OP2

Using the fixed-order quantity model, what is the total ordering cost of inventory given an annual demand of 36,000 units, a cost per order of $40 and a holding cost per unit per year of $45?

$5,692 Q = square root of ((2 x demand x order cost)/holding cost) = Square root ((2 x 36,000 x 40)/45) = Square root (64,000) = 252.98. Dividing annual demand by Q, 36,000/252.98 = 142.3 orders per year x $40 per order = $5,692 ordering cost per year.

Every 2 minutes a bus departs from AVIS. Flow time is 20 minutes. How many buses are in the system at a time?

(1 bus / 2 minutes) x 20 minutes = 10 buses

Which of the following equations is correct for calculating the required workstation cycle time? (Required output per day)/(Production time per day) (Production time per day)/(Required output per day) (Sum of task times)/(Required output per day) (Production time per day)/(Sum of task times)

(Production time per day)/(Required output per day)

Which of the following are parts of the material requirements planning system?

- master production schedule -bill of materials -inventory records

organization of product processes

- project - workcenter (jobshop) - manufacturing cell - assembly line - continuous process

which case outsourcing manufacturing is appropriate? 1. the design in manufacturing of products are closely connected and require mutual adaptation 2. the products are modularized designed and assembled together using standard modules

-2 only

Which of the following statements about inventory measures is TRUE? Multiple select question. Days-of-supply measures how long (on average) a firm's inventory can support sales. Total average inventory is the best measure of inventory. Inventory turn and days-of-supply are unrelated measures. Inventory turn compares cost of goods sold to average inventory.

-Days-of-supply measures how long (on average) a firm's inventory can support sales. -Inventory turn compares cost of goods sold to average inventory.

which initiative cannot effectively counteract the bullwhip effect -periodic ordering -everyday low price -consumer direct -Vendor management inventory

-periodic ordering

Using the assembly-line balancing procedure, which of the following is the required cycle time if the production time in minutes per day is 1440 and the required output per day in units is 2000? - 1.388 - 500 - 0.72 - Cannot be determined from the information above - 250

0.72

You have just determined the actual number of workstations that will be used on an assembly line to be 6 using the assembly-line balancing procedure. The cycle time of the line is 5 minutes and the sum of all that tasks required on the line is 25 minutes. Which of the following is the correct value for the resulting line's efficiency? - 0.833 - None of these - 0.973 - 0.500 - 0.990

0.833 Using equation 6.5, [25 / (6 x 5)] = 0.833.

Which types of inventory are included in the average aggregate inventory value? 1. Raw material 2. Work-in-process 3. Finished goods 4. Distribution

1 2 3 4

The total cost of ownership includes: 1. Procurement costs 2. Disposal costs 3. Engineering design costs

1 and 2

Which types of inventory are included in the average aggregate inventory value? 1. Raw material 2. Work-in-process 3. Finished goods 4. Distribution 1, 2, 3, and 4 1, 2, and 3 Only 3 and 4 Only raw materials

1, 2, 3, and 4

Which of the following is the net requirement using an MRP program if the gross requirement is 1,250 and the inventory on hand is 50? 1,200 1,300 1,150 2,450 None of the above

1,250 - 50 = 1,200. Net requirements are the amounts that are needed week by week in the future over and above what is currently on hand or committed to through an order already released and scheduled.

Using the fixed-time period inventory model, and given an average daily demand of 300 units, 4 days between inventory reviews, 5 days for lead time, 1,200 units of inventory on hand, a "z" of 1.96, and a standard deviation of demand over the review and lead time of 12 units, what quantity should be ordered?

1,525 q = (300 x (5 + 4) + 1.96 x 12) - 1200 = 2,700 + 23.52 - 1200 = 1,524.52 = about 1,525

List the highest level planning to the lowest level of planning:

1. Aggregate Planning 2. Master Production Schedule 3. Material Requirements Planning

Green Sourcing steps

1. Assess the opportunity 2. Engage sourcing agents 3. Assess the supply base 4. Develop the sourcing strategy 5. Implement sourcing strategy 6. Institutionalizing the sourcing strategy

The master scheduler must consider

1. Never lose sight of the aggregate plan 2. Be involved with customer order promising 3. Trade-off manufacturing, engineering and marketing conflicts

Last year, Ace Electronics had Cost of Goods Sold of $2,500,000. The average inventory value last year was $250,000. What was the inventory turnover for Ace Electronics last year? 10 8 4 6

10

The efficiency of an assembly-line balance must always be less than or equal to _______________ %. The efficiency of an assembly-line balance must always be less than or equal to %.

100

A computer manufacturer offers 3 types of hard disk drives, 2 types of monitors, 4 types of batteries, and 5 choices of operating systems. How many total combinations are possible using these choices? 60 90 120 150

120

If annual demand is 8,000 units, the ordering cost is $20 per order and the holding cost is $12.50 per unit per year, what is the optimal order quantity using the fixed-order quantity inventory model?

160 Q = square root of ((2 x demand x order cost)/holding cost) = Square root ((2 x 8,000 x 20)/12.50) = Square root (25,600) = 160

There are ______ dimensions depicted on a product-process matrix.

2

There are _______________ dimensions depicted on a product-process matrix. dimensions depicted on a product-process matrix.

2

Last year a firm had an average inventory of $1,500,000 and the cost of goods sold was $3,750,000. What was the inventory turn last year? 1.0 3.5 2.0 2.5

2.5

In inventory management, the Pareto principle suggests that ___% of the items account for ___% of the total inventory cost.

20,80

Most retailers estimate that annual inventory carrying costs equals _____ of what is paid for the product.

25

Most retailers estimate that annual inventory carrying costs equals _____ of what is paid for the product

25%

Most retailers estimate that annual inventory carrying costs equals _____ of what is paid for the product. 25% 10% 2% 50%

25%

Firm ABC has an annual demand for 2,000 widgets. Their typical order quantity is 400 units and they maintain a safety stock of 50 units. What is their average inventory?

250

250 people/hour 15 min average time in a store how many customers in the store at any given time?

250 ppl/hour x (15/60 mins) - 62.5 customers

An assembly line must produce 1,000 units in an 8 hour day. Assuming the line operates continuously, what is the required workstation cycle time? 57.6 seconds 28.8 seconds 35.5 seconds 60.0 seconds

28.8 seconds

Using the assembly-line balancing procedure, which of the following is the theoretical minimum number of workstations if the task times for the six tasks that make up the job are 4, 6, 7, 2, 6, and 5 minutes, and the cycle time is 10 minutes? - 8 - 5 - None of these - 6 - 3

3 (4 + 6 + 7 + 2 + 6 + 5) / 10 = 3.

In the ABC approach, B items account for approximately ___% of the items in inventory.

35

"B" items account for approximately _% of the items in inventory.

35%

If it takes a supplier 10 days to deliver an order once it has been placed and the standard deviation of daily demand is 14, what is the standard deviation of usage during lead time?

44.27 the answer is the square root of the sum of the variances which is the square root of 10 x (14 squared) or the square root of 1960 or 44.27.

If the sum of all task times is 100 seconds and the required cycle time is 21 seconds, what is the theoretical minimum number of workstations? 5 4 4.76 5.23

5

Assuming no safety stock, what is the reorder point (R) given an average daily demand of 100 units and a lead time of 5 days?

500 Reorder point = Average daily demand x Lead time in days = 100 x 5 = 500

Which of the following is the planned-order release using an MRP program if the gross requirement is 670 and the inventory on hand is 600? 670 600 530 70 None of the above

670 600 530 correct 70 None of the above Using net requirements, the program calculates when orders should be received to meet these requirements. This can be a simple process of just scheduling orders to arrive according to the exact net requirements or a more complicated process where requirements are combined for multiple periods. This schedule of when orders should arrive is referred to as "planned-order receipts." Since there is typically a lead time associated with each order, the next step is to find a schedule for when orders are actually released. Offsetting the "planned-order receipts" by the required lead time does this. This schedule is referred to as the "planned-order release." 670 - 600 = 70.

For an assembly-line system with 6 workstations, the cycle time is 27 seconds and the sum of task times is 120 seconds. What is the efficiency of this balance? 81.1% 74.1% 77.2% 71.0%

74.1%

Using the assembly-line balancing procedure, which of the following is the required cycle time in minutes per unit if the daily production time is 480 minutes and the required daily output is 50 units? - 480 - 0.104 - Cannot be determined from the information above - 50 - 9.6

9.6 daily production time (480) / daily output (50)

The z-score associated with a ___ percent probability of not stocking out is 1.64.

95

Which of the following is an example of a product made with a project layout?

A house

If a company has an MRP program that can reflect the exact status of each item in real time, this program is called?

A net change MRP system

If a company has an MRP program that can reflect the exact status of each item in real time, this program is called? A peg record An inventory transaction file A net change MRP system A bill-of-material system

A net change MRP system

Computer cycle counting programs can produce a cycle count notice after which events?

A positive balance but a backorder was created A specified level of activity A zero balance on-hand

An MRP system is

A system-driven logic that allows a company to tie the production functions together from a material planning and control view

Which of the following statements best characterizes an MRP system? A system-driven logic that allows a company to tie the production functions together from a material planning and control view. An independent demand system that helps a company to prioritize customer orders based on profit potential. A system that specifies the best transportation mode for inbound materials. A system-driven approach to determine which suppliers are likely meet delivery due dates.

A system-driven logic that allows a company to tie the production functions together from a material planning and control view.

Which of the following is NOT true about a workcenter layout? In a workcenter layout, machines with similar functions are grouped together. A workcenter layout is also called a job shop. A workcenter layout can produce a wide variety of products. A workcenter layout is commonly used for systems with high production volumes.

A workcenter layout is commonly used for systems with high production volumes.

Which of the following is NOT true about a workcenter layout? Multiple choice question. A workcenter layout can produce a wide variety of products. A workcenter layout is commonly used for systems with high production volumes. A workcenter layout is also called a job shop. In a workcenter layout, machines with similar functions are grouped together.

A workcenter layout is commonly used for systems with high production volumes.

From highest percentage to lowest percentage, rank the ABC categories in terms of value of items in inventory: Instructions

A, B, C

A company is planning for its financing needs and uses the basic fixed-order quantity inventory model. Which of the following is the total cost (TC) of the inventory given an annual demand of 10,000, setup cost of $32, a holding cost per unit per year of $4, an EOQ of 400 units, and a cost per unit of inventory of $150? A. $1,501,600 B. $1,498,200 C. $500,687 D. $499,313 E. None of the above

A. $1,501,600 Q = 400. Average Inventory = Q/2 = 200. Holding cost/year = $4. Thus, annual holding cost = $800. Annual set-up cost = 10,000/400 = 25 x $32 = 800. Demand x cost per unit = 10,000 x $150 = 1,500,000. Hence, TC = $1,500,000 + 800 + 800 = $1,501,600.

Using the fixed-time period inventory model, and given an average daily demand of 75 units, 10 days between inventory reviews, 2 days for lead time, 50 units of inventory on hand, a service probability of 95 percent, and a standard deviation of demand over the review and lead time of 8 units, which of the following is the order quantity? A. 863 B. 948 C. 1,044 D. 1,178 E. 4,510

A. 863 q = 75 x (10 + 2) + (1.64 x 8) - 50 = 900 + 13.12 - 50 = 863.12 = 863

Which of the following are the recommended percentage groupings of the ABC classifications of the dollar volume of products? A. A items get 15%, B items get 35%, and C items get 50% B. A items get 15%, B items get 45%, and C items get 40% C. A items get 25%, B items get 35%, and C items get 40% D. A items get 25%, B items get 15%, and C items get 60% E. A items get 20%, B items get 30%, and C items get 50%

A. A items get 15%, B items get 35%, and C items get 50% The ABC approach divides this list into three groupings by value: A items constitute roughly the top 15 percent of the items, B items the next 35 percent, and C items the last 50 percent.

You would like to use the fixed-time period inventory model to compute the desired order quantity for a company. You know that vendor lead time is 5 days and the number of days between reviews is 7. Which of the following is the standard deviation of demand over the review and lead time if the standard deviation of daily demand is 8? A. About 27.7 B. About 32.8 C. About 35.8 D. About 39.9 E. About 45.0

A. About 27.7 The standard deviation of demand over the 12 days of time between reviews and lead time is the square root of (12 x 64) = 27.71

Which of the following is not included as an inventory holding cost? A. Annualized cost of materials B. Handling C. Insurance D. Pilferage E. Storage facilities

A. Annualized cost of materials Holding costs include the costs for storage facilities, handling, insurance, pilferage, breakage, obsolescence, depreciation, taxes, and the opportunity cost of capital.

Which of the following is an input file necessary to run an MRP system? A. Bill of materials (BOM) file B. Quality management report C. Exception reports D. Planned-order schedules E. Purchasing contracts

A. Bill of materials (BOM) file

Which of the following are fixed-order quantity inventory models? A. Economic order quantity model B. The ABC model C. Periodic replenishment model D. Cycle counting model E. P model

A. Economic order quantity model

Which of the following industry types will not benefit greatly from the application of MRP? A. Fabricate-to-order B. Assemble-to-stock C. Assemble-to-order D. Manufacture-to-order E. None of the above

A. Fabricate-to-order

If a vendor has correctly used marginal analysis to select their stock levels for the day (as in the newsperson problem), and the profit resulting from the last unit being sold (Cu) is $0.90 and the loss resulting from that unit if it is not sold (Co) is $0.50, which of the following is the probability of the last unit being sold? A. Greater than 0.357 B. Greater than 0.400 C. Greater than 0.556 D. Greater than 0.678 E. None of the above

A. Greater than 0.357 P < = Cu/(Cu + Co) = 0.90/1.40 = 0.643. Since P is the probability that the unit will not be sold and 1 - P is the probability of it being sold, the answer to this question is 1 - 0.643 or 0.357.

