Practice Exam 2

C

A manufacturer's decision to extend the degree of forward integration should be influenced by its desire to do which of the following? I. Reduce the uncertainty of demand. II. Erect barriers to potential competitors. III. Reduce the number of processes to be controlled. I III I and II I, II, and III

B

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

C

Distribution replenishment requirements enter a manufacturer's planning hierarchy at which of the following levels? Master production schedule Distribution schedule Demand management Production plan

B

Failsafe work methods include which of the following activities? I. Training workers to improve the work II. Designing products for greater simplicity III. Installing poka-yoke I III I and II II and III

C

If a company changes to activity-based costing, which of the following traditional measures will be affected? I. Direct labor costs II. Profit before taxes and depreciation III. Allocation of overhead cost IV. Unit product cost II I and II III and IV I, III, and IV

A

Input/output control seeks to manage lead times by adjusting the input of load into the system on the basis of: actual output. material requirements. planned output. capacity requirements.

B

Orders for a specific assembly have been released over the last two weeks. Stockroom personnel have reported unplanned issues for one component and returns of another component. Which of the following is the most likely cause of this situation? There are errors in the inventory records for the two components. An engineering change for the assembly is not in the bill of material. The master scheduling horizon is not long enough. Material availability checking is not being performed before release of the orders.

D

Why would a company want to generate short-term wins during a change management project? To build trust in the team and between the team and the organization To build on successes and plan new projects To support new values and processes To motivate employees and leaders by showing quick results and "proof of concept"

B

In a lean environment, material is pulled into a final assembly area from feeding operations: when production is completed. as it is needed. when material-handling equipment is available. when the material balance is zero.

B

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

B

Continuous production processes would be most appropriate for which of the following? Mining of semiprecious gem stones Generation of electric power Assembly of low-cost consumer electronics Restoring furniture

D

A company competes in an industry that serves other manufacturers. Their customers play a significant role in defining requirements, and most products have a seven- to ten-year life. What is the most likely advantage a company in this industry would realize from having a fast product and service design process? It can evaluate competitors' products before beginning the design. It can involve customers early in the design process. It can charge higher prices for its products and services. It can delay start of design and still meet demand.

C

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

C

A company owns a large number of retail stores and obtains products from manufacturers worldwide. Only a few new stores are planned to be opened within the next five years in key geographic areas. The company is focusing on internet ordering as an alternative to an aggressive new store growth strategy. All stores and projected internet demand will be adequately served by existing distribution centers for at least the next seven years. Which of the following is the most important consideration in the development of this strategy? Existing store growth rate Capacity of current distribution centers Finished goods inventory turns Geographic location of new stores

A

A company uses centralized planning at the manufacturing site for distribution system replenishment decisions. How is the reorder point typically established for this type of planning? When the projected available balance for a future given period is negative or below the safety stock level By a predetermined standard order point When the minimum level is reached in min/max planning There is no reorder point. Finished goods are allocated evenly through the distribution system as they are completed by manufacturing.

D

A company uses material requirements planning (MRP) and reorder point. Which of the following most relates to the planner's ability to determine the source of gross requirements for a part having both dependent and independent demand? Planners do not normally use or understand time-phased order point. Independent demand has no source and no gross requirements. There is no easy way to separate independent from dependent demand. Independent demand cannot be imploded to identify the parent.

A

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

D

A firm that relies too heavily on external suppliers may experience which of the following problems? I. The suppliers may evolve into competitors. II. The firm's employees may fail to develop critical skills. III. The firm may fail to develop technology important to its survival. I I and II II and III I, II, and III

B

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

C

A master production schedule should be loaded to a level that is: equal to the sales forecast. capable of fully utilizing available capacity. no greater than can be realistically produced. equal to sales orders.

C

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

B

A planner has reviewed a planned order for 100 units and released it for 90 units due to a shortage for one component. The order would appear in the material requirements planning grid as which of the following after the release? Planned order receipt Scheduled receipt Allocation Firm planned order

D

A repair center is implementing a process improvement change to a work cell. This change represents which of the following steps in the Deming circle? Check Do Plan Action

A

A reseller of theater tickets has an inventory of two dozen tickets for a play that is scheduled to start in eight hours. Which of the following would be the most appropriate classification of the inventory of the tickets? Distressed Obsolete Hedge Excess

A

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

B

All of the following activities focus on promoting supply chain efficiencies except: sharing common resources. building in redundancies. building strong trust. building better communication.

C

Forecasting cash flow in a make-to-order business involves converting which of the following to dollars? I. Final assembly schedule II. Planned component purchase orders III. Carrying cost of finished goods I III I and II I, II, and III

D

If a company is familiar with high-volume manufacturing, what is the caution when introducing a new low-volume product line? The low-volume products will require separate forecast planning horizons. The high-volume products will have higher margins than new products with lower volumes. The low-volume products will require separate focused facilities. Different process technologies, labor skills, and planning/control systems will be required with low-volume operations.

B

Improvement programs at a manufacturing company have increased efficiency 10% and utilization 5%. What is the effect on the theoretical capacity? It has increased. It remains constant. It has decreased. It varies with work in process.

