ISDS 3115 Quiz 2 Questions
Which of these statements about the production order quantity model is FALSE? A. Average inventory is more than one-half of the production order quantity. B. All else equal, the smaller the ratio of demand rate to production rate, the smaller is the production order quantity. C. The production order quantity model is appropriate when the assumptions of the basic EOQ model are met, except that receipt is noninstantaneous. D. Because receipt is noninstantaneous, some units are used immediately and not stored in inventory. E. None of the above is false.
A. Average inventory is more than one-half of the production order quantity.
The main trait of a single-period model is that: A. inventory has limited value after a certain period of time. B. the order quantity should usually equal the expected value of demand. C. the cost of a shortage cannot be determined accurately. D. supply is limited. E. it has the largest EOQ sizes.
A. inventory has limited value after a certain period of time.
Airfreight A. is a fast-growing mode of shipping. B. represents about 10% of the tonnage shipped in the United States. C. is the oldest means of freight transportation. D. is the best way to transport natural gas.
A. is a fast-growing mode of shipping.
Product-focused processes: A. tend to have long, continuous production runs. B. apply only to service firms, not to manufacturers. C. are processes that accommodate a variety of products or customer groups. D. allow more customization, but are not very efficient. E. are profitable because customers demand flexibility, not specialization.
A. tend to have long, continuous production runs.
A product-focused process is commonly used to produce: A. high-volume, low-variety products. B. low-variety products at either high- or low-volume. C. low-volume, high-variety products. D. high-volume, high-variety products. E. high-volume products of either high- or low-variety.
A. high-volume, low-variety products.
In MRP, system nervousness is caused by: A. management's attempt to continually respond to minor changes in production requirements. B. management's marking part of the master production schedule as "not to be rescheduled". C. the use of the lot-for-lot approach. D. management's attempt to evaluate alternative plans before making a decision. E. the use of phantom bills of material.
A. management's attempt to continually respond to minor changes in production requirements.
What is required for an MRP system to work? A. A high number of purchase orders outstanding B. Accurate inventory records C. Long lead times D. A small bill of material
Accurate inventory records
The use of effective contracts with penalties could reduce which form of supply chain risk? A. Distribution B. Logistic delays or damages C. Supplier failure to deliver D. All of the above
All of the above
Which of the following is an element of inventory holding costs? A. pilferage, scrap, and obsolescence B. housing costs C. material handling costs D. investment costs E. All of the above are elements of inventory holding costs.
All of the above are elements of inventory holding costs.
Which of the following is NOT a goal of JIT partnerships? A. obtain improved quality and reliability B. removal of in-plant inventory C. removal of in-transit inventory D. removal of unnecessary activities E. All of the above are goals of JIT partnerships.
All of the above are goals of JIT partnerships.
ABC analysis divides on-hand inventory into three classes, generally based upon which of the following? A. unit price B. annual demand C. the number of units on hand D. item quality E. annual dollar volume
Annual dollar volume
In the basic EOQ model, if D = 6000 per year, S = $100, and holding cost = $10 per unit per month, what is the economic order quantity? A. 600 B. 100 C. 24 D. 141 E. 346
B. 100
A work system has five stations that have process times of 5, 9, 4, 6, and 8. What is the throughput time of the system? A. 18 B. 35 C. 9 D. 32 E. 7
D. 32
Which of the following statements is true regarding cross-sourcing? A. Cross-sourcing enhances technological skills. B. Cross-sourcing develops the ability to produce goods or services previously purchased or actually buying a supplier or distributor. C. Cross-sourcing describes suppliers who become part of a company coalition. D. Cross-sourcing uses one supplier for a component and a second supplier for another component, where each supplier acts as a backup for the other.
D. Cross-sourcing uses one supplier for a component and a second supplier for another component, where each supplier acts as a backup for the other.
Which of the following statements about quantity discounts is FALSE? A. The smaller the ordering cost, the less attractive a discount schedule will be. B. The larger the annual demand, the less attractive a discount schedule will be. C. If carrying costs are expressed as a percentage of value, EOQ is larger at each lower price in the discount schedule. D. The cost-minimizing solution may or may not be where annual holding costs equal annual ordering costs. E. In inventory management, item cost becomes relevant to order quantity decisions when a quantity discount is available.