A product tree can do which of the following? A. Help to compute component usage B. Reduce product scrap C. Reduce labor overtime D. Reduce regular time labor E. Locate raw material supplies

A. Help to compute component usage

Which of the following is considered a primary report in an MRP system? A. Planned order schedule B. Peg report C. Planning report D. Inventory accuracy report E. Aggregate production plan report

A. Planned order schedule

A BOM file is also called which of the following? A. Product tree B. Stocking plan C. Inventory usage record D. Production parts plan E. Time bucket schedule

A. Product tree

Which of the following is most closely related to the reason a firm might implement MRP? A. So they can order the right parts B. So they can order parts sufficient for immediate use C. So they can insure that parts to arrive prior to when they are needed D. To assure appropriate quality levels E. To keep process costs between the LCL and the UCL

A. So they can order the right parts

In order to determine the standard deviation of usage during lead time in the reorder point formula for a fixed-order quantity inventory model which of the following must be computed first? A. Standard deviation of daily demand B. Number of standard deviations for a specific service probability C. Stockout cost D. Economic order quantity E. Safety stock level

A. Standard deviation of daily demand

Which is the most challenging kind of supply chain to manage according to Hau Lee? A.)Agile supply chain B.)Efficient supply chain C.)Risk-hedging supply chain D.)Erratic supply chain E.)Responsive supply chain

A.) Agile supply chain

The inventory turnover ratio used in measuring supply-chain efficiency is found by the ratio of which of the following? A.) Cost of goods sold/Average aggregate inventory value B.) Fixed costs/Variable costs C.)Sales costs/Marketing costs D.)Cost of goods sold/Cost to sell goods E.)Operations flow costs/Suppliers flow costs

A.) Cost of goods sold/Average aggregate inventory value

Which of the following activities should not be outsourced? Multiple select question. Activities that have lots back-and-forth exchange of information Complex computer software Specialized research and development Immature technology Highly standardized and well understood processes

Activities that have lots back-and-forth exchange of information Complex computer software Specialized research and development Immature technology

From the highest level planning at the top to the lowest level planning at the bottom, rank the following. Aggregate planning Master production schedule Material requirements planning

Aggregate planning Master production schedule Material requirements planning

Which type of supply chain strategy is aimed at being responsive and flexible to customer needs and hedges against pooled inventory and other capacity resources? Responsive supply chains Efficient supply chains Risk-hedging supply chains Agile supply chains

Agile supply chains

Select all the transportation methods listed below that are considered fast Rail-car Container Ship Airplane Barge Pipeline

Airplane Pipeline

What are the five purposes of inventory?

All firms keep a supply of inventory for the following reasons: 1. To maintain independence of operations 2. To meet variation in product demand. 3. To allow flexibility in production scheduling. 4. To provide a safeguard for variation in raw material delivery time. 5. To take advantage of economic purchase order size.

Which is not true about a Bill of Material (BOM) There is more than one way to create a BOM The BOM has multiple levels Item is coded at the lowest level at which it occurs All of the above are true statements

All of the above are true statements

Which of the following is/are components of total annual costs in a fixed-quantity inventory system?

Annual holding costs Annual ordering costs Annual purchase costs

MRP would provide the highest benefit to assembly processes such as

Appliances, Motors, and Trucks

Which of the following is not a reason to use inventory as a safeguard against raw material delivery time variation?

As a supplement to vendor-managed inventory programs

Which of the following is NOT a good reason to hold inventory?

As needed to improve company cash flow

Which common layout format refers to the progressive build of a product? Assembly line Manufacturing cell Project layout Workcenter

Assembly line

Which common layout format refers to the progressive build of a product? Multiple choice question. Assembly line Workcenter Manufacturing cell Project layout

Assembly line

Which layout moves product from workstation to workstation at a controlled rate? Assembly line Retail layout Continuous process U-shaped layout

Assembly line

Which layout moves product from workstation to workstation at a controlled rate? Multiple choice question. Continuous process Assembly line U-shaped layout Retail layout

Assembly line

Which of the following basic types of process structures is one which equipment or work processes are arranged according to the progressive steps by which the product is made? - Manufacturing cell - Assembly line - Project - Workcenter - Continuous process

Assembly line

Which of the following type of work flow is appropriate when production volume is high? Assembly line Manufacturing cell Workcenter Project layout

Assembly line

Which the following describes the layout for items produced through a fixed sequence of workstations? Manufacturing cell Assembly line Project Workcenter

Assembly line

Which the following describes the layout for items produced through a fixed sequence of workstations? Multiple choice question. Project Workcenter Assembly line Manufacturing cell

Assembly line

What is the first step in the process for green sourcing? Engage sourcing agents Assess the opportunity Assess the supply base Develop the sourcing strategy

Assess the opportunity

If a company has more units in the master production schedule than firm customer orders, the residual is called? Liquid inventory Available to promise Ready to ship Customer overstock

Available to promise

If a company has more units in the master production schedule than the firm customer orders then it is called

Available to promise

Days-of-Supply

Average Inventory/Cost of goods sold x 365

Using the probability approach to determine an inventory safety stock and wanting to be 95 percent sure of covering inventory demand, which of the following is the number of standard deviations necessary to have the 95 percent service probability assured? A. 1.28 B. 1.64 C. 1.96 D. 2.00 E. 2.18

B. 1.64 Companies using this approach generally set the probability of not stocking out at 95 percent. This means we would carry about 1.64 standard deviations of safety stock,

If it takes a supplier 25 days to deliver an order once it has been placed and the standard deviation of daily demand is 20, which of the following is the standard deviation of usage during lead time? A. 50 B. 100 C. 400 D. 1,000 E. 1,600

B. 100 the standard deviation of usage during lead time will be the square root of (25 x (20 x 20)) = square root of 10,000 = 100

If annual demand is 35,000 units, the ordering cost is $50 per order and the holding cost is $0.65 per unit per year, which of the following is the optimal order quantity using the fixed-order quantity model? A. 5,060 B. 2,320 C. 2,133 D. 2,004 E. 1,866

B. 2,320 Q = 2,320.5 = Square root of (2 x 35,000 x 50/0.65)

If it takes a supplier four days to deliver an order once it has been placed and the standard deviation of daily demand is 10, which of the following is the standard deviation of usage during lead time? A. 10 B. 20 C. 40 D. 100 E. 400

B. 20 The standard deviation of usage during lead time is equal to the square root of the sums of the variances of the number of days of lead time. Since variance equals standard deviation squared, the standard deviation of usage during lead time is the square root of 4(10x10) = square root of 400 = 20.

Assuming no safety stock, what is the reorder point (R) given an average daily demand of 78 units and a lead time of 3 days? A. 421 B. 234 C. 78 D. 26 E. 312

B. 234 78 times 3 = 234

If annual demand is 12,000 units, the ordering cost is $6 per order and the holding cost is $2.50 per unit per year, which of the following is the optimal order quantity using the fixed-order quantity model? A. 576 B. 240 C. 120.4 D. 60.56 E. 56.03

B. 240 240 = Square root of (2 x 12,000 x 6/2.5)

A company has recorded the last six days of daily demand on a single product they sell. Those values are 37, 115, 93, 112, 73, and 110. The time from when an order is placed to when it arrives at the company from its vendor is 3 days. Assuming the basic fixed-order quantity inventory model fits this situation and no safety stock is needed, which of the following is the reorder point (R)? A. 540 B. 270 C. 115 D. 90 E. 60

B. 270 Average demand is 37 + 115 + 93 + 112 + 73 + 110/6 = 90. Lead time = 3 days so the reorder point is 90 x 3 = 270.

Assuming no safety stock, what is the re-order point (R) given an average daily demand of 50 units, a lead time of 10 days and 625 units on hand? A. 550 B. 500 C. 715 D. 450 E. 475

B. 500 Fifty (50) times ten (10) equals 500.

If annual demand is 50,000 units, the ordering cost is $25 per order and the holding cost is $5 per unit per year, which of the following is the optimal order quantity using the fixed-order quantity model? A. 909 B. 707 C. 634 D. 500 E. 141

B. 707 Q = 707.1 = Square root of (2 x 50,000 x 25/5)

Using the fixed-time period inventory model, and given an average daily demand of 200 units, 4 days between inventory reviews, 5 days for lead time, 120 units of inventory on hand, a "z" of 1.96, and a standard deviation of demand over the review and lead time of 3 units, which of the following is the order quantity? A. About 1,086 B. About 1,686 C. About 1,806 D. About 2,206 E. About 2,686

B. About 1,686 q = (200 x (5 + 4) + 1.96 x 3) - 120 = 1,800 + 5.88 - 120 = 1,685.88 = about 1,686

If it takes a supplier two days to deliver an order once it has been placed and the daily demand for three days has been 120, 124, and 125, which of the following is the standard deviation of usage during lead time? A. About 2.16 B. About 3.06 C. About 4.66 D. About 5.34 E. About 9.30

B. About 3.06 The standard deviation (Equation 11.6) of daily demand = Square root of (14/3) = 2.1602. This number squared is 4.6667. The square root of (2 (days) times 4.6667) = the square root of 9.3333 or 3.055.

Which of the following is usually included as an inventory holding cost? A. Order placing B. Breakage C. Typing up an order D. Quantity discounts E. Annualized cost of materials

B. Breakage Holding costs include the costs for storage facilities, handling, insurance, pilferage, breakage, obsolescence, depreciation, taxes, and the opportunity cost of capital.

MRP systems seek to achieve which of the following? A. Minimize lot sizes B. Determine the number of dependent demand items needed C. Relieve capacity bottlenecks D. Provide a yardstick for future improvements E. Improve on JIT methods

B. Determine the number of dependent demand items needed

Which of the following is considered a secondary report in an MRP system? A. Planned order schedule B. Exceptions reports C. Inventory record D. Firm orders from known customers E. Engineering change reports

B. Exceptions reports

Which of the following is a perpetual system for inventory management? A. Fixed-time period B. Fixed-order quantity C. P model D. First-in-first-out E. The wheel of inventory

B. Fixed-order quantity The fixed-order quantity model is a perpetual system, which requires that every time a withdrawal from inventory or an addition to inventory is made, records must be updated to reflect whether the reorder point has been reached.

Under the lot-for-lot (L4L) lot sizing technique as used in MRP, we would expect which of the following? A. A consistent lag of supply behind demand B. Minimized carrying costs C. Minimized set-up costs D. A just in time management philosophy E. Minimized quality problems

B. Minimized carrying costs

When developing inventory cost models, which of the following are not included as costs to place an order? A. Phone calls B. Taxes C. Clerical D. Calculating quantity to order E. Postage

B. Taxes

Which of the following is an input to the master production schedule (MPS)? A. Inventory records file B. The aggregate plan C. The bill of materials D. The exception report E. Planned order schedules

B. The aggregate plan

In an MRP program, the program accesses the status segment of an inventory record according to specific periods called which of the following? A. Cubed time units B. Time buckets C. BOM units D. Time modules E. Time lines

B. Time buckets

Which of the following is one of the main purposes of a MRP system? A. Educate personnel in basic work rules B. To determine the amount of materials needed to produce each end item. C. Stimulate the work force D. Decrease labor requirements E. Increase inventory accuracy

B. To determine the amount of materials needed to produce each end item.

Computer inventory systems are often programmed to produce a cycle count notice in which of the following case? A. When the record shows a near maximum balance on hand B. When the record shows positive balance but a backorder was written C. When quality problems have been discovered with the item D. When the item has become obsolete E. When the item has been misplaced in the stockroom

B. When the record shows positive balance but a backorder was written The computer can be programmed to produce a cycle count notice in the following cases: 1. When the record shows a low or zero balance on hand. 2. When the record shows a positive balance but a backorder was written 3. After some specified level of activity. 4. To signal a review based on the importance of the item (as in the ABC system)

Which of the following is one of the categories of manufacturing inventory? A. Economic Order Inventory B. Work-in-process C. Quality units D. JIT Inventory E. Re-order point

B. Work-in-process

A bill-of-material also goes by the acronym ______.

BOM

Which of the following is/are issues a master scheduler must consider?

Be involved with customer order promising. Trade-off manufacturing, engineering and marketing conflicts. Never lose sight of the aggregate plan.

Which of the following is an input to the master production schedule? Bill of materials (BOM) file Inventory records file Exception reports Planned-order schedules None of the above

Bill of materials (BOM) file Inventory records file Exception reports Planned-order schedules correct None of the above

Which of the following products would use a project layout? Bridge Laptop Automobile Mass produced toy

Bridge

Which of the following products would use a project layout? Multiple choice question. Bridge Automobile Mass produced toy Laptop

Bridge

Which of the following terms describes the phenomenon of variability magnification as one moves upstream in the supply chain from customer to producer? Continuous replenishment Normal demand Outsourcing Bullwhip effect

Bullwhip effect

work station cycle time formula

C = total production time/ total units needed per day

Which of the following values for "z" should we use in as safety stock calculation if we want a service probability of 98%? A. 1.64 B. 1.96 C. 2.05 D. 2.30 E. None of the above

C. 2.05 Using the Excel function NORMSINV, the z score for a 98% service probability is 2.05.

You would like to use the fixed-time period inventory model to compute the desired order quantity for a company. You know that vendor lead time is 10 days and the number of days between reviews is 15. Which of the following is the standard deviation of demand over the review and lead time period if the standard deviation of daily demand is 10? A. 25 B. 40 C. 50 D. 73 E. 100

C. 50 the standard deviation of demand over the 25 days of time between reviews and lead time is the square root of (25 x 100) = 50

A company has recorded the last five days of daily demand on their only product. Those values are 120, 125, 124, 128, and 133. The time from when an order is placed to when it arrives at the company from its vendor is 5 days. Assuming the basic fixed-order quantity inventory model fits this situation and no safety stock is needed, which of the following is the reorder point (R)? A. 120 B. 126 C. 630 D. 950 E. 1,200

C. 630 Average demand is 120 + 125 + 124 + 128 + 133/5 = 126. Lead time = 5 days so the reorder point is 126 x 5 = 630.

The Pareto principle is best applied to which of the following inventory systems? A. EOQ B. Fixed-time period C. ABC classification D. Fixed-order quantity E. Single-period ordering system

C. ABC classification

Using the fixed-time period inventory model, and given an average daily demand of 15 units, 3 days between inventory reviews, 1 day for lead time, 30 units of inventory on hand, a service probability of 98 percent, and a standard deviation of daily demand is 3 units, which of the following is the order quantity? A. About 30.4 B. About 36.3 C. About 42.3 D. About 56.8 E. About 59.8

C. About 42.3 q = 15 x (3 + 1) + (2.05 x 6) - 30 = 60 + 12.3 - 30 = 42.3

Which of the following is the set of all cost components that make up the fixed-order quantity total annual cost (TC) function? A. Annual purchasing cost, annual ordering cost, fixed cost B. Annual holding cost, annual ordering cost, unit cost C. Annual holding cost, annual ordering cost, annual purchasing cost D. Annual lead time cost, annual holding cost, annual purchasing cost E. Annual unit cost, annual set up cost, annual purchasing cost

C. Annual holding cost, annual ordering cost, annual purchasing cost Total Annual Cost = Annual Purchase Cost + Annual Ordering Cost + Annual Holding Cost.

Which of the following industry types have high expected benefits from the application of MRP? A. Fabricate-to-order B. Hospitals C. Assemble-to-order D. Aircraft manufacturers E. Oil refineries

C. Assemble-to-order

Which of the following industry types have high expected benefits from the application of MRP? A. Fabricate-to-stock B. Fabricate-to-order C. Assemble-to-stock D. Continuous process E. Service and repair parts

C. Assemble-to-stock

Which of the following is not an assumption of the basic fixed-order quantity inventory model? A. Ordering or setup costs are constant B. Inventory holding cost is based on average inventory C. Diminishing returns to scale of holding inventory D. Lead time is constant E. Demand for the product is uniform throughout the period

C. Diminishing returns to scale of holding inventory These assumptions are unrealistic, but they represent a starting point and allow us to use a simple example: 1. Demand for the product is constant and uniform throughout the period. 2. Lead time (time from ordering to receipt) is constant. 3. Price per unit of product is constant. 4. Inventory holding cost is based on average inventory. 5. Ordering or setup costs are constant. 6. All demands for the product will be satisfied. (No backorders are allowed.)