C

In an emerging market for a new product, financially strong companies pose which of the following risks to initial frontrunners? Increasing the complexity of products Increasing the velocity of distribution channels Acquiring operations of weaker competitors Reducing the barriers to entry

A

In environments using backflush inventory relief, when are perpetual on-hand inventory counts relieved? When production against the parent item is reported When the parent item is shipped to a customer When planned orders for the parent items are created by material requirements planning When a work order for the parent item is generated

B

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

C

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

B

Lean purchasing must include which of the following features? I. Cost reductions are shared. II. Purchase order paper is minimized. III. Deliveries are made at least daily. III I and II I and III I, II, and III

D

Marketing asks the master scheduler to divide an economic run and move half of it inside the planning time fence in order to meet a special customer demand. Which of the following is the most likely negative impact of such an action? Layoffs will be required. Customer service may suffer. Inventory may increase. Manufacturing will lose efficiency.

B

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

C

Tactical buying typically would be the most appropriate approach for which of the following types of items? Critical subassemblies Expensive raw materials Standard low-cost hardware Precision machined parts

A

The actual cost of an order can be different from the standard cost because of which of the following factors? I. Efficiency II. Tooling III. Scrap IV. Queue I and III II and IV I, II, and III II, III, and IV

B

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

A

The choice of a particular method for change, development, and innovation depends primarily on: a systematic approach to implementing change. evaluation of employee attitudes and opinions. the symptoms of the problem. the nature of the problem that management has diagnosed.

C

The criteria for quality self-inspection include an attitude that quality is number one, training, certification, mutual confidence, and: meeting customer needs. protecting the environment. self-control. fitness for use.

B

The firm planned order (FPO) technique may be used to achieve which of the following results? I. Prevent automatic rescheduling of planned orders by material requirements planning (MRP). II. Reduce plant load fluctuation. III. Trigger MRP to replan higher-level items. IV. Increase plant capacity. I I and II I and IV II and III

B

The result of single exponential smoothing is most like which of the following? Linear programming Moving average Data decomposition Seasonal index technique

A

The sales and operations planning (S&OP) horizon should be at least as long as which of the following? Business planning horizon End item lead time Forecast interval Strategic planning horizon

D

Under the group technology concept, which of the following is true? Like machines should be grouped in clusters. Labor is highly specialized. Manufacturing departments should be laid out according to function. Machines should be grouped to produce parts of similar form.

A

Under the theory of constraints, a missed order in which zone should be expedited immediately? Red zone Green zone Buffer zone Yellow zone

A

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

D

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

D

What is a prerequisite for successful benchmarking? The organization being studied must be willing to collaborate in the study. The organization being studied must be similar and in a related industry. Individuals performing the study must represent most of the organization's functions. Individuals performing the study must thoroughly understand their organization's processes.

A

What is an advantage of using an advanced planning system (APS) in a make-to-order environment with multiple production facilities and warehouses? An APS system can determine what the company is capable of promising. An APS system can calculate the capacity required. An APS system can validate resource availability. An APS system can plan distribution resources.

B

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

B

What is the primary difference between enterprise resources planning (ERP) and manufacturing resource planning (MRP II)? ERP includes manufacturing information only. ERP includes supplier and distribution/delivery information. ERP is computer-based, but MRP II is not. ERP provides balance between production, marketing, and information technology.

A

What is the purpose of a time buffer in the theory of constraints (TOC)? It prevents unplanned idleness in the constrained work center. It processes jobs at a lower rate than demand. It identifies the root cause of the constraint. It opens an opportunity to exploit the system.

A

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

D

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

B

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

C

Which of the following are prerequisites for a material requirements planning (MRP) system? I. Stock location II. Inventory record III. Bill of material IV. Planning factors I and IV II and III II, III, and IV I, II, III, and IV

B

Which of the following are the desired results of removing a kanban card from between two steps of a smooth-flowing process? I. Reduced inventory level II. Insertion of a kanban card to replace the one removed III. Exposure of problems I and II I and III II and III I, II, and III

B

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

D

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

A

Which of the following guidelines should be used when selecting activities for performance measurement? I. The activity has a significant effect on the performance of the overall system. II. The activity has a high potential for improvement. III. The activity falls within the responsibility of the organization. IV. The activity is measurable (objective and quantifiable). I and IV I, II, and IV II, III, and IV I, II, III, and IV

D

Which of the following inventory evaluation methods best measures falling costs? First in, first out Last in, first out Average cost Standard cost

B

Which of the following is the easiest way to become familiar with the characteristics of the data to be used in a forecast? Running a simulation Plotting the data on a graph Correlating the data with some other data Knowing the products being forecast

B

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

D

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

C

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

D

Which of the following is true of inventory in an engineer-to-order (ETO) environment? Large safety stocks must be maintained. Lot-size inventory increases to the finished goods level. Customer influence on the product design should not affect inventory levels. Buffer inventory should be held closer to the raw material stage.

A

Which of the following methods would be most appropriate to use for developing forecasts as input to the strategic planning process? Economic growth models