B. The larger the annual demand, the less attractive a discount schedule will be.
The minimum record accuracy required for successful MRP is approximately which of the following? A. lower than 90% B. 99% C. 90% D. 95% E. 97%
B. 99%
What is an information system for identifying and planning the enterprise-wide resources needed to take, make, ship, and account for customer orders? A. EIS B. SCM C. ERP D. MRP
ERP
(T/F) Because most services cannot be inventoried, there is little place for JIT to help service organizations achieve competitive advantage.
False
(T/F) Capacity decisions are based on technological concerns, not demand forecasts.
False
(T/F) MRP can be effective only if very accurate lot sizes are calculated in advance.
False
(T/F) Utilization is the number of units a facility can hold, receive, store, or produce in a period of time.
False
In mass service and professional service, the operations manager should focus extensively on: A. automation. B. cost-cutting initiatives. C. equipment maintenance. D. sophisticated scheduling. E. human resources.
Human resources.
ABC analysis is based upon the principle that: A. more time should be spent on class "C" items because there are many more of them. B. an item is critical if its usage is high. C. there are usually a few critical items, and many items that are less critical. D. all items in inventory must be monitored very closely. E. as with grade distributions in many MBA courses, there should be more medium-level "B" items than either "A" or "C" items.
C. there are usually a few critical items, and many items that are less critical.
What is developing the ability to produce goods or services previously purchased or actually buying a supplier or a distributor? A. virtual companies B. outsourcing C. vertical integration D. horizontal integration
C. vertical integration
What is a list of quantities of components, ingredients, and materials required to make a product? A. engineering change notice B. master production schedule C. bill-of-material D. purchase order
C. bill-of-material
Which of the following could reduce distribution risk? A. secure IT systems B. cross-country diversification C. careful selection, monitoring and effective contracts with penalties D. use multiple suppliers
Careful selection, monitoring and effective contracts with penalties
Trucking A. does not play a role in multimodal shipping. B. is one of the least flexible transportation modes. C. is the least used transportation mode for manufacturing goods. D. is increasingly using computers to manage its operations.
Is increasingly using computers to manage its operations.
Which of the following best represents the relationship between the master production schedule (MPS) and the aggregate plan? The MPS precedes the aggregate plan in the planning process. The MPS disaggregates the aggregate plan. The MPS is the same as the aggregate plan. There is no relationship between the MPS and the aggregate plan.
The MPS disaggregates the aggregate plan.
Excess bags of basic commodities such as flour and sugar that are stored in a restaurant's kitchen represent which of the following wastes? A. overproduction B. inventory C. transportation D. queues E. defective product
inventory
By convention, what is the top level in a product structure? A. level 1 B. level T C. level 0 D. level 10 E. level 100
level 0
Which of the following lot-sizing techniques results in the lowest holding costs? A. EOQ B. POQ C. lot-for-lot D. Wagner-Whitin algorithm E. the quantity discount model
lot-for-lot
Which of the following phrases best describes process focus? A. low inventory B. low volume, high variety C. Operators are less broadly skilled. D. Finished goods are usually made to a forecast and stored. E. high fixed costs, low variable costs
low volume, high variety
Which of the following is not one of the strategies for improving service productivity? A. self-service B. separation C. mass customization D. automation E. scheduling
mass customization
Demand for dishwasher water pumps is 8 per day. The standard deviation of demand is 3 per day, and the order lead time is four days. The service level is 95%. What should the reorder point be? about 24 about 32 about 18 about 38 more than 40
more than 40
The advantage of having many potential suppliers is their willingness to A. provide innovations. B. participate in JIT. C. provide technical expertise. D. offer lower prices in the short term.
offer lower prices in the short term.