If a vendor has correctly used marginal analysis to select their stock levels for the day (as in the newsperson problem), and the profit resulting from the last unit being sold (Cu) is $120 and the loss resulting from that unit if it is not sold (Co) is $360, which of the following is the probability of the last unit being sold? A. Greater than 0.90 B. Greater than 0.85 C. Greater than 0.75 D. Greater than 0.25 E. None of the above

C. Greater than 0.75 P < = Cu/(Cu + Co) = 120/480 = 0.25. Since P is the probability that the unit will not be sold and 1 - P is the probability of it being sold, the answer to this question is 1 - 0.25 or 0.75

Which of the following is an input file necessary to run an MRP system? A. Exception report B. Computer-aided-design files C. Inventory records file D. Personnel files E. Planned order schedule

C. Inventory records file

Which of the following is a dynamic lot-sizing technique that calculates the order quantity by comparing the carrying cost and the setup (or ordering) costs for various lot sizes and then selects the lot in which these are most nearly equal? A. Economic Order Quantity B. Lot for lot C. Least total cost D. Least unit cost E. ABC analysis

C. Least total cost

Which of the following can be used for lot sizing in an MRP system? A. Low-level coding B. Time bucket size C. Least unit cost D. Inventory record file E. Peg inventory

C. Least unit cost

Which of the following is an assumption of the basic fixed-order quantity inventory model? A. Lead times are averaged B. Ordering costs are variable C. Price per unit of product is constant D. Back orders are allowed E. Stock-out costs are high

C. Price per unit of product is constant These assumptions are unrealistic, but they represent a starting point and allow us to use a simple example: 1. Demand for the product is constant and uniform throughout the period. 2. Lead time (time from ordering to receipt) is constant. 3. Price per unit of product is constant. 4. Inventory holding cost is based on average inventory. 5. Ordering or setup costs are constant. 6. All demands for the product will be satisfied. (No backorders are allowed.)

We would expect to see which of the following in an MRP system's inventory status file? A. End items produced B. Late/early delivery records C. Scrap parts D. Labor efficiency E. Computer errors

C. Scrap parts

Firms keep supplies of inventory for which of the following reasons? A. To maintain dependence of operations B. To provide a feeling of security for the workforce C. To meet variation in product demand D. To hedge against wage increases E. In case the supplier changes the design

C. To meet variation in product demand

When considering outsourcing, what should firms be sure to avoid? A.)Losing control of non-core activities which don't distinguish the firm B.) Allowing outsourcing to develop into a substitute for innovation C.) Giving the outsourcing partner opportunities to become a strong competitor D.) Allowing employees transferred to the outsourcing partner to rejoin the firm E.) Adverse corporate tax implications of asset transfers to the outsourcing partner

C.) Giving the outsourcing partner opportunities to become a strong competitor

inventory turn

COGS / avg. inventory value

With which of the following goods would a continuous process be used? Computers Houses Chemicals Cars

Chemicals

Which of the following is not a major characteristic to be considered when structuring an outsourcing relationship?

Collaboration

assemble to order

Combine a number of preassembled modules to meet a customer's specifications

Which process layout is best used for manufacturing liquids?

Continuous

Which process layout is best used for manufacturing liquids? Project Continuous Manufacturing Cell Assembly line

Continuous

_____________ is used to avoid expensive shut downs by operating 24 hours a day. Multiple choice question. Assembly line Workcenter Project layout

Continuous process

What type of activities are key to the business but do not confer a competitive advantage? Core Integral Strategic Outsourced

Core

Which of the following resources would a firm not outsource?

Core competencies

Which of the following resources would a firm not outsource? Human resources department IT department Manufacturing facility to produce a component Core competencies

Core competencies

What term describes the annual cost for a company to produce the good or services provided to customers? Weeks of supply Cost of goods sold Cost of production Average aggregate inventory value

Cost of goods sold

Inventory turn

Cost of goods sold/Average inventory

The location for a manufacturing operation is often ____ focused, while the location for services operations is often ___ focused.

Cost, Revenue/Profit/Customer

Which of the following are some ideas for firms to implement green sourcing programs? Multiple select question. Creating recycling partnerships with suppliers Waste reduction programs that employees can help use Increasing the number of air conditioners in an improperly insulated building Reducing the use of electricity throughout facilities

Creating recycling partnerships with suppliers Waste reduction programs that employees can help use Reducing the use of electricity throughout facilities

develop the sourcing strategy

Cultivate quantitative and qualitative criteria to evaluate the sourcing process

Which of the following is not considered when calculating the order quantity in a fixed-time period model?

Current stock at the supplier

Which of the following are sources of demand for products in a material requirements planning system?

Customer orders from sales personnel. Inter-department transactions.

What is the name of a physical inventory-taking technique that focuses only on certain items and counts more often than once or twice a year?

Cycle counting is a physical inventory-taking technique in which inventory is counted frequently rather than once or twice a year

A company wants to determine its reorder point (R). Demand is variable and they want to build a safety stock into R. The company wants to have a service probability coverage of 95 percent. If average daily demand is 8, lead time is 3 days, and the standard deviation of usage during lead time is 2, which of the following is the desired value of R? A. About 17.9 B. About 19.7 C. About 24.0 D. About 27.3 E. About 31.2

D. About 27.3 Desired z score for service probability coverage of 95% = 1.64. Equation 11.5 is (average daily demand times number of days of lead time) plus (standard deviation during lead time) times (desired z score) = (8 x 3) + (2 x 1.64) = 24 + 3.28 = 27.28 = about 27.3 units

A company wants to determine its reorder point (R). Demand is variable and they want to build a safety stock into R. If the average daily demand is 12, the lead time is 5 days, the desired "z" value is 1.96, and the standard deviation of usage during lead time is 3, which of the following is the desired value of R? A. About 6 B. About 16 C. About 61 D. About 66 E. About 79

D. About 66 (average daily demand times number of days of lead time) plus (standard deviation during lead time) times (desired Z score) = (12 x 5) + (3 x 1.96) = 60 + 5.88 = 65.88 = 66 units

One of the main purposes of a MRP system is which of the following? A. Track inventory levels B. Create productive capacity C. Decrease layers of management D. Develop schedules specifying when each component should be ordered or produced. E. Upgrade manufacturing's professionalism

D. Develop schedules specifying when each component should be ordered or produced.

In making any decision that affects inventory size, which of the following costs do not need to be considered? A. Holding costs B. Setup costs C. Ordering costs D. Fixed costs E. Shortage costs

D. Fixed costs In making any decision that affects inventory size, the following costs must be considered. 1. Holding (or carrying) costs. 2. Setup (or production change) costs. 3. Ordering costs. 4. Shortage costs.

Which of the following is not one of the categories of manufacturing inventory? A. Raw materials B. Finished products C. Component parts D. Just-in-time E. Supplies

D. Just-in-time

Which of the following is a dynamic lot-sizing technique that adds ordering and inventory carrying cost for each trial lot size and divides by the number of units in each lot size, picking the lot size with the lowest unit cost? A. Economic order quantity B. Lot-for-lot C. Least total cost D. Least unit cost E. Inventory item averaging

D. Least unit cost

Which of the following is not necessary to compute the order quantity using the fixed-time period model with safety stock? A. Forecast average daily demand B. Safety stock C. Inventory currently on hand D. Ordering cost E. Lead time in days

D. Ordering cost It requires: 1. The number of days between reviews 2. Lead time in days (time between placing an order and receiving it) 3. Forecast average daily demand 4. Number of standard deviations for a specified service probability 5. Standard deviation of demand over the review and lead time 6. Current inventory level (includes items on order)

Which of the following are fixed-time period inventory models? A. The EOQ model B. The least cost method C. The Q model D. Periodic system model E. Just-in-time model

D. Periodic system model

Which of the following is considered a primary report in an MRP system? A. Planning reports B. Performance reports C. Exception reports D. Planned order schedules E. Cycle counting reports

D. Planned order schedules

Using the ABC classification system for inventory, which of the following is a true statement? A. The "C" items are of moderate dollar volume B. You should allocate about 50 % of the dollar volume to "B" items C. The "A" items are of low dollar volume D. The "A" items are of high dollar volume E. Inexpensive and low usage items are classified as "C" no matter how critical

D. The "A" items are of high dollar volume The ABC classification scheme divides inventory items into three groupings: high dollar volume (A), moderate dollar volume (B), and low dollar volume (C).

Which of the following is one of the strategic characteristics to consider when deciding how supplier relationships should be structured on the continuum between vertical integration (do not outsource) to arm's length relationships (outsource)? A.) Cost B.) Location C.) Investment D.) Coordination E.) Control

D.) Coordination

Last year a firm had an average inventory of $1,500,000 and the cost of goods sold was $3,750,000. What was the days-of-supply last year?

Days-of-Supply = Averageinventory/ Costofgoodssold ×365=$1,500,000/$3,750,000×365= 146

Which of the following is not a step required to make a good? Making Decoupling Delivering Sourcing

Decoupling

What is a legitimate reason for inventory?

Decoupling Risk

Which of the following is NOT a step in the process of developing a manufacturing cell? Determine which machines perform the same process. Physically regroup machines into cells. Group parts into families that follow a common sequence of steps. Identify dominant flow patterns for each family.

Determine which machines perform the same process.

Which of the following is NOT a step in the process of developing a manufacturing cell? Multiple choice question. Determine which machines perform the same process. Physically regroup machines into cells. Group parts into families that follow a common sequence of steps. Identify dominant flow patterns for each f

Determine which machines perform the same process.

One of the main purposes of a MRP system is which of the following? Track inventory levels Create productive capacity Decrease layers of management Develop schedules specifying when each component should be ordered or produced. Upgrade manufacturing's professionalism

Develop schedules specifying when each component should be ordered or produced. MRP is a logical, easily understandable approach to the problem of determining the number of parts, components, and materials needed to produce each end item. MRP also provides the schedule specifying when each of these items should be ordered or produced.

_____ inventory includes items in-transit or at a warehouse ready for shipment to the customer.

Distributions

A(n) _____ _____ _____ system is a computer system that integrates application programs from the functional areas of a firm.

E R P

Using the fixed-order quantity model, which of the following is the total ordering cost of inventory given an annual demand of 36,000 units, a cost per order of $80 and a holding cost per unit per year of $4? A. $849 B. $1,200 C. $1,889 D. $2,267 E. $2,400

E. $2,400 1,200 = Square root of (2 x 36,000 x 80/4). Number of orders per year = 36,000/1,200 = 30 x $80 = $2,400

Which of the following is not a production activity report generated by MRP? A. Exception report B. Planning report C. Performance control report D. Planned-order schedules E. Bill of materials report

E. Bill of materials report

Which of the following is an input to the master production schedule? A. Prototype products from product development B. Aggregate component schedule C. Peg reports D. Exception reports E. Forecasts of random demand from customers

E. Forecasts of random demand from customers

Which of the following is a dynamic lot-sizing technique that calculates the order quantity by comparing the carrying cost and the setup (or ordering) costs for various lot sizes and then selects the lot size in which these are most nearly equal? A. Kanban B. Just-in-time system C. MRP D. Least unit cost E. Least total cost

E. Least total cost

In a typical inventory status record which of the following would you not expect to see? A. Scrap allowance B. Order quantity C. Gross requirements D. Planned-order releases E. Lost items

E. Lost items

Which of the following files allows us to retrace a material requirement upward in the product structure through each level, identifying each parent item that created the demand? A. Planning bill of materials file B. Modular bill of materials file C. Super bill of materials file D. Exception report file E. Peg record file

E. Peg record file

When material is ordered from a vendor, which of the following is not a reason for delays in the order arriving on time? A. Normal variation in shipping time B. A shortage of material at the vendor's plant causing backlogs C. An unexpected strike at the vendor's plant D. A lost order E. Redundant ordering systems

E. Redundant ordering systems When material is ordered from a vendor, delays can occur for a variety of reasons: a normal variation in shipping time, a shortage of material at the vendor's plant causing backlogs, an unexpected strike at the vendor's plant or at one of the shipping companies, a lost order, or a shipment of incorrect or defective material.

Which of the following is the symbol used in the textbook for the cost of placing an order in the fixed-order quantity inventory model? A. C B. TC C. H D. Q E. S

E. S S = Setup cost or cost of placing an order

To take into consideration demand uncertainty in reorder point (R) calculations, what do we add to the product of the average daily demand and lead time in days when calculating the value of R? A. The product of average daily demand times a standard deviation of lead time B. A "z" value times the lead time in days C. The standard deviation of vendor lead time times the standard deviation of demand D. The product of lead time in days times the standard deviation of lead time E. The product of the standard deviation of demand variability and a "z" score relating to a specific service probability.

E. The product of the standard deviation of demand variability and a "z" score relating to a specific service probability.

Which of the following is not a reason to carry inventory? A. To provide a safeguard for variation in raw material delivery time B. To take advantage of economic purchase-order size C. To maintain independence of operations D. To meet variation in product demand E. To keep the stock out of the hands of competitors

E. To keep the stock out of the hands of competitors

Which of the following is not a lot sizing technique used in MRP systems? A. Lot-for-lot (L4L) B. Economic order quantity (EOQ) C. Least total cost (LTC) D. Least unit cost (LUC) E. Warehouse loading factor (WLF)

E. Warehouse loading factor (WLF)

Which is the correct equation used to calculate economic order quantity (EOQ)? EOQ= √(2HS/D) EOQ= √(2DS/H) EOQ= √(2DH/S) EOQ= √(DS/H)

EOQ= √(2DS/H)

Grocery stores would traditionally use which type of supply chain?

Efficient supply chain

Grocery stores would traditionally use which type of supply chain? Responsive supply chain Agile supply chain Efficient supply chain Risk-hedging supply chain

Efficient supply chain

The placement of which of the following is not determined by production process organization decisions? - Emergency exits - Machines - Workstations - Departments - `Workgroups

Emergency exits

The master production schedule is used to plan

End Items

Match the green-sourcing step with the correct action associated. Engage internal sourcing agents Assess the supply base Develop the sourcing strategy Implement sourcing strategy Cultivate quantitative and qualitative criteria to evaluate the sourcing process Engaging new and existing vendors Select vendors and products for each business requirement Involving individuals and groups to help set realistic green goals

Engage internal sourcing agents: Involving individuals and groups to help set realistic green goals Assess the supply base: Engaging new and existing vendors Develop the sourcing strategy: Cultivate quantitative and qualitative criteria to evaluate the sourcing process Implement sourcing strategy: Select vendors and products for each business requirement

assess the supply base

Engaging new and existing vendors

In which of the following industry types would MRP provide high benefits? Multiple select question. Engineer-to-order Make-to-order Assemble-to-stock Assemble-to-order

Engineer-to-order Assemble-to-stock Assemble-to-order

An _______ ______ ______ system is a computer system that integrate application programs from the functional areas of a firm

Enterprise resource planning

A continuous process indicates production of discrete parts moving from workstation to workstation at a controlled rate.

