OPMA 9 Material Requirement Planning
A modular bill of materials is the term for an item that can be produced and stocked as a subassembly.
TRUE A modular bill of materials is the term for a buildable item that can be produced and stocked as a subassembly.
A Bill of Materials file is often called a product structure file or product tree because it shows how a product is put together.
TRUE The bill of materials file is often called the product structure file or product tree because it shows how a product is put together.
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
Master production schedule (MPS)
A time-phased plan specifying how many and when the firm plan to build each end item.
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
C
If annual demand is 12,000 units, annual holding cost is $15 per unit, and setup cost per order is $25, which of the following is the EOQ lot size? A. 2,000 B. 1,200 C. 1,000 D. 300 E. 200
E
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
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
Which of the following is an input to the master production schedule? A. Bill of materials (BOM) file B. Inventory records file C. Exception reports D. Planned-order schedules E. None of the above
E
The time-phased plan specifying how many and when the firm plans to build each end item is called the Materials Requirements Plan (MRP.)
FALSE The master production schedule (MPS) is the time-phased plan specifying how many and when the firm plans to build each end item.
An output of MRP is a bill of materials (BOM) file.
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 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
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
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? A. 1,200 B. 1,300 C. 1,150 D. 2,450 E. None of the above
A
Net change systemDr
A MRP system thatsvhhi calculates the impact of a change in the MRP data -the inventory status, Bill of materials or master schedule -immediately.
Bill of materials (BOM)
A computer file that contains the complete product description, listing the materials, parts, and components, and also the sequence in which the product is created.
MRP is based on dependent demand.
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 is most valuable where a number of products are made in batches using the same productive equipment.
TRUE MRP is most valuable in industries where a number of products are made in batches using the same productive equipment.
MRP provides the schedule specifying when each part and component of an end item should be ordered or produced.
TRUE MRP provides the schedule specifying when each of these items should be ordered or produced.
Projected available balance is the amount of inventory that is expected as of the beginning of a period.
TRUE Projected available balance is the amount of inventory that is expected as of the end of a period (or the beginning of the next period).
The least total cost method (LTC) lot-sizing technique 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.
TRUE The least total cost method (LTC) 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.
If annual demand is 6,125 units, annual holding cost is $5 per unit, and setup cost per order is $50, which of the following is the EOQ lot size? A. 350 B. 247 C. 23 D. 185 E. 78
A
Available to promise
A feature of MRP systems that identifies the difference between the number of units currently included in the master schedule and the actual firm customer orders
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 customer
E
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
E
A modular bill of materials includes items with fractional options.
FALSE A super bill of materials includes items with fractional options.
Generally, determining lot sizes in MRP systems is simple.
FALSE Determination of lot sizes in an MRP system is a complicated and difficult problem.
The deeper one looks into the product creation sequence, the more the requirements of dependent demand items tend to smooth out and become even over time.
FALSE The requirements of dependent demand items tend to become more and more lumpy as we go farther down into the product creation sequence.
The least unit cost method of lot-sizing technique 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.
TRUE The least unit cost method 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.
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
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
C
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
A master production schedule is an input to a material requirements planning (MRP) system.
TRUE Generally, the master schedule deals with end items and is a major input to the MRP process.
Lot-for-lot (L4L) is the most common lot sizing technique.
TRUE Lot-for-lot (L4L) is the most common technique.
A lot-for-lot (L4L) lot sizing technique does not take into account setup costs or capacity limitations.
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.
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.
Time fences are periods of time having some specified level of opportunity for the customer to make changes.
TRUE Management defines time fences as periods of time having some specified level of opportunity for the customer to make changes.
MRP stands for Material Requirements Planning.
TRUE Material Requirements Planning (MRP)
In a net change MRP system requirements and schedules are updated whenever a transaction is processed that has an impact on the item.
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.
Net change MRP reflects the exact status of each item managed by the system in "real time."
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.
Net change MRP systems are "activity" driven.
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 economic order quantity (EOQ) lot sizing technique uses the "square root formula" to balance set-up cost and carrying cost.
TRUE The EOQ model balances setup and holding costs
Manufacturing firms maintain bill of materials (BOM) files, which are simply a sequencing of everything that goes into a final product.
TRUE The bill of materials (BOM) file contains the complete product description, listing not only the materials, parts, and components but also the sequence in which the product is created.
The time-phased plan specifying how many and when the firm plans to build each end item is called the master production schedule (MPS).
TRUE The master production schedule (MPS) is the time-phased plan specifying how many and when the firm plans to build each end item.
The master production schedule states the number of items to be produced during specific time periods.
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."
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.
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.)
An input to the material requirements planning (MRP) system is an inventory records file.
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.
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.
Material requirements planning (MRP)
The logic for determining the number of parts, components, and materials needed to produce a product.
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
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
Enterprise resource planning (ERP)
A computer system that integrates application programs in accounting, sales, manufacturing, and the other functions in a firm.
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
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
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
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
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
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
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
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
Which of the following is the net requirement using an MRP program if the gross requirement is 1,000 and the inventory on hand is 500? A. 1,000 B. 950 C. 500 D. 400 E. 350
C
Which of the following is the planned-order release using an MRP program if the gross requirement is 5,000, inventory on hand is 1,200 and planned receipts are 800? A. 7,000 B. 4,200 C. 3,000 D. 2,000 E. 1,200
C
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
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
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? A. 670 B. 600 C. 530 D. 70 E. None of the above
D
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
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
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.
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).
The lot-for-lot (L4L) lot sizing technique minimizes carrying cost by taking into account setup costs and capacity limitations.
FALSE 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
Low level coding in MRP indicates the exact status of each item managed by the system in "real time."
FALSE Low-level coding (is where) each item is placed at the lowest level at which it appears in the structure hierarchy.
MRP is least valuable in industries where a number of products are made in batches using the same productive equipment.
FALSE MRP is most valuable in industries where a number of products are made in batches using the same productive equipment.
The customer grace period is a time-span having some specified level of opportunity for the customer to make changes.
FALSE Management defines time fences as periods of time having some specified level of opportunity for the customer to make changes.
MRP stands for Manufacturing Requirements Planning.
FALSE Material Requirements Planning (MRP)
When implemented correctly, MRP links all areas of the business.
FALSE Material requirements planning is the key piece of logic that ties the production functions together from a material planning and control view. Page 293: (MRP is an) integral part of enterprise resource planning that ties together all the major functions of a firm.
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.
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.
FALSE Projected available balance is the amount of inventory not just unsold finished goods that is expected as of the end of a period.
The economic order quantity (EOQ) lot sizing technique uses the "square root formula" to balance set-up cost, carrying cost and cost of stock-outs.
FALSE The EOQ model balances setup and holding costs.
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.
The least unit cost method (LUC) lot-sizing technique 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.
FALSE The least unit cost method 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.
The least unit cost method of lot-sizing adds ordering, stock-out 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.
FALSE The least unit cost method 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.
An input to the material requirements planning (MRP) system is an exception report.
FALSE This bill of materials file is one of the three main inputs to the MRP program. The other two are the master schedule and the inventory records file.