What is transferring a firm's activities that have traditionally been internal to external suppliers? A. keiretsu network B. make-or-buy C. outsourcing D. vertical integration
outsourcing
Which of the following industries has the highest supply chain cost as a percentage of sales? A. petroleum B. automobile C. restaurants D. metals
petroleum
A grill assembly takes 20 washers. Instead of listing these washers separately, they are grouped into a single kit for production. How is the bill of material for the washers classified? A. phantom bill B. component bill C. low-level bill D. modular bill E. planning bill
planning bill
A process focused facility is A. based on the classical assembly line. B. a production facility organized around products. C. a production facility organized around specific activities. D. a rapid, low-cost production facility that caters to constantly changing unique customer desires.
a production facility organized around specific activities.
Concerning relationships with suppliers, which of the following combinations is critical to the success of JIT? A. distant relationships with trust B. close relationships with trust C. distant relationships with skepticism D. close relationships with skepticism E. none of the above
close relationships with trust
Utilization will typically be lower than efficiency because: A. expected output is less than actual output. B. expected output is less than rated capacity. C. effective capacity is greater than design capacity. D. effective capacity equals design capacity. E. effective capacity is less than design capacity.
effective capacity is less than design capacity.
A lawnmower assembly plant uses a variety of nuts, bolts, screws, and other fasteners in its operation. Its supplier delivers these items directly to the point of use on the assembly line and ensures that there are always sufficient quantities of fasteners to maintain the production schedule. This is an example of A. postponement. B. vendor-managed inventory. C. single stage control of replenishment. D. e-procurement.
vendor-managed inventory.
Prior to embarking on supply chain design, operations managers must first consider A. what kind of distribution network to have. B. how to select suppliers. C. how to manage supply chain inventory. D. "make-or-buy" and outsourcing decisions.
"make-or-buy" and outsourcing decisions.
A work system has five stations that have process times of 5, 9, 14, 9, and 8. What is the bottleneck time? A. 9 B. 35 C. 18 D. 45 E. 14
14
An assembly line has 10 stations with times of 1, 2, 3, 4, ..., 10, respectively. What is the bottleneck time? A. 1.82% of the throughput time B. 550% of the throughput time C. 50% of the throughput time D. 18.18% of the throughput time E. 100% of the throughput time
18.18% of the throughput time
A specific product has demand during lead time of 100 units, with a standard deviation during lead time of 25 units. What safety stock (approximately) provides an 85% service level? A. 165 B. 26 C. 133 D. 41 E. 126
26
A production order quantity problem has a daily demand rate = 10 and a daily production rate = 50. The production order quantity for this problem is approximately 750 units. What is the average inventory for this problem? A. 300 B. 600 C. 245 D. 375 E. 61
300
Christopher's Cranks uses a machine that can produce 100 cranks per hour. The firm operates 12 hours per day, five days per week. Due to regularly scheduled preventive maintenance, the firm expects the machine to be running during approximately 95% of the available time. Based on experience with other products, the firm expects to achieve an efficiency level for the cranks of 75%. What is the expected weekly output of cranks for this company? A. 4275 B. 4845 C. 5100 D. 8421 E. 5700
4275
The Academic Computing Center has five trainers available in its computer labs to provide training sessions to students. Assume that the design capacity of the system is 1900 students per semester and that effective capacity equals 90% of design capacity. If the number of students who actually got their orientation session is 1500, what is the utilization of the system? A. 78.9% B. 87.7% C. 1710 students D. 90% E. 1350 students
78.9%
The staff training center at a large regional hospital provides training sessions in CPR to all employees. Assume that the capacity of this training system was designed to be 1200 employees per year. Since the training center was first put into use, the program has become more complex, so that 950 now represents the most employees that can be trained per year. In the past year, 850 employees were trained. The efficiency of this system is approximately ________ and its utilization is approximately ________. A. 79.2 percent; 90.5 percent B. 90.5 percent; 79.2 percent C. 87.5 percent; 950 employees D. 950 employees; 850 employees E. 89.5 percent; 70.8 percent
89.5 percent; 70.8 percent
A firm's probability of a stockout for a popular item is 2%. Given this information, what is its service level for this popular item? A. 2% B. 98% C. 96% D. 4%
98%
Which of the following statements is TRUE about the MRP plan when using lot-for-lot ordering? A. The quantity of gross requirements for a child item is equal to the quantity of planned order release(s) multiplied by the number of child items used in the parent assembly. B. The quantity and gross requirements for a child item is always equal to the quantity of net requirements for its parent. C. The quantity of gross requirements for a child item is always equal to the quantity of gross requirements for its parent. D. The quantity of gross requirements for a child item is always equal to the quantity of planned order releases for its parent. E. All of the above are true.