F

A make-to-order firm will work with the customer to design the product and then make it from purchased materials, parts, and components.

F

A project layout is characterized by a relatively low number of production units in comparison with process and product layout formats.

F

Break-even analysis can only be used in production equipment decision making when dealing solely with fixed costs, not variable costs.

F

Process selection refers to the strategic decision of choosing the volume of output to produce in a manufacturing facility depending upon the way that facility produces.

F

The closer the customer is to the customer order decoupling point, the longer it takes the customer to receive the product.

F

The essential issue in satisfying customers in the make-to-stock environment is to balance the cost of the finished item against the willingness of the consumer to pay for it.

F

The time needed to respond to a customer's order is called the customer response time.

F

Work-center layouts allocate dissimilar machines into cells to work on products that have dissimilar processing requirements.

F

Firms producing functional products are forced to introduce a steady stream of innovations in order to survive.

FALSE

Two common measures to evaluate supply chain efficiency are the consumer price index and the beta flow system.

FALSE

Which of the following is not considered a major work flow structure? - Work Center - Project - Fabrication - Assembly line - Continuous Flow

Fabrication

A firm's core competency should always be considered a candidate for outsourcing to improve performance.

False

An improvement-driven reason for outsourcing is that it can increase product and service value, customer satisfaction, and shareholder value

False

Capability Sourcing refers to outsourcing the functions that they do best to trusted key partners.

False

In a MTO manufacturing process, the product volumes are usually high and the customization is also high.

False

The Factor Rating Method is a calculation of where to place a distribution center given the distances and volumes between sources and destinations.

False

The fixed-order quantity model has a larger average inventory because it must also protect against stock-out during the review period, T; fixed-time period model has no review period.

False

The total cost of ownership (TCO) is an estimate of the cost of an item that includes all the costs related to the procurement and use of an item, but does not include any of the costs related to disposing of the item after it is no longer useful.

False

True of False: Finished goods purchased by individuals external to the organization are considered dependent demand items.

False

True or false: A firm should consider its core competency as an activity that should be outsourced.

False

True or false: Finished goods purchased by individuals external to the organization are considered dependent demand items.

False

True or false: Sourcing activities remain the same regardless of what is being purchased.

False

True or false: The total work at a workstation is equal to the sum of all tasks to complete a product.

False

Using a modular bill-of-materials will complex the scheduling and control and also makes it difficult to forecast the use of different modules.

False

If demand for an item is normally distributed we plan for demand to be twice the average demand and carry 2 standard deviations worth of safety stock inventory.

False Companies using the probability approach generally set the probability of not stocking out at 95 percent. This means we would carry about 1.64 standard deviations of safety stock.

The fixed-time period inventory system has a smaller average inventory than the fixed-order quantity system because it must also protect against stockouts during the review period when inventory is checked.

False Fixed-time period model has a larger average inventory because it must also protect against stockout during the review period, T; the fixed-order quantity model has no review period.

The standard fixed-time period model assumes that inventory is never counted but determined by EOQ measures.

False Fixed-time period models generate order quantities that vary from period to period, depending on the usage rates. The standard fixed-time period models assume that inventory is counted only at the time specified for review

Safety stock is not necessary in any fixed-time period system.

False Fixed-time period models generate order quantities that vary from period to period, depending on the usage rates. These generally require a higher level of safety stock than a fixed-order quantity system.

In inventory models, high holding costs tend to favor high inventory levels.

False Holding (or carrying) costs. This broad category includes the costs for storage facilities, handling, insurance, pilferage, breakage, obsolescence, depreciation, taxes, and the opportunity cost of capital. Obviously, high holding costs tend to favor low inventory levels and frequent replenishment.

Dependent demand inventory levels are usually managed by calculations using calculus-driven, cost-minimizing models.

False Independent demand, the need for any one item is a direct result of the need for some other item, usually a higher-level item of which it is part.

Price-break models deal with the fact that the selling price of an item generally increases as the order size increases.

False Price-break models deal with the fact that, generally, the selling price of an item varies with the order size.

The costs associated with reduced inventory results in lower profits.

False Savings from reduced inventory results in increased profit.

In a price break model of lot sizing the lowest cost quantity is always feasible.

False Step 1. Sort the prices from lowest to highest and then, beginning with the lowest price, calculate the economic order quantity for each price level until a feasible economic order quantity is found. By feasible, we mean that the price is in the correct corresponding range. Step 2. If the first feasible economic order quantity is for the lowest price, this quantity is best and you are finished. Otherwise, calculate the total cost for the first feasible economic order quantity (you did these from lowest to highest price) and also calculate the total cost at each price break lower than the price associated with the first feasible economic order quantity. This is the lowest order quantity at which you can take advantage of the price break. The optimal Q is the one with the lowest cost.

The "sawtooth effect," named after turn-around artist Al "chainsaw" Dunlap, is the severe reduction of inventory and service levels that occurs when a firm has gone through a hostile takeover.

False The "sawtooth effect" relating Q and R in Exhibit 11.5 shows that when the inventory position drops to point R, a reorder is placed.

The average cost of inventory in the United States is 20 to 25 percent of its value.

False The average cost of inventory in the United States is 30 to 35 percent of its value.

Fixed-order quantity inventory models are "time triggered."

False The basic distinction is that fixed-order quantity models are "event triggered" and fixed-time period models are "time triggered."

Fixed-time period inventory models are "event triggered."

False The basic distinction is that fixed-order quantity models are "event triggered" and fixed-time period models are "time triggered."

The fixed-order quantity inventory model favors less expensive items because average inventory is lower.

False The fixed-order quantity model favors more expensive items because average inventory is lower.

Fixed-order quantity systems assume a random depletion of inventory, with less than an immediate order when a reorder point is reached.

False The fixed-order quantity system focuses on order quantities and reorder points. Procedurally, each time a unit is taken out of stock, the withdrawal is logged and the amount remaining in inventory is immediately compared to the reorder point. If it has dropped to this point, an order for Q items is placed. If it has not, the system remains in an idle state until the next withdrawal.

The optimal stocking decision in inventory management, when using marginal analysis, occurs at the point where the benefits derived from carrying the next unit are more than the costs for that unit.

False The optimal stocking level, using marginal analysis, occurs at the point where the expected benefits derived from carrying the next unit are less than the expected costs for that unit.

One of the drivers of the direct-to-store (direct distribution) approach is the decrease in trucking industry regulation.

False What accounts for the emergence of the direct-to-store model? Global sourcing and the upstream migration of value-added logistics services are certainly primary drivers.

Shortage costs are precise and easy to measure.

False When the stock of an item is depleted, an order for that item must either wait until the stock is replenished or be canceled. There is a trade-off between carrying stock to satisfy demand and the costs resulting from stockout. This balance is sometimes difficult to obtain, because it may not be possible to estimate lost profits, the effects of lost customers, or lateness penalties.

MRP stands for Manufacturing Requirements Planning.

False Material Requirements Planning (MRP)

The MRP program performs its analysis from the bottom up of the product structure trees, imploding requirements level by level.

False The MRP program performs its analysis from the top of the product structure downward, calculating requirements level by level.

One of the basic purposes of inventory analysis in manufacturing and stockkeeping services is to determine the level of quality to specify.

False The basic purpose of inventory analysis in manufacturing and stockkeeping services is to specify (1) when items should be ordered and (2) how large the order should be.

Which of the following is considered distribution inventory?

Finished goods inventory in a distribution center

Which of the following is a form of inventory?

Finished products held in a warehouse Parts waiting to be assembled Raw materials held in a warehouse

What is NOT a lot sizing technique used in MRP systems?

Fixed time costs

Which of the following is not a lot sizing technique used in MRP systems? Fixed time costs Economic order quantity Lot-for-lot Least total costs

Fixed time costs

Which multiperiod inventory system is used for high-priced or critical items?

Fixed-order quantity

XYZ Company uses an inventory model where the amount requisitioned is fixed and ordering is triggered by inventory dropping to a specified level. What type of inventory system is XYZ using?

Fixed-order quantity

Which inventory system requires continuous monitoring of inventory levels?

Fixed-order quantity system

Which of the following is also called a periodic review system?

Fixed-time period

What term is used to describe a practice where a customer makes a large purchase in response to a promotion or price cut?

Forward buying

What term is used to describe a practice where a customer makes a large purchase in response to a promotion or price cut? Forward buying Hedging Buying to forecast Risky buying

Forward buying

Which of the following highlights a dependent demand scenario?

Four tires that are needed to complete the assembly of a car

Time fences are described as

Frozen, Slushy, or Liquid

What type of products have low profit margins, long product life, and predictable demand? Functional Stable Evolving Innovative

Functional

What type of products include staples that people buy in a wide range of retail outlets? Unique Innovative Functional Common

Functional

Which of the following is not an organizationally driven reason to outsource?

Generate access to new markets

Which of the following is not an organizationally driven reason to outsource? Increase product and service value Generate access to new markets Improve effectiveness Increase flexibility

Generate access to new markets

What is part of an MRP record?

Gross Requirements, Net Requirements, & Planned Order Receipts

Which of the following is/are a part of an MRP record? Multiple select question. Scheduled repairs Raw material receipts Gross requirements Net requirements Planned order receipts

Gross requirements Net requirements Planned order receipts

A major drawback with lot-for-lot sizing is? Low investment costs High capital investments High setup costs Low setup costs

High setup costs

Which are characteristics of a continuous process line? Multiple select question. Highly automated machinery is used. Product is moved from one workstation to the next workstation in a sequence of events. Shutdowns can be expensive. May operate 24 hours a day.

Highly automated machinery is used. Shutdowns can be expensive. May operate 24 hours a day.

Which of the following activities should not be outsourced?

Immature technology Complex computer software Specialized research and development Activities that have lots back-and-forth exchange of information

Which of the following is an organizationally-driven reason for outsourcing? A.) Improve effectiveness by focusing on what the firm does best B.) Turn fixed costs into variable costs C.) Reduce costs through lowered cost structure and increased flexibility D.) Improve risk management Improve credibility and image by associating with superior providers E.) Improve effectiveness by focusing on what the firm does best

Improve effectiveness by focusing on what the firm does best

Identify the true statements about assembly-line and continuous process layouts. Multiple select question. In a continuous process, a product moves continuously through the process. In an assembly line, the stations are completely independent of each other. Often, the item being produced in a continuous process is a liquid or chemical that actually flows through the system. In an assembly line, a product goes through a progressive set of steps

In a continuous process, a product moves continuously through the process. Often, the item being produced in a continuous process is a liquid or chemical that actually flows through the system. In an assembly line, a product goes through a progressive set of steps.

Which is true in regards to a request for proposal and a reverse auction?

In a reverse auction, the buyer establishes a request, sellers then place bids for the amount they are willing to accept.

Which is true in regards to a request for proposal and a reverse auction? Both allow the seller to have the majority of control in deciding on the price of goods or services. A reverse auction allows the buyer to inform the seller the price they are willing to pay for services. Both allow the buyer to have the majority of control in deciding on the price of goods or services. In a reverse auction, the buyer establishes a request, sellers then place bids for the amount they are willing to accept.

In a reverse auction, the buyer establishes a request, sellers then place bids for the amount they are willing to accept.

In making any decision that affects the size of inventory, what are the four categories of cost that must be considered?

In making any decision that affects inventory size, the following costs must be considered. 1. Holding (or carrying) costs. 2. Setup (or production change) costs. 3. Ordering costs. 4. Shortage costs.

A bill-of-materials that uses differences in alignment to indicate the order of assembly of components is using which type of structure?

Indented Structure

A bill-of-materials that uses differences in alignment to indicate the order of assembly of components is using which type of structure? Uneven structure Duplicate structure Component structure Indented structure

Indented structure

Mastertech Furniture Company makes chairs. When Walmart orders finished chairs from Mastertech, it creates what type of demand on inventory?

Independent

What is the term for there being no relationship between demands for various items?

Independent demand In independent demand, the demands for various items are unrelated to each other.

What type of products have a life cycle of just a few months? Innovative Cyclical Functional Seasonal

Innovative

During which step of the green sourcing process does the actual procurement process begin?

Institutionalize the sourcing strategy

During which step of the green sourcing process does the actual procurement process begin? Implement sourcing strategy Engage sourcing agent Institutionalize the sourcing strategy Develop the sourcing strategy

Institutionalize the sourcing strategy

Which of the following are inventory holding costs?

Insurance Opportunity cost of capital Storage facility costs

What are the sources of demand for products in a material requirements planning system?

Inter-department transactions, customer orders from sales personnel, and orders for specific components needed in repair

Which of the following are sources of demand for products in a material requirements planning system? Multiple select question. Inter-department transactions. Customer orders that have been canceled. Customer orders from sales personnel. The master production schedule.

Inter-department transactions. Customer orders from sales personnel.

___ turn is the ratio of costs of goods sold to average inventory value.

Inventory

____ is the stock of any item or resource used in an organization.

Inventory

Little's law relates inventory, throughput rate, and flow time as Inventory = Throughput rate x Flow time Inventory x Throughput rate = Flow time Flow time = Inventory + Throughput rate Inventory = Throughput rate + Flow time

Inventory = Throughput rate x Flow time

An EOQ lot sizing technique will try to minimize the sum of which of the following costs given a fairly constant demand

Inventory holding and setup

A material requirements planning system interfaces with the master production schedule, bill-of-materials file and ________ _______ ____

Inventory records file

When changes occur because of stock receipts and disbursements, scrap losses, wrong parts and canceled orders, the real-time file capturing these changes is called the:

Inventory transactions file

Last year a firm had an average inventory of $1,500,000 and the cost of goods sold was $3,750,000. What was the inventory turn last year?

Inventory turn = CostofgoodssoldAverageinventory=$3,750,000/$1,500,000=2.5

Engage internal sourcing agents

Involving individuals and groups to help set realistic green goals

The inventory records file contains an _____ ______ data segment that contains a detailed description of the item, lead time information, safety stock levels and other records

Item master

If an end item is ________ or _________, the master production schedule may include major sub-assemblies and/or complex components

Large or Expensive

Which of the following is influenced by the customer order decoupling point?

Lead time Inventory investment

the part quantities issued in the planned order receipt and planned order release sections of an MRP schedule.

Least total cost

The ______ ____ ____ lot sizing technique is a dynamic approach that adds ordering and inventory carrying costs for each trial lot size, divides the costs by the number of units, and chooses the lot size with the lowest unit cost

Least unit cost

The long-term relationship between inventory, throughput, and flow time is mathematically related using _______________'s law. The long-term relationship between inventory, throughput, and flow time is mathematically related using 's law.

Little

The long-term relationship between inventory, throughput, and flow time is mathematically related using

Little's law

What term refers to the management functions that support the complete cycle of material flow?