A. The quantity of gross requirements for a child item is equal to the quantity of planned order release(s) multiplied by the number of child items used in the parent assembly.
Which of the following statements is NOT one of the differentiation strategy decisions? A. Use buffer stocks to ensure speedy supply. B. Gather and communicate market research data. C. Modular design to aid product differentiation. D. Minimize inventory to avoid product obsolescence.
A. Use buffer stocks to ensure speedy supply.
To reduce the risks from vertical integration, firms may choose to develop some form of formal collaboration known as A. a joint venture. B. cross sourcing. C. channel assembly. D. vendor managed inventory.
A. a joint venture.
Kanban is associated with all EXCEPT which of the following? A. increased material handling B. small lot sizes C. signals, such as cards, lights, or flags D. moving inventory only as needed E. reductions in inventory
A. increased material handling
Which of the following statements about ABC analysis is FALSE? A. In ABC analysis, forecasting methods for "C" items may be less sophisticated than for "A" items. B. ABC analysis is based on the presumption that all items must be tightly controlled to produce important cost savings. C. In ABC analysis, "A" items should have tighter physical inventory control than "B" or "C" items have. D. Criteria other than annual dollar volume, such as high holding cost or delivery problems, can determine item classification in ABC analysis. E. ABC analysis is based on the presumption that controlling the few most important items produces the vast majority of inventory savings.
B. ABC analysis is based on the presumption that all items must be tightly controlled to produce important cost savings.
What is the term of shipping directly from the supplier to the end consumer rather than from the seller, saving both time and reshipping costs? A. Vendor-managed inventory B. Drop shipping C. Postponement D. Direct shipping
B. Drop shipping
Which of the following is NOT one of the assumptions of fixed-period systems? Items are independent of one another. Lead times are variable. Lead times are known. The only relevant costs are the ordering and holding costs.
B. Lead times are variable.
Which of the following statements is NOT one of the response strategy decisions? A. use buffer stocks to ensure speedy supply B. gather and communicate market research data C. low setup time D. fast transportation
B. gather and communicate market research data
High-volume, low-variety production is best suited for which of the following process strategies? A. repetitive focus B. product focus C. mass customization D. process focus
B. product focus
Which of the following statement is NOT true? A. Probabilistic models are a real-world adjustment because demand and lead time will not always be known and constant. B. Probabilistic models relax the assumption that demand for a product is constant and certain. C. Having certain demand raises the possibility of a stockout. D. The service level is the complement of the probability of a stockout.
C. Having certain demand raises the possibility of a stockout.
Which of the following statements regarding the production order quantity model is TRUE? A. It minimizes the total production costs. B. It minimizes inventory. C. It relaxes the assumption that all the order quantity is received at one time. D. It applies only to items produced in the firm's own production departments. E. It relaxes the assumption that the demand rate is constant.
C. It relaxes the assumption that all the order quantity is received at one time.
Consider a production line with five stations. Station 1 can produce a unit in 9 minutes. Station 2 can produce a unit in 10 minutes. Station 3 has two identical machines, each of which can process a unit in 12 minutes (each unit only needs to be processed on one of the two machines). Station 4 can produce a unit in 11 minutes. Station 5 can produce a unit in 8 minutes. Which station is the bottleneck station? A. Station 3 B. Station 2 C. Station 4 D. Station 5 E. Station 1
C. Station 4
Which of the following statements is NOT true regarding the bullwhip effect? A. Bullwhip fluctuations in the supply chain decrease customer service and profitability. B. Bullwhip fluctuations in the supply chain increase the costs associated with inventory, transportation, shipping and receiving. C. The bullwhip effect occurs as order are relayed from retails, to distributors, to wholesalers, to manufacturers, with fluctuations decreasing at each step in the sequence. D. Inaccurate information results in distortions and fluctuations, causing what is known as the bullwhip effect.