Logistics

What term refers to the management functions that support the complete cycle of material flow? Logistics Supply chain Purchasing Transportation

Logistics

Which of the following is not a broad cost category in total cost of ownership? Logistics Ownership Post-ownership Acquisition

Logistics

______________ are the part quantities issued in the planned order receipt and planned order release sections of an MRP schedule. Lot sizes Least total cost Demand numbers Economic order quantity

Lot sizes

Setting planned orders to match the net requirements exactly is what type of lot sizing technique? EOQ Least total costs Least unit costs Lot-for-lot

Lot-for-lot

Which of the following is true about MRP? Multiple select question. MRP is not used for dependent demand items. MRP is used to determine the number of parts, components, and other materials needed to produce a product. MRP is the highest level of planning in most organizations. MRP is an acronym for Material Requirements Planning.

MRP is used to determine the number of parts, components, and other materials needed to produce a product. MRP is an acronym for Material Requirements Planning.

Which of these acronyms are part of Ch 6 Manufacturing Processes (check all that apply) MTO ETO WIP RBI BEP

MTO ETO WIP BEP

Match the advantages of inventory with their definitions.

Maintain independence of operations matches, Allow the work center flexibility to work without undue influence from other work centers Meet variation in product demand matches, Acts as a buffer to absorb unexpected periods of high demand Take advantage of economic purchase order size matches, Order larger quantities to reduce shipping, receiving, and clerical costs Accommodate variability in raw material delivery time matches, Provide a buffer to absorb unexpected shortages or disruptions from vendors

The issue of balancing the level of finished inventory against the level of service to the customer occurs in which type of firm?

Make-to-stock

The issue of balancing the level of finished inventory against the level of service to the customer occurs in which type of firm? Assemble-to-order Make-to-stock Engineer-to-order Make-to-order

Make-to-stock

Which type of firm invests in lean manufacturing programs in order to improve customer service levels for a given inventory investment? Make-to-order Engineer-to-order Make-to-stock Assemble-to-order

Make-to-stock

According to the inventory control system matrix, if a company has highly independent products and high transaction costs, it is likely to deploy what type inventory control process?

Manual two-bin

Which layout format groups machines to work on products that have similar processing requirements?

Manufacturing cell

Which layout format groups machines to work on products that have similar processing requirements? Manufacturing cell Project layout Assembly line Workcenter

Manufacturing cell

Which layout format groups machines to work on products that have similar processing requirements? Project layout Workcenter Assembly line Manufacturing cell

Manufacturing cell

Which statement is true regarding differences between service and manufacturing organizations? Manufacturing organizations must plan and hold inventory. Service organizations produce tangible goods. Service organizations have higher inventory costs.

Manufacturing organizations must plan and hold inventory.

The step in the planning process down from the master production schedule is called

Material Requirements Planning

Which are characteristics of a continuous process line? Multiple select question. May operate 24 hours a day. Product is moved from one workstation to the next workstation in a sequence of events. Highly automated machinery is used. Shutdowns can be expensive.

May operate 24 hours a day. Highly automated machinery is used. Shutdowns can be expensive.

MRP systems seek to achieve which of the following? Minimize lot sizes Determine the number of dependent demand items needed Relieve capacity bottlenecks Provide a yardstick for future improvements Improve on JIT methods

Minimize lot sizes correct Determine the number of dependent demand items needed Relieve capacity bottlenecks Provide a yardstick for future improvements Improve on JIT methods MRP is a logical, easily understandable approach to the problem of determining the number of parts, components, and materials needed to produce each end item. MRP also provides the schedule specifying when each of these items should be ordered or produced. MRP is based on dependent demand. Dependent demand is caused by the demand for a higher-level item.

An item that can be produced and stocked as a subassembly often uses a ______ bit-of-materials for planning

Modular

After finding gross requirements, the next step in the MRP explosion process references inventory on hand and scheduled orders to calculate _____ requirements

Net

A ___ requirement is the amount needed when the projected available balance plus the scheduled receipts in a period are not sufficient to cover the ____ requirements

Net, gross

number of work stations needed formula

Nt = sum of task time (t) / cycle time

Identify the true statements about assembly-line and continuous process layouts. Multiple select question. In an assembly line, the stations are completely independent of each other. Often, the item being produced in a continuous process is a liquid or chemical that actually flows through the system. In an assembly line, a product goes through a progressive set of steps. In a continuous process, a product moves continuously through the process.

Often, the item being produced in a continuous process is a liquid or chemical that actually flows through the system. In an assembly line, a product goes through a progressive set of steps. In a continuous process, a product moves continuously through the process.

When safety stock is needed, what is reduced by the safety stock? Projected available balance Forecast for last period On-hand balance Demand from sales

On-hand balance

The total cost of ownership includes: 1. Procurement costs 2. Disposal costs 3. Engineering design costs Only 1 and 2 Only 2 and 3 Only 1 and 3 1, 2, and 3

Only 1 and 2

Which of the following is considered in green sourcing? 1. Using recyclable materials 2. Waste reduction 3. Increase usage Only 1 and 3 1, 2, and 3 Only 1 and 2 Only 2 and 3

Only 1 and 2

Which costs are not part of the Total Cost of Ownership framework? Taxes Opportunity Costs Energy Costs Finance Costs Disposal Costs

Opportunity Costs

In Fixed-Order Quantity Systems, the amount of inventory that minimizes total costs is called the _________ , ___________ , ____________.

Optimal, order, quantity

Lot sizes are the part quantities issued in the planned order receipt and planned _____ _______ sections of an MRP schedule

Order Release

What term describes moving some of a firm's activities and decisions to outside providers? Production In-sourcing Benchmarking Outsourcing

Outsourcing

Which cost of ownership includes maintenance and ergonomic factors? Post-ownership Ownership These are not part of TCO Acquisition

Ownership

The file created by retracing a material requirement upward in the product structure to identify each parent item that created the demand is called a _____ record

Peg

Which of the following is an innovative product? Personal computer Pens Cereal Diapers

Personal computer

Which of the following files allows us to retrace a material requirement upward in the product structure through each level, identifying each parent item that created the demand? Planning bill of materials file Modular bill of materials file Super bill of materials file Exception report file Peg record file

Planning bill of materials file Modular bill of materials file Super bill of materials file Exception report file correct Peg record file The MRP program allows the creation of a peg record file either separately or as part of the inventory record file. Pegging requirements allows us to retrace a material requirement upward in the product structure through each level, identifying each parent item that created the demand.

Because of favorable pricing in the short-term, a company is looking at ordering a larger-than-needed optimal quantity of an item, and keeping the excess in inventory. Which model is the company likely using to arrive at this decision?

Price break

The bill-of-material file is also known as

Product structure file and Product tree

One purpose of inventory is to provide flexibility in______ ______, this can increase lead times but reduce setup costs.

Production scheduling

Rank the production process layouts from lowest- to highest-volume (top to bottom).

Project Workcenter Manufacturing cell Assembly line

Rank the production process layouts from lowest- to highest-volume (top to bottom). Manufacturing cell Project Workcenter Assembly line

Project Workcenter Manufacturing cell Assembly line

In which production system does the product remain in one place while resources (such as workers or equipment) travel to the product when needed? Workcenter layout Project layout Assembly line Cellular layout

Project layout

In which production system does the product remain in one place while resources (such as workers or equipment) travel to the product when needed? Multiple choice question. Assembly line Project layout Cellular layout

Project layout

_____________ techniques are typically used to manage production processes that follow a project layout structure. Made-to-stock Lean manufacturing Project management Bulk inventory

Project management

Projected balance, the amount of inventory expected at the end of a period, is calculated using which equation? Projected available balance = sum of on-hand inventory + gross requirements - scheduled receipts + planned orders Projected available balance = sum of on-hand inventory + gross requirements - scheduled receipts - planned orders Projected available balance = sum of on-hand inventory + gross requirements + scheduled receipts - planned orders Projected available balance = sum of on-hand inventory - gross requirements + scheduled receipts + planned orders

Projected available balance = sum of on-hand inventory - gross requirements + scheduled receipts + planned orders

Which of the following is not a step in the process to balance an assembly line? Calculate the efficiency of the balance. Randomly assign tasks to workstations. Determine the theoretical number of workstations. Determine the required workstation cycle time.

Randomly assign tasks to workstations.

What is an example of a Set Up Cost?

Reconfig Machines Driving to the farm every time you want some eggs

The Bullwhip Effect can be prevented if companies all along the value stream: Always buy in bulk at reduced prices Replenish stock with smaller volumes more frequently Coordinate and communicate orders and demand forecasts Avoid placing orders

Replenish stock with smaller volumes more frequently. Coordinate and communicate orders and demand forecasts.

Which sourcing process is used for complex items where there are a number of potential vendors? Electronic catalog Request for proposal Spot purchase Strategic alliance

Request for proposal

Which type of supplier relationship should be used when there is a standardized interface between adjacent tasks?

Required coordinated

Which type of supplier relationship should be used when there is a standardized interface between adjacent tasks? Required coordinated Intellectual property Vertical integration Strategic control

Required coordinated

A product with high demand uncertainty and low supply uncertainty would utilize which type of supply chain? Agile Efficient Responsive Risk-hedging

Responsive

The first step in the MRP explosion process is? Retrieve the gross requirements for end items from the master schedule. Place part orders for net requirements. Calculate the lead times for all products that have been schedule on the master schedule. Identify the inventory on hand for all parts.

Retrieve the gross requirements for end items from the master schedule.

In a typical inventory status record which of the following would you not expect to see? Scrap allowance Order quantity Gross requirements Planned-order releases Lost items

Scrap allowance Order quantity Gross requirements Planned-order releases correct Lost items The inventory status file is kept up to date by posting inventory transactions as they occur. These changes occur because of stock receipts and disbursements, scrap losses, wrong parts, canceled orders, and so forth.

Implementing sourcing strategy

Select vendors and products for each business requirement

make to stock

Serve customers "on demand" from finished goods inventory

An EOQ lot sizing technique will try to balance the sum of which of the following costs given a fairly constant demand? Multiple select question. Marketing Transportation Setup Holding costs

Setup Holding costs

Logistics involves which of the following management functions? Multiple select question. Shipping of final goods Purchase of production materials Planning of employee work hours Distribution of finished product Planning of work-in-process

Shipping of final goods Purchase of production materials Distribution of finished product Planning of work-in-process

Logistics involves which of the following management functions?

Shipping of final goods Purchase of production materials Planning of work-in-process Distribution of finished product

Which of the following is not a common constraint regarding vendor managed inventory?

Shipping terms

Which of the following is not a common constraint regarding vendor managed inventory? Required service level Maximum inventory level Billing transaction process Shipping terms

Shipping terms

Shorter cycle time and better risk management are ___________ reasons to outsource

Shorter cycle time and better risk management

If a company is trying to find the optimal amount of inventory to produce for a single event, it is likely to deploy which type of inventory model?

Single-period

Southern Printing Corp. produces high-end booklets for university graduations listing all the participating students at a given university. What inventory model would Southern use to optimize the amount of booklet inventory produced for each graduation?

Single-period

Which type of time fence allows for changes to a specific product so long as parts are available?

Slushy

Which type of time fence allows for changes to a specific product so long as parts are available? Slushy Frozen Scheduled Liquid

Slushy

Which of the following describes the step where parts are procured from one or more suppliers? Sourcing Delivering Decoupling Making

Sourcing

Place the steps associated with the production process into order (from first to last). Sourcing Making Delivering

Sourcing Making Delivering

Which of the following activities should not be outsourced?

Specialized research and development Immature technology Complex computer software Activities that have lots back-and-forth exchange of information

Which of the following is a sourcing term to describe how common an item is and/or how many substitutes may be available?

Specificity

Which of the following is a sourcing term to describe how common an item is and/or how many substitutes may be available? Bullwhip effect Specificity Uniqueness Outsourcing

Specificity

When balancing an assembly line, which of the following is not a way to reduce the longest task time below the required workstation cycle time? - Split the task between two workstations - Use a more skilled worker - Speed up the assembly line transfer mechanism - Upgrade the equipment - Assign a roaming helper to support the line

Speed up the assembly line transfer mechanism

Which type of supply process has a mature manufacturing and technology base? Functional Innovative Evolving Stable

Stable

Which type of activities are a key source of competitive advantage?

Strategic

Which type of activities are a key source of competitive advantage? Outsourced Noncritical Internal Strategic

Strategic

What term describes the development and management of supplier relationships?

Strategic sourcing

What term describes the development and management of supplier relationships? Bullwhip effect Strategic sourcing Spot purchasing Vendor managed inventory

Strategic sourcing

Total average value of inventory

Sum of raw material, work-in-process, and finished goods inventory

A company producing widgets only needs Part A for 40% of the widgets built. This company is likely using what type of bill-of material?

Super

A company producing widgets only needs Part A for 40% of the widgets built. This company is likely using what type of bill-of-material? Partial bill-of-material Modular bill-of-material Deluxe bill-of-material Super bill-of-material

Super bill-of-material

What is NOT a part of the material requirements planning system?

Supplier Delivery Schedule

Which of the following is NOT a part of the material requirements planning system? Master production schedule Supplier delivery schedule Bill-of-materials Inventory records

Supplier delivery schedule

A general-purpose machine is less capable than a special-purpose machine in certain tasks but can perform a broader variety of tasks.

T

A high-level map or diagram of a supply chain process can be useful to understand how material flows and where inventory is held.

T

A project layout is characterized by a high degree of task ordering.

T

An example of an assemble-to-order firm is Dell Computer.

T

Assemble-to-order means moving the customer order decoupling point from finished goods to components.

T

Break-even analysis can be used to help decide whether to perform a task with a special-purpose machine or with a general-purpose machine.

T

Engineer-to-order firms will work with the customer to design the product and then make it from purchased materials, parts, and components.

T

One difference between an assembly line process flow and a continuous process flow is that on the assembly line the flow is discrete rather than continuous.

T

One methodology used to evaluate equipment investment decisions where the investment entails an initial investment, fixed costs, and variable costs is break-even analysis.

T

One trade-off illustrated by the product-process matrix is between flexibility and cost.

T

Process selection refers to the strategic decision of selecting which kind of production processes to use to produce a product or provide a service.

T

The closer the customer is to the customer order decoupling point, the more quickly the customer receives the product.

T

The essential issue in satisfying customers in the make-to-stock environment is to balance the level of finished inventory against the level of service to the customer.

T

The focus in the make-to-stock environment is on providing finished goods where and when the customers want them.

T

The product-process matrix shows the relationship between process structures and product volume and variety characteristics.

T

The term "assembly line" refers to progressive assembly linked by some material handling device.

T

The volume requirements for the product are one determinant of the choice of which process structure to select.

T

Efficiency formula

T (sum of time) / NaC (# workstations x cycle time)

Which of the following is the correct total annual cost equation?

TC = DC + (D/Q)s + (Q/2)H

The total cost of ownership (TCO) can be categorized into three areas: acquisition costs, ownership costs, and post-ownership costs.

TRUE

The file containing the complete product description, parts listing, quantity needed and product build sequence is called? The peg record The bill-of-material The inventory log The MPS

The bill-of-material

The next level in the planning process down from an aggregate plan is called?

The master production schedule

The next level in the planning process down from an aggregate plan is called? Supply coordination Materials requirements planning Demand forecasting The master production schedule

The master production schedule

According to Little's Law, which of the following can be used to estimate work-in-process inventory? - Process velocity/Flow time - Value added time/Process velocity - Process time/Cycle time - Throughput rate times Flow time - Set up time/Throughput rate

Throughput rate times Flow time

______ _______ are a company's attempt to provide a controlled window of opportunity to make changes to the master production schedule

Time fences

are a company's attempt to provide a controlled window of opportunity to make changes to the master production schedule.

Time fences

inventory measures

Total average value of inventory Inventory turns Days of supply

Match each inventory measure with its definition. Total average value of inventory Inventory turn Days-of-supply Cost of goods sold/Average inventory Average Inventory/Cost of goods sold x 365 Sum of raw materials, work-in-progress, and finished goods inventory

Total average value of inventory: Sum of raw material, work-in-process, and finished goods inventory Inventory turn: Cost of goods sold/Average inventory Days-of-supply: Average inventory/Cost of goods sold x 365

Which of the following is/are issues a master scheduler must consider? Multiple select question. Trade-off manufacturing, engineering and marketing conflicts. Be involved with customer order promising. The firms financing plans. Never lose sight of the aggregate plan. Adjust the raw material supply schedule as needed.

Trade-off manufacturing, engineering and marketing conflicts. Be involved with customer order promising. Never lose sight of the aggregate plan.

Which of the following is not a cost associated with inventory management?

Transportation costs

A BOM file is often called a product structure file or product tree because it shows how a product is put together.

True

A fixed-order quantity model is triggered by inventory dropping to a specified level.

True

A process that places all identical parts at the same level in the bills-of-materials simplifies computations. This process is known as low level coding.

True

An inventory system is a set of policies and controls that monitors levels of inventory and determines what levels should be maintained, when stock should be replenished, and how large orders should be.

True

Cycle counting is a physical inventory-taking technique in which inventory is counted on a frequent basis rather than once or twice a year.

True

Fixed-order quantity inventory models are "event triggered."

True

Fixed-order quantity inventory systems determine the reorder point, R and the order quantity, Q values.

True

Fixed-time period inventory models are "time triggered."

True

Fixed-time period inventory models generate order quantities that vary from time period to time period, depending on the usage rate.

True

If the cost to change from producing one product to producing another were zero the lot size would be very small.

True

In a price break model of lot sizing, to find the lowest-cost order quantity, it is sometimes necessary to calculate the economic order quantity for each possible price and to check to see whether the lowest cost quantity is feasible.

True

In a price break model of lot sizing, to find the lowest-cost order quantity, it is sometimes necessary to calculate the economic order quantity for each possible price.

True

In inventory models, high holding costs tend to favor low inventory levels and frequent replenishment.

True

In the fixed-time period model it is necessary to determine the inventory currently on hand to calculate the size of the order to place with a vendor.

True

Inventory is defined as the stock of any item or resource used in an organization.

True

Inventory turn values that are considered good differ by industry and the type of products being handled

True

Logistics is a term that refers to the management functions that support the complete cycle of material flow, from the purchase and internal control of production materials; to the planning and control of work-in-process; to the purchasing, shipping, and distribution of the finished product.

True

MRP require a very accurate BOM to successfully plan material requirements.

True

One of the basic purposes of inventory analysis in manufacturing and stockkeeping services is to determine how large the orders to vendors should be.

True

One of the basic purposes of inventory analysis in manufacturing and stockkeeping services is to specify when items should be ordered.

True

One of the daily, delicate balancing acts that Logistics managers have to perform involves the trade-off between customer satisfaction and cost to serve.

True

One of the daily, delicate balancing acts that Logistics managers have to perform involves the trade-off between inventory costs and the cost of stock-outs.

True

One of the daily, delicate balancing acts that Logistics managers have to perform involves the trade-off between transportation costs and fulfillment speed.

True

One of the drivers of the direct-to-store (direct distribution) approach is the increase in global sourcing.

True

One of the drivers of the direct-to-store (direct distribution) approach is the upstream migration of value-added logistics services.

True

Price-break models deal with discrete or step changes in price as order size changes rather than a per-unit change.

True

Price-break models deal with the fact that the selling price of an item varies with the order size.

True

Safety stock can be computed when using the fixed-order quantity inventory model by multiplying a "z" value representing the number of standard deviations to achieve a service level or probability by the standard deviation of periodic demand.

True

Safety stock can be defined as the amount of inventory carried in addition to the expected demand.

True

Savings from reduced inventory results in increased profit.

True

Some inventory situations involve placing orders to cover only one demand period or to cover short-lived items at frequent intervals.

True

The "sawtooth effect," is named after the jagged shape of the graph of inventory levels over time.

True

The Master Production Schedule (MPS) is a disaggregation of the aggregate plan that looks ahead a set number of weeks and is often fixed or "frozen" in the short term.

True

The computation of a firm's inventory position is found by taking the inventory on hand and adding it to the on-order inventory, and then subtracting back-ordered inventory.

True

The fixed-order quantity inventory model is more appropriate for important items such as critical repair parts because there is closer monitoring and therefore quicker response to a potential stockout.

True

The fixed-order quantity inventory model requires more time to maintain because every addition or withdrawal is logged.

True

The key difference between a fixed-order quantity inventory model, where demand is known and one where demand is uncertain is in computing the reorder point.

True

True or False: A least total cost lot sizing technique is a dynamic approach that continually looks for an optimal lot size where carrying costs and ordering costs are close to equal

True

True or false: A least total cost lot sizing technique is a dynamic approach that continually looks for an optimal lot size where carrying costs and ordering costs are close to equal.

True

True or false: By taking advantage of economic purchase order sizes, one can usually achieve lower per-unit shipping costs.

True

True or false: Innovative products have higher profit margins than functional products.

True

True or false: Manufacturing processes are used to make tangible goods.

True

True or false: The average aggregate inventory value is valued at cost.

True

True or false: The economic order quantity depends upon three factors: the annual demand, the setup cost, and the annual holding cost of one unit of inventory.

True

True or false: The longest required task time often defines the shortest possible workstation cycle time for production.

True

True or false: The order quantity in a fixed-order quantity model is the same, regardless if demand is known or uncertain.

True

True or false: Typically, there is a trade-off where quicker response to customer demand comes at the expense of greater inventory investment.

True

True or false: Weeks of supply is the preferred measure of supply chain efficiency when distribution inventory is dominant.

True

True or false: When a vendor makes routine visits to a firm to take orders, a fixed-time period model may be a good choice.

True

True or false: When analyzing a price-break model, it is possible that the economic order quantity that is calculated is either higher or lower than the range to which the price corresponds.

True

True or false: When safety stock is expected to be on-hand, the average inventory value calculation is (Q/2 + SS)C.

True

Using the probability approach we assume that the demand over a period of time is normally distributed.

True

When stocked items are sold, the optimal inventory decision using marginal analysis is to stock that quantity where the probable profit from the sale or use of the last unit is equal to or greater than the probable losses if the last unit remains unsold.

True

You should visualize inventory as stacks of money sitting on forklifts, on shelves, and in trucks and planes while in transit.

True

Which of the following is not a reason why a firm may choose to outsource an activity?

Turn variable costs into fixed costs

A _______________ line layout can increase operator access and improve workstation time. line layout can increase operator access and improve workstation time.

U-shaped

Which of the following is not a way to reduce the required time for a task? Work overtime Share the task among several workstations Use a less skilled worker Product redesign

Use a less skilled worker

Which of the following is not a type of time fence described in the text? Variable Frozen Slushy Liquid

Variable

When purchasing items that are highly specified and a long contract is desirable, which sourcing process should be used?

Vendor managed inventory

When purchasing items that are highly specified and a long contract is desirable, which sourcing process should be used? Electronic catalog Reverse auction Spot purchase Vendor managed inventory

Vendor managed inventory

Which of the following is one of the dimensions depicted on a product-process matrix? Service Time Cost Volume

Volume

Which two product characteristics help determine the appropriate manufacturing process Volume demanded (high or low) Specifications (detailed or simple) Customization (unique or standard) Value of Finished Goods

Volume demanded (high or low) Customization (unique or standard)

Which of the following is a policy and control of an inventory system?

When stock should be replenished

engineer to order

Work with the customer to design and then make the product

Which of the following is/are manufacturing inventory items?

Work-in-process Finished products Component parts in manufacturing

Which of the following is a basic type of process structure? - Process matrix - Manual assembly - Process flow diagram - Product matrix - Workcenter

Workcenter

Which work flow structure is appropriate for a process with great flexibility to produce a variety of products? Workcenter Continuous process Manufacturing cell Project layout

Workcenter

Are the inventory turnover and weeks of supply measures related to one another? Yes, they can be added together for a true result. Yes, one is a multiple of the other. No, they are not related. Yes, they are mathematically inverses.

Yes, they are mathematically inverses.

manufacturing cell

a dedicated area where products that are similar in processing requirements are produced -formed by allocating dissimilar machines to cells that are designed to work on similar products

lean manufacturing

a means of achieving high levels of customer service with minimal inventory investment

manufacturing process flow design

a method to evaluate the specific processes that material follow as they move through the plant -focus should be on the identification of activities that can be minimized or eliminated

Least unit cost provides _________ as an advantage when taking variable ordering costs and setup costs into account. a shorter computation a simple return on investment a quick reference a more complete analysis

a more complete analysis

Outside of determining parts, components, and materials, MRP provides independent demand for products being produced. a schedule for when each of these should be produced or ordered. a forecast for the next 6 months. the total plan for all capital investments needed.

a schedule for when each of these should be produced or ordered.

breakeven analysis

a standard approach to choosing among alternative processes or equipment-seeks to determine the point in units produced where a company will start making a profit on the process =FC/($/unit-VC/unit)

Which of the following are inventory holding costs? a) storage facility lease b) opportunity cost of capital c) requisition d) I.T. network lease e) insurance

a) storage facility lease and b) opportunity cost of capital and e) insurance

Which of the following highlights a dependent demand scenario? a) the four tires needed to complete a car b) flowers purchased at a garden center c) smart phones purchased at a retailer d) gallons of milk purchased at a grocery store

a) the four tires needed to complete a car

Which of the following is a policy and control of an inventory system? a) when stock should be replenished b) the payment terms associated with buying the stock from vendors c) who should order the stock d) how one will finance the stock

a) when stock should be replenished

Problem 6-17 Some tasks and the order in which they must be performed according to their assembly requirements are shown in the following table. These are to be combined into workstations to create an assembly line. The assembly line operates 13 hours per day. The output requirement is 1,800 units per day. (TASK) (b/4) (TIME) A — 20 G C 13 B A 7 H D 8 C A 14 I E 7 D B 16 J F, G 9 E B 15 K H, I 6 F C 14 L J, K 4 a. What is the workstation cycle time? b. balance the line using the longest task time based on the 1,800-unit forecast, stating which tasks would be done in each workstation. c. What is the efficiency of your line balance? (Round your answer to 1 decimal place.) d. After production was started, Marketing realized that they understated demand and must increase output to 1,900 units. There are two options: reduce cycle time or work overtime. Please identify the following:

a. 26 seconds per unit b. c. 85.3 d. reduce cycle time to 25 (13 x 3600)/1900 = 25 overtime 43 minutes ((1900-1800) x 26 sec) = 2600 sec / 60 sec = 43 minutes

Firms invest in lean manufacturing programs in order to assemble products after a customer has placed an order. ensure that products are highly customized. achieve high customer service with minimum levels of inventory investment. design products after a customer has placed an order.

achieve high customer service with minimum levels of inventory investment.

Workcenters with large amounts of interdepartmental traffic are often placed adjacent to each other. far away from each other. in areas where few machines are located. near exits.

adjacent to each other.

Workcenters with large amounts of interdepartmental traffic are often placed Multiple choice question. adjacent to each other. in areas where few machines are located. far away from each other. near exits.

adjacent to each other.

Which type of supply chain strategy is aimed at being responsive and flexible to customer needs and hedges against pooled inventory and other capacity resources?

agile supply chains

A flexible line layout may improve assembly-line balance by decreasing operator interactions. placing workstations in a straight line layout. increasing task times. allowing work sharing among employees.

allowing work sharing among employees.

assembly drawing

an exploded view of the product showing its component parts

An _______________ _______________ arranges processes according to the sequence of steps by which the product is manufactured. arranges processes according to the sequence of steps by which the product is manufactured.

assembly line

An _____ arranges processes according to the sequence of steps by which the product is manufactured.

assembly line

continuous process

assembly line only the flow is continuous such as with liquids

continuous process

assembly line only the flow is continuous such as with liquids. ex: oil refining

What is the first step in the process for green sourcing?

assess the opportunity

If a company has more units in the master production schedule than firm customer orders, the residual is called?

available to promise

Which of the following is considered distribution inventory? a) work-in-process inventory b) finished goods inventory in a distribution center c) inventory at a vendor's facility awaiting shipment d) raw material inventory awaiting a machining operation

b) finished goods inventory in a distribution center

Which inventory system requires continuous monitoring of inventory levels? a) fixed-time period system b) fixed-order quantity system c) single period system

b) fixed-order quantity system

Which of the following is also called a periodic review system? a) perpetual b) fixed-time period c) fixed-order quantity d) single-period

b) fixed-time period

If a company is trying to find the optimal amount of inventory to produce for a single event, it is likely to deploy which type of inventory model? a) fixed-order quantity b) single-period c) periodic d) LIFO

b) single-period

When calculating the reorder point for a fixed-quantity model with safety stock, the value "z" represents a) the standard deviation of demand during the lead time b) the number of standard deviations associated with a given service probability c) the expected number of stockouts each period d) the average daily demand

b) the number of standard deviations associated with a given service probability

An assembly line is to operate eight hours per day with a desired output of 300 units per day. The following table contains information on this product's task times and precedence relationships: TASK TIME b/4 A 50 — B 40 A C 45 A D 25 A E 60 B, C F 35 C, D G 25 E, F H 50 G b. What is the required workstation cycle time to meet the desired output rate? (Round your answer to the nearest whole number.) c. Balance this line using the longest task time. (Leave no cells blank - be certain to enter "0" wherever required.) d. What is the efficiency of your line balance, assuming it is running at the cycle time determined in part b? (Round your answer to 1 decimal place.)

b. Workstation cycle time 96 correct seconds per unit c. Work Station Task Idle Time I A-C 1 II B-D 31 III E-F 1 IV G-H 21 d. Efficiency 85.9 %

MRP systems tend to work best in companies where products are made in _____ using the same productive equipment.

batches

MRP systems tend to work best in companies where products are made in_____________, using the same productive equipment.

batches

Stock carried to absorb variation in demand is known as ____ stock.

buffer

Which of the following terms describes the phenomenon of variability magnification as one moves upstream in the supply chain from customer to producer

bullwhip effect

which describes the phenomenon of variability magnification as one moves from customer to producer? -continuous replenishment -outsourcing -bullwhip effect -normal demand

bullwhip effect

Which category of inventory is managed most closely by the firm? a) all items are managed the same b) "C" items c) "A" items d) no items

c) "A" items

Because of favorable pricing in the short-term, a company is looking at ordering a larger-than-needed optimal quantity of an item, and keeping the excess in inventory. Which model is the company likely using to arrive at this decision? a) cycle count b) inventory turns c) price break d) time-period

c) price break

When price varies the order size, the first step in the analysis process is to a) determine if the extreme prices are acceptable to management b) choose the highest price level and determine if the EOQ is feasible c) sort the prices from highest to lowest and calculate the EOQ for each price level

c) sort the prices from highest to lowest and calculate the EOQ for each price level

When placing an order for a single period, which of the following is considered? a) the cost of transportation b) the cost of placing an order c) the cost of underestimating demand d) the cost of overestimating demand

c) the cost of underestimating demand and d) the cost of overestimating demand

Customer order decoupling points Multiple select question. can impact inventory investment. determine lead times. are not a necessary supply chain production process. allow manufacturers to see every customer purchase.

can impact inventory investment. determine lead times.

Lumpiness, or the tendency for uneven production, further down the creation sequence is cause by items being withdrawn from inventory in single items. not possible with an ERP system in place. caused by items being withdrawn from inventory in lots.

caused by items being withdrawn from inventory in lots.

Which of the following is not a major characteristic to be considered when structuring an outsourcing relationship?

collaboration

assemble to order

combine a number of preassembled modules to meet a customer's specifications ex: Dell computers, subway sandwich - decoupling point: components -enables flexibility in combining components -define a customers order in terms of alternative components because these are carried in inventory

The term sourcing implies a more ________ process suitable for products that are strategically purchased.

complex

The term sourcing implies a more ________ process suitable for products that are strategically purchased. modest simple complex tactical

complex

Fixed-order quantity models assume there is _________ tracking of inventory.

continual

One program for automatically resupplying customers on a regular basis is _______________ _______________.

continuous replenishment

One program for automatically resupplying customers on a regular basis is __________ _________

continuous replenishment

One program for automatically resupplying customers on a regular basis is ___________

continuous replenishment

what types of activities are key to the business but do not confer a competitive advantage? -core -outsourced -integral -strategic

core activities

Which of the following is an input file necessary to run an MRP system? Bill of materials (BOM) file Quality management report Exception reports Planned-order schedules Purchasing contracts

correct Bill of materials (BOM) file Quality management report Exception reports Planned-order schedules Purchasing contracts

The economic order quantity (EOQ) lot sizing technique produces or acquires exactly the amount of product that is needed each time period with none carried over into future periods.

correct False EOQ assumes that parts are used continuously during the period. The lot sizes generated by EOQ do not always cover the entire number of periods. For example, the EOQ might provide the requirements for 4.6 periods (when another EOQ would be needed).

Low level coding in MRP indicates the exact status of each item managed by the system in "real time."

correct False Low-level coding (is where) each item is placed at the lowest level at which it appears in the structure hierarchy.

In a net change MRP program, a change in one item will result in a completely new inventory plan and schedule for every item in the master production schedule.

correct False Net change systems are "activity" driven and requirements and schedules are updated whenever a transaction is processed that has an impact on the item. Net change enables the system to reflect in "real time" the exact status of each item managed by the system.

"Projected available balance" is a term referring to unsold finished goods inventory.

correct False Projected available balance is the amount of inventory (not just unsold finished goods) that is expected as of the end of a period.

An input to the material requirements planning (MRP) system is an exception report.

correct False This BOM file is one of the three main inputs to the MRP program. (The other two are the master schedule and the inventory records file.)

A product tree can do which of the following? Help to compute component usage Reduce product scrap Reduce labor overtime Reduce regular time labor Locate raw material supplies

correct Help to compute component usage Reduce product scrap Reduce labor overtime Reduce regular time labor Locate raw material supplies The BOM file is often called the product structure file or product tree because it shows how a product is put together. It contains the information to identify each item and the quantity used per unit of the item of which it is a part.

A BOM file is also called which of the following?

correct Product tree Stocking plan Inventory usage record Production parts plan Time bucket schedule The BOM file is often called the product structure file or product tree because it shows how a product is put together.

A master production schedule is an input to a material requirements planning (MRP) system.

correct True Generally, the master schedule deals with end items and is a major input to the MRP process.

A lot-for-lot (L4L) lot sizing technique does not take into account setup costs or capacity limitations.

correct True Lot-for-lot (L4L) is the most common technique. It: • Sets planned orders to exactly match the net requirements. • Produces exactly what is needed each week with none carried over into future periods. • Minimizes carrying cost. • Does not take into account setup costs or capacity limitations.

MRP is a logical, easily understandable approach to the problem of determining the number of parts, components, and materials needed to produce each end item.

correct True MRP is a logical, easily understandable approach to the problem of determining the number of parts, components, and materials needed to produce each end item.

MRP is based on dependent demand

correct True MRP is based on dependent demand. Dependent demand is caused by the demand for a higher-level item. Tires, wheels, and engines are dependent demand items based on the demand for automobiles, for example.

MRP provides the schedule specifying when each part and component of an end item should be ordered or produced.

correct True MRP provides the schedule specifying when each of these items should be ordered or produced.

Time fences are periods of time having some specified level of opportunity for the customer to make changes.

correct True Management defines time fences as periods of time having some specified level of opportunity for the customer to make changes.

Net change MRP systems are "activity" driven.

correct True Net change systems are "activity" driven and requirements and schedules are updated whenever a transaction is processed that has an impact on the item. Net change enables the system to reflect in "real time" the exact status of each item managed by the system.

The master production schedule states the number of items to be produced during specific time periods.

correct True The master production schedule states the number of items to be produced during specific time periods.

The deeper one looks into the product creation sequence, the more the requirements of dependent demand items tend to become more "lumpy."

correct True The requirements of dependent demand items tend to become more and more lumpy as we go farther down into the product creation sequence.

The three main inputs to an MRP system are the bill of materials, the master schedule and the inventory records file.

correct True This BOM file is one of the three main inputs to the MRP program. (The other two are the master schedule and the inventory records file.)

Computing the quantity of each component that goes into a finished product can be done by expanding (or exploding) each item in a product structure file and summing at all levels.

correct True To compute the amount of each item needed at the lower levels, each item would need to be expanded ("exploded") and summed. A more efficient procedure is to store parts data in simple single-level lists. That is, each item and component is listed showing only its parent and the number of units needed per unit of its parent.

What term describes the annual cost for a company to produce the good or services provided to customers?

cost of goods sold

costs of goods sold is also known as

cost of revenue

Cost of goods sold is also referred to as the cost of revenue. cost of inventory. cost of expenses. cost of doing business.

cost of revenue.

which is an approach used in consolidation warehouses, where, rather than making larger shipments, large shipments are broken down into mixed shipments for local delivery in an area? -third party logistics -cross docking -location services -hub and spoke systems

cross docking

The point in the supply chain where inventory is positioned to allow the preceding processes to operate independently is the

customer order decoupling point.

The point in the supply chain where inventory is positioned to allow the preceding processes to operate independently is the manufacturing independence point. forecast level. customer order independence point. customer order decoupling point.

customer order decoupling point.

Lead time can vary based on ______. Multiple select question. the total inventory costs. customization of the product being produced. location of the manufacturing facility. the amount of customer satisfaction.

customization of the product being produced. location of the manufacturing facility.

Campbell's Soup makes product for Kroger and other grocery stores based on sales to the final consumer. This inventory management environment is characterized as _ demand. a) forecasted b) dependent c) marketing d) independent

d) independent

manufacturing cell

dedicated area where a group of similar products are produced

assembly chart

defines how parts fit together, their order of assembly, and overall flow pattern ex: putting IKEA furniture together diagram + step by step instruction

Calculation of the reorder point for a fixed-quantity model with safety stock requires that one know the average daily_____ and the _____ time.

demand, lead

process flowchart

denotes what happens to the product as it progresses through the production facility -helps determine cost of making the product

When the number of needed items are computed based on the number of HIGHER-LEVEL items produced, one is operating in a(n) __________ demand environment.

dependent

When then number of needed items are computed based on the number of higher-level items produced, one is operating in a(n) _ demand environment.

dependent

Fixed-time period is an inventory control method where firms place orders periodically, but the order quantity is ___________ every time.

different

A manufacturing cell is generally made up of ___________ machines. dissimilar similar identical

dissimilar

A manufacturing cell is generally made up of ___________ machines. Multiple choice question. similar identical dissimilar

dissimilar

Inventory turn is calculated by

dividing cost of goods sold by average inventory value.

The required workstation cycle time is determined by dividing the production time per day by the required output per day. dividing required output per day by the production time per day. multiplying the production time per day by the required output per day. observing the process to determine its current cycle time.

dividing the production time per day by the required output per day.

Inventory classifications of A, B and C are based on

dollar value or measure of importance.

Grocery stores would traditionally use which type of supply chain?

efficient supply chain

Level 0 items during the explosion process are typically referred to as _____ items, or gross requirements.

end

The master production schedule is used to plan raw materials. end items. supply parts. rework.

end items.

A firm that works with the customer to design a product but has less control over materials and steps in manufacturing until the product has been designed is known as a(n) _______________-to-order. A firm that works with the customer to design a product but has less control over materials and steps in manufacturing until the product has been designed is known as a(n) -to-order.

engineer

The economic order quantity (Qopt) occurs when the annual ordering and holding costs are .

equal

If Acme groceries wanted a 0.95 probability of not stocking out, the "z" value that would be used in the calculation to find the safety stock is _______.

equal to 1.64, located in the z chart.

When the manufacturing process and underlying technology are still under development and rapidly changing, it is known as a(n) ___________ supply process.

evolving

When the manufacturing process and underlying technology are still under development and rapidly changing, it is known as a(n) ___________ supply process. innovative functional stable evolving

evolving

Demand is characterized as independent if comes from sources _ to the firm and is not related to other _.

external, products

Demand is characterized as INDEPENDENT if it comes from sources _________ to the firm and is NOT related to other ____________.

external, products.

True or false: Sourcing activities remain the same regardless of what is being purchased.

false

creating assortment is one of the economic benefits provided by warehouses t/f

false

Improved return on assets and generation of cash are ___________ reasons to outsource

financial

little law

flow of items through production process inventory = throughput rate x flow rate

What term is used to describe a practice where a customer makes a large purchase in response to a promotion or price cut?

forward buying

what is used to describe a practice where a customer purchases excess parts in advance? -hedging -risky buying -forward buying -buying to forecast

forward buying

Staple products that customers buy in a wide range of retail outlets are known as __________ products.

functional

Staple products that customers buy in a wide range of retail outlets are known as _______________ products.

functional

What type of products have low profit margins, long product life, and predictable demand?

functional

What type of products include staples that people buy in a wide range of retail outlets?

functional

what type of products include staples that people buy in a wide range of retail outlets? -common -unique -functional -innovative

functional

A fixed-time period inventory model carries a _____ level of safety stock than a fixed-order quantity system.

higher

Strategic sourcing is focused on the ________ needs of a business.

immediate

Strategic sourcing is focused on the ________ needs of a business. forecasted future immediate historical

immediate

Shorter cycle time and better risk management are driven reasons to outsource.

improvement

Which of the following is NOT a major economic benefit provided by warehouses?

increased flow time

Green sourcing is not only for developing new technologies, but also for

increasing the use of recyclable materials.

If manufacturing equipment within a facility produces at different rates, one can use inventory to maintain _____ of operations.

independence

Campbell's Soup makes products for Kroger and other grocery stores based on sales to the final consumer. This inventory management environment is characterized as ________ demand.

independent

which is not a cause of the bullwhip effect -rationing and shortage gaming -order batching -information sharing -demand forecasting updating

information sharing

What type of products have a life cycle of just a few months?

innovative

A single period _ model helps in situations where a company is trying to produce the optimal quantity of inventory for a single event minimizing overproduction costs and potential lost revenues.

inventory

Using complex lot-sizing techniques, larger lot sizes can cause an increase in __________, complicating plant logistics. inventory setup costs supplier costs demand

inventory

Weeks of supply is a measure of how many weeks' worth of __________ is in the system at a particular point in time

inventory

Weeks of supply is a measure of how many weeks' worth of __________ is in the system at a particular point in time.

inventory

Customer order decoupling point

inventory is positioned to allow entities in the supply chain to operate independently

The current amount of inventory (on-hand quantity plus on-order minus backordered) is known as the

inventory position.

A material requirements planning system interfaces with the master production schedule, bill-of-materials file and __________

inventory records file.

A material requirements planning system interfaces with the master production schedule, bill-of-materials file and __________. product demand. inventory records file. forecasted sales. customer purchase order.

inventory records file.

When changes occur because of stock receipts and disbursements, scrap losses, wrong parts and canceled orders, the real-time file capturing these changes is called the peg record file. bill-of-material file. inventory transactions file. inventory backlog file.

inventory transactions file.

The ratio of cost of good sold to average inventory value is known as

inventory turnover

The ratio of cost of good sold to average inventory value is known as asset turnover. employee turnover. inventory turnover. receivables turnover.

inventory turnover.

The inventory records file contains information such as Multiple select question. item description. list of authorized suppliers. lead time. planned order releases. safety stock.

item description. lead time. planned order releases. safety stock.

In a fixed-time period inventory model, the average demand over the vulnerable period depends on the review cycle (T) and the constant ___ time (L).

lead

The time between placing an order and receiving the item(s) is called the

lead time

The time required to respond to a customer order is known as response period. lead time. response time. order time.

lead time.

The practice of achieving high levels of customer service with a minimal inventory investment is known as _______________ manufacturing. The practice of achieving high levels of customer service with a minimal inventory investment is known as manufacturing.

lean

The _____ _____ _____ method is a dynamic approach that adds ordering and inventory carrying costs for each trial lot size, divides the costs by the number of units, and chooses the lot size with the lowest unit cost.

least unit cost

One of the limitations with least total coast (LTC) is the influence by the size of the manufacturing site. length of the planning horizon. number of parts ordered. selection of suppliers.

length of the planning horizon.

In a fixed-time period system, inventory monitoring happens _ frequently than in a fixed-order quantity system.

less

In a fixed-time period system, inventory monitoring happens ______ frequently than in a fixed-order quantity system.

less

What term refers to the management functions that support the complete cycle of material flow?

logistics

throughput rate

long term average rate of flow through process

Firms enter into _____________ relationships with vendors, this changes "how many is ordered" to "how many is delivered" with each order.

long-term

are the part quantities issued in the planned order receipt and planned order release sections of an MRP schedule. Economic order quantity

lot sizes

A generic pizza box that can be used by multiple pizza shops is an example of a product with ____________ specificity

low

A generic pizza box that can be used by multiple pizza shops is an example of a product with ____________ specificity.

low

A generic pizza box that can be used by multiple pizza shops is an example of a product with ____________ specificity. generic low high medium

low

spot purchases have _ specificity and _ transaction costs

low and low

A process that places all identical parts at the same level in the bills-of-materials simplifies computations. This process is known as

low level coding

Spot purchases have ________ specificity and ________ transaction costs.

low; low

A supply of materials at a work center allows workers to

maintain independence of operations.