C. The bullwhip effect occurs as order are relayed from retails, to distributors, to wholesalers, to manufacturers, with fluctuations decreasing at each step in the sequence.
A grocery store is attempting to implement a kanban system. Which of the following would NOT be an application of kanbans? A. A red light on top of the cashier's lane signals that the cashier needs additional change replenished. B. An empty doughnut tray signaling the bakery to produce 2 dozen glazed doughnuts. C. The meat department stocking up on turkeys before Thanksgiving. D. A line of 5 people in the Chinese department signaling the department to heat 5 orders of crab rangoon. E. All of the above are kanban applications.
C. The meat department stocking up on turkeys before Thanksgiving.
What is a long-term purchase commitment to a supplier for items that are to be delivered against short-term releases to ship? A. postponement B. advanced shipping notice C. blanket order D. drop shipping
C. blanket order
Supply chain managers outsource logistics to meet three goals: A. lower delivery costs, improve delivery reliability and speed, and provide better market response. B. drive down inventory investment, improve delivery reliability and speed, and provide better market response. C. drive down inventory investment, lower delivery costs, and improve delivery reliability and speed. D. drive down inventory investment, lower delivery costs, and provide better market response.
C. drive down inventory investment, lower delivery costs, and improve delivery reliability and speed.
Which of the following strategies is part collaboration, part purchasing from few suppliers, and part vertical integration? A. virtual companies B. joint ventures C. keiretsu networks D. horizontal integration
C. keiretsu networks
Which of the following is FALSE regarding the links between JIT and quality? A. As quality improves, fewer inventory buffers are needed; in turn, JIT performs better. B. Inventory hides bad quality; JIT immediately exposes it. C. JIT reduces the number of potential sources of error by shrinking queues and lead times. D. JIT increases the cost of obtaining good quality. E. If consistent quality exists, JIT allows firms to reduce all costs associated with inventory.
D. JIT increases the cost of obtaining good quality.
Which of the following statements regarding a pull system is TRUE? A. Manufacturing cycle time is increased. B. Large lots are pulled from upstream stations. C. Work is pulled to the downstream stations before it is actually needed. D. Problems become more obvious. E. None of the above is true of a pull system.
D. Problems become more obvious.
The fixed−period inventory system requires more safety stock than a fixed-quantity system because: A. this model is used for products that require very high service levels. B. setup costs and holding costs are large. C. this model is used for products that have large standard deviations of demand. D. replenishment is not instantaneous. E. a stockout can occur during the review period as well as during the lead time.
E. a stockout can occur during the review period as well as during the lead time.
Which of the following is characteristic of lean operations? A. no supplier partnerships B. easy, mindless jobs C. specialty workers with no cross-training D. inventory buffers between each workstation to minimize system downtime E. low space requirements
E. low space requirements
The two most basic inventory questions answered by the typical inventory model are: A. order quantity and service level. B. timing of orders and cost of orders. C. order quantity and cost of orders. D. ordering cost and carrying cost. E. timing of orders and order quantity.
E. timing of orders and order quantity.
Which one of the following statements is TRUE regarding JIT inventory? A. It is minimized with large lot production. B. It increases if setup costs decrease. C. It is the minimum inventory necessary to keep a perfect system running. D. It exists just in case something goes wrong. E. It hides variability.
It is the minimum inventory necessary to keep a perfect system running.
Which of the following is specifically characterized by continuous and forced problem solving via a focus on throughput and reduced inventory? A. Material requirements planning (MRP) B. Lean operations C. kanban D. Just-in-time (JIT) E. Toyota Production System (TPS)
Just-in-time (JIT)
Characteristics of just-in-time partnerships do NOT include: A. removal of in-transit inventory. B. focus on core competencies. C. long-term contracts. D. produce with zero defects. E. large lot sizes to save on setup costs and to gain quantity discounts.
Large lot sizes to save on setup costs and to gain quantity discounts.