The master production schedule typically deals with end items, but can be broken down to __________ if the item is large or expensive. inexpensive components work-in-process major subassemblies single use

major subassemblies

A map showing the flow of materials through a manufacturing system is known as a _______________-to-_______________ process map. A map showing the flow of materials through a manufacturing system is known as a -to- process map.

make stock

make to order

make a customer's order from raw material

make to order

make the customer's product from raw materials, parts, and components ex: cars or boeing's process for making aircraft

Firms whose product is built directly from raw materials and components in response to a customer are known as engineer-to-order. make-to-stock. assemble-to-order. make-to-order.

make-to-order.

Work in process is considered ________ inventory

manufacturing

Work-in-process is considered a _ inventory.

manufacturing

A _______________ _______________ layout uses dedicated areas for production of similar products. layout uses dedicated areas for production of similar products.

manufacturing cell

When a company groups dissimilar machines to work on products that have similar processing requirements, it's using a(n) ___________ layout

manufacturing cell

inventory

material held by arm for future use

When attempting to balance an assembly-line, the amount of idle time across workstations should be _________________. maximized minimized the projected monthly sales unimportant

minimized

An item that can be produced and stocked as a subassembly often uses a _____ bill-of-materials for planning.

modular

Group C items may only be ordered ___ or ___ due to their low importance and value.

monthly, bimonthly

If inventory turn is known, days-of-supply is calculated by

multiplying the inverse of inventory turn by 365 days.

In an assemble-to-order system, the total number of unique combinations possible is calculated by

multiplying the number of options for each choice together.

In an assemble-to-order system, the total number of unique combinations possible is calculated by multiplying the number of options for each choice together. determining the number of options offered for the most popular item. adding the number of choices together. adding the number of options for each choice together.

multiplying the number of options for each choice together.

After finding gross requirements, the next step in the MRP explosion process references inventory on hand and scheduled orders to calculate _____ requirements.

net

Workcenters are often focused on

one type of operation

Workcenters are often structured _______________ to the movement of material. Workcenters are often structured to the movement of material.

optimize

Workcenters are often structured to___________ the movement of material.

optimize

The ultimate goal of any MRP lot sizing approach is to balance the setup or _____ costs and the _____ costs associated with meeting the net requirements generated by the MRP planning process.

order holding

Push ordering is an example of: -channel alignment -demand forecast updating -order batching -forward buying

order batching

the ultimate goal of any MRP lot sizing approach is to balance the setup or _______________ costs and the ______________costs associated with meeting the net requirements generated by the MRP planning process.

order, holding

As it relates to inventory, a buyer's time expended to prepare the purchase order for more material is considered a(n) ____ cost.

ordering

The managerial and clerical costs to prepare purchase or production orders are called

ordering costs.

In a single period model, Co represents the cost per unit associated with the estimating of demand.

over

The file created by retracing a material requirement upward in the product structure to identify each parent item that created the demand is called a _____ record.

peg

Which of the following would be located on the MPS plan? Multiple select question. vehicle engine purchased for a production line. pens ordered from an office supply company. pen caps ordered by a pen manufacturer from a supplier. a new vehicle purchased from an automotive dealer.

pens ordered from an office supply company. a new vehicle purchased from an automotive dealer.

Which of the following is an innovative product?

personal computer

The _______________ relationship identifies the restrictions imposed by product design and process technologies. relationship identifies the restrictions imposed by product design and process technologies.

precedence

On an assembly-line, the order in which tasks must be performed is called the __________. successor relationship precedence relationship workstation order path

precedence relationship

Safety stock inventory levels are determined by the _______ of stock out at a given desired service level.

probability

Safety stock inventory levels are determined by the ________ of stock out at a given desired service level.

probability

The ______________-_______________ matrix shows when different production process types are used in relation to product volume and standardization. matrix shows when different production process types are used in relation to product volume and standardization.

product process

The __________-_______ matrix shows when different production process types are used in relation to product volume and standardization.

product process

The bill-of-material (BOM) file is also known as a Multiple select question. product structure file. product recipe. assembly instruction. product tree.

product structure file. product tree.

A framework depicting when the different production process types are typically used depending on volume and standardization is known as the

product-process matrix.

A framework depicting when the different production process types are typically used depending on volume and standardization is known as the product-volume matrix. process-cost matrix. process-time matrix. product-process matrix.

product-process matrix.

To determine the required workstation cycle time, an analyst needs to know the _______________ _______________ per day and the required _______________ per day (in units). To determine the required workstation cycle time, an analyst needs to know the per day and the required per day (in units).

production time output

how production processes are organized

project workcenter (job shop) manufacturing cell assembly line continuous process

Some benefits of an ERP system are Multiple select question. quality management can develop inspection points for products during manufacturing. manufacturing knows about orders as soon as they are entered. human resources knows how many employees to schedule. sales can track all the details of an order.

quality management can develop inspection points for products during manufacturing. manufacturing knows about orders as soon as they are entered. sales can track all the details of an order.

A fixed-order _ model uses a reorder point, R, to trigger an order of an optimal amount of product, labeled Q.

quantity

A fixed-order _____ model uses a reorder point, R, to trigger an order of an optimal amount of product, labeled Q.

quantity

project

remain in a fixed location, equipment is moved to the product

In companies using a fixed-order quantity model, a consistent inventory level is used as a trigger to order more product. This inventory level is called the

reorder point.

Inventory turn is the expected number of times that inventory is _ over a year.

replaced

A solicitation for a detailed proposal from a vendor is called a _______________ for _______________.

request proposal

A solicitation for a detailed proposal from a vendor is called a ________for _________

request proposal

A solicitation for a detailed proposal from a vendor is called a ___________ for ___________

request for proposal

Which sourcing process is used for complex items where there are a number of potential vendors?

request for proposal

which sourcing process demands high transaction costs? -electronic catalog -request for proposal -spot purchase -vendor managed inventory

request for proposal

A product with high demand uncertainty and low supply uncertainty would utilize which type of supply chain?

responsive

a product with high demand uncertainty and low supply uncertainty would utilize which type of supply chain? -responsive -agile -risk hedging -efficient

responsive

The calculated theoretical number of workstations should be ____________________. greater than three. rounded up to the next highest integer. calculated using the first task. rounded down to the nearest integer.

rounded up to the next highest integer.

Acme Company carries an additional level of inventory beyond the expected demand during reorder lead times. This additional inventory is known as

safety stock.

A price-break model suggests that the _ price of an item varies with order _.

selling, quantity

make to stock

serve customers from finished goods inventory ex: things sold in retail like televisions, clothing, packaged food -essential issue in satisfying customers is to balance level of inventory against level of customer service -use lean manufacturing to achieve higher service levels for a given inventory investment -decoupling point is FG inventory

The EOQ is the Quantity where the ___ costs equal the ___ costs.

set-up order

Delta Company uses special equipment and personnel to changeover production runs quickly. The costs associated with this changeover approach are considered

setup costs

When a customer cancels an order because of item backlogs, that lost revenue is a(n) _____ cost.

shortage

When a customer cancels an order because of item backlogs, the lost revenue is a(n) _____ cost.

shortage

Workcenter (job shop)

similar equipment or functions are grouped together

workcenter (job shop)

similar equipment or functions are grouped together -most common is to arrange the centers in a way that optimizes the movement of material -sometimes referred to as a department and is focused on a particular type of operation

Which type of time fence allows for changes to a specific product so long as parts are available

slushy

When price varies with the order size, the first step in the analysis process is to

sort the prices from lowest to highest and calculate the EOQ for each price level.

Production process

source, make, deliver

Which of the following is a sourcing term to describe how common an item is and/or how many substitutes may be available?

specificity

which is a sourcing term to describe how monnon an item is / how many substitutes may be available -outsourcing -specificity -bullwhip effect -uniqueness

specificity

operation and route sheet

specifies operations and process routing -helps determine cost of making the product

Which type of supply process has a mature manufacturing and technology base?

stable

which type of supply process is one where the manufacturing and technology base are mature? -functional -stable -evolving -innovative

stable

which is not a benefit provided by cross docking -reduced demand -reduced flow time -increased inventory turnover -stockpiling to accommodate seasonal demand

stockpiling to accomodate seasonal demand -- tranditional warehouses

What term describes the development and management of supplier relationships?

strategic sourcing

A company producing widgets only needs Part A for 40% of the widgets built. This company is likely using what type of bill-of-material?

super

The bullwhip effect can be reduced by __________- efforts among members of the supply chain.

synchronizing

The bullwhip effect can be reduced by _______________ efforts among members of the supply chain.

synchronizing

In services, inventory generally refers to any ____ good and the ____ necessary to administer the service.

tangible, supplies

In services, inventory generally refers to any ____ good and the ______ necessary to administer the service.

tangible, supplies

In a project layout, a high degree of __________ is common. workcenter design assembly line work process cell formation task ordering

task ordering

In a project layout, a high degree of __________ is common. Multiple choice question. process cell formation workcenter design assembly line work task ordering

task ordering

Inventory turn is a key measure for a business and directly relates to

the financial performance of the firm.

days of supply

the inverse of inventory turns scaled to days

If ordering costs and setup costs remain constant then _________ is the easiest method for lot sizing. the lowest total cost method any method the least unit cost method the lot-for-lot method

the lowest total cost method

When calculating the reorder point for a fixed-quantity model with safety stock, the value "z" represents

the number of standard deviations associated with a given service probability.

When placing an order for a single period, the order quantity should be increased as long as

the probability of selling what is ordered is less than or equal to Cu/Cu+Co

project

the product remains in a fixed location -manufacturing equipment is moved to the product -high degree of task ordering -layout may be developed by arranging materials according to their assembly priority

THis is not true about the bullwhip effect

the size of orders increases as the order moves from retailers to wholesalers to manufacturers to suppliers

Total average value of inventory

the sum of the value (at cost) of the raw material, work-in process, and finished goods inventory

lead time

the time needed to respond to a customer order

time between plane takeoffs can be at least 3 minutes. after take off, run time is 45 seconds. planes wait an average of 4 minutes and 15 seconds. on average there are 15 planes taking of per hours. How many planes are on the runway at once?

throughput rate: 15 planes/hour flow time: 4 min 15 sec + 45 sec -> 5 minutes inventory: 15 planes/hour x (5 min/60) = 1.25 planes

_____ _____ are a company's attempt to provide a controlled window of opportunity to make changes to the master production schedule.

time fences

At any point in time, an MRP system can access the status segment of the inventory record according to specific time periods commonly known as

time buckets

At any point in time, an MRP system can access the status segment of the inventory record according to specific time periods commonly known as low-level coding system. product part matrix. bill-of-material. time buckets.

time buckets.

Little's Law provides a convenient way to calculate WIP inventory with this equation: Inventory = Throughput time x Flow time. What is Flow Time? WIP Inventoy average rate that items come out of the process time for a single unit to go end-to-end Cycle time

time for a single unit to go end-to-end

flow time

time for one unit to get through a process

The fixed-time period models are ____ triggered while the fixed-order quantity models are ____ triggered.

time; event

An estimate of all expenses incurred while procuring and using an item is the _______________ cost of ownership.

total

The sum of annual purchasing costs, annual ordering costs, and annual holding costs is known as the

total annual cost.

An estimate of all costs related to the procurement and use of an item is the

total cost of ownership

An estimate of all costs related to the procurerment and use of an item is the

total cost of ownership

An estimate of all costs related to the procurerment and use of an item is the total purchase price. total cost of ownership. final cost. landed cost.

total cost of ownership.

A production process map is built by

tracking the flow of material through the system.

A production process map is built by tracking the flow of material through the system. determining where inventory is purchased. identifying where value is added to materials. identifying where labor is utilized.

tracking the flow of material through the system.

Coke's bottling facility which mixed drink ingredients, adds water, and fills up cans and bottles with the drink should be located closer to markets t/f

true

True or false: Innovative products have higher profit margins than functional products.

true

True or false: The average aggregate inventory value is valued at cost

true

True or false: The economic order quantity depends upon three factors, the annual demand, the setup cost, and the annual holding cost of one unit of inventory.

true

True or false: When analyzing a price-break model, it is possible that the lowest price (highest quantity) will be the best choice even if the EOQ model solution for this price is infeasible.

true

cross docking is used in consolidation warehouses and targets for local delivery in area t/f

true

innovative products have higher stockout costs than functional products? t/f

true

which is not a reason why a firm may choose to outsource an activity? -turn variable costs into fixed costs -improve risk management -shorten cycle time -improve quality

turn variable costs into fixed costs --> turn fixed costs into variable costs

Which of the following is not a reason why a firm may choose to outsource an activity?

turn variable into fixed costs

The re-order point is measured in terms of

units quantity

production process mapping

useful to understand how material flow and inventory is held

In constructing any inventory model, there has to be a functional relationship between the

variable of interest and the measure of effectiveness.

Standardization on the product-process matrix refers to the amount of product being produced. the volume the process is designed to produce. raw materials shared between processes. variations in the product.

variations in the product.

When the supplier takes full responsibility to manage items for the customer, the supplier is performing

vendor managed inventory.

When the supplier takes full responsibility to manage items for the customer, the supplier is performing outsourcing activities. helpful activities. vendor managed inventory. strategic sourcing.

vendor managed inventory.

When purchasing items that are highly specified and a long contract is desirable, which sourcing process should be used

vendor management theory

According to the logistics-system design matrix, which of the following modes of transporting products has the highest capacity and a very low cost? -highway -water -hand delivery -rail

water

customer order decoupling point

where inventory is positioned to allow entities in the supply chain to operate independently

assembly line

work processes are arranged according to the progressive steps by which the product is made

engineer to order

work with the customer to design and make the product ex: buildings built to specification -customer order decoupling point could be in either raw materials at the manufacturing site or the supplier inventory

In a _______________ layout, machines are grouped according to type or function and parts travel to the appropriate location for processing. layout, machines are grouped according to type or function and parts travel to the appropriate location for processing.

workcenter

In a_____ layout, machines are grouped according to type or function and parts travel to the appropriate location for processing.

workcenter

When parts are moved on a conveyor that passes a series of workstations in a uniform time interval, this is called the ___________________. workstation cycle time assembly-line balance assembly-line design workstation task

workstation cycle time

The time between successive units coming off the end of an assembly line is referred to as assembly-line balancing. line balancing. process flow. workstation cycle time.

workstation cycle time.

Are the inventory turnover and weeks of supply measures related to one another?

yes they are mathematically inverses