Which of the following is specifically characterized by the elimination of waste through a focus on exactly what the customer wants? A. Material requirements planning (MRP) B. Lean operations C. Just-in-time (JIT) D. kanban E. Toyota Production System (TPS)
Lean operations
What is a dependent demand technique that uses a bill-of-material, inventory, expected receipts, and a master production schedule to determine material requirements? A. Economic order method (EOM) B. Material requirements method (MRM) C. Periodic order planning (POP) D. Material requirements planning (MRP)
Material requirements planning (MRP)
Low-volume, high-variety production is best suited for which of the following process strategies? A. process focus B. product focus C. mass customization D. repetitive focus
Process focus
Which of the following industries is most likely to have low equipment utilization? A. commercial baking B. television manufacturing C. auto manufacturing D. restaurants E. steel manufacturing
Restaurants
How can a reduction of in-transit inventory be encouraged? A. use of trains, not trucks B. low carrying costs C. low-cost, global suppliers D. supplier location near plants E. high setup costs
Supplier location near plants
Which of the following is specifically characterized by a focus on continuous improvement, respect for people, and standard work practices? A. Just-in-time (JIT) B. Toyota Production System (TPS) C. Lean operations D. Material requirements planning (MRP) E. kanban
Toyota Production System (TPS)
(T/F) Price changes are useful for matching the level of demand to the capacity of a facility.
True
The do-it-yourselfer plucked a gallon can of base paint from the shelf of the local hardware store and handed it to Keith, the cheerful clerk at the paint counter. Their eyes met briefly and the do-it-yourselfer silently handed over sample 150C-1, Musical Mist, to the clerk. It was impractical to keep several gallons of every possible color on the shelves at the hardware store, so the paint manufacturer had created clever workaround. The workaround was a computer-based system that added predetermined quantities of pigments to a gallon can of base paint depending on the desired shade, in this case, Musical Mist. The hardware store now needed to stock only the base paint, this machine, and a small supply of paint pigments in order to create the thousands of colors in its catalog. This scenario is a prime example of A. drop shipping. B. vendor-managed inventory. C. the bullwhip effect. D. postponement.
postponement.
Frito-Lay is to ________ focus as Dell Computer is to ________ focus. A. product, repetitive B. process, product C. repetitive, product D. product, mass customization E. process, repetitive
product, mass customization
Which of the following is generally found in most Lean environments? A. pull systems B. a push system for high margin items and a pull system for low margin items C. push systems D. a push system for purchased parts and a pull system for manufactured parts E. a push or pull system, depending upon the rate of demand
pull systems
Which of the following mitigation tactics could reduce economic risk? A. purchasing contracts that address price fluctuations B. multiple transportation modes and warehouses C. franchising and licensing D. subcontractors on retainer
purchasing contracts that address price fluctuations
Which one of the following is a characteristic of a JIT partnership? A. maximal product specifications imposed on supplier B. third-party logistics never used C. removal of incoming inspection D. active pursuit of vertical integration E. frequent deliveries in large lot quantities
removal of incoming inspection
An assembly line is an example of a: A. process-focused process. B. specialized process. C. line process. D. repetitive process. E. product-focused process.
repetitive process.
A disadvantage of the fixed-period inventory system is that: A. orders usually are for larger quantities. B. since there is no count of inventory during the review period, a stockout is possible. C. it involves higher ordering costs than the fixed quantity inventory system. D. the average inventory level is decreased. E. additional inventory records are required.
since there is no count of inventory during the review period, a stockout is possible.
Adding a complementary product to what is currently being produced is a demand management strategy used when: A. demand exceeds capacity. B. price increases have failed to bring about demand management. C. efficiency exceeds 100 percent. D. capacity exceeds demand for a product that has stable demand. E. the existing product has seasonal or cyclical demand.
the existing product has seasonal or cyclical demand.
Which of the following allows a segment of the master schedule to be designated as "not to be rescheduled?" A. pegging B. system nervousness C. time fence D. freeze point
time fence
Harley Davidson: A. utilizes job shops to make each of its modules. B. uses work cells to feed its assembly line. C. uses a large number of modules to build a small number of different bikes. D. uses product focused manufacturing. E. All of the above are true.
uses work cells to feed its assembly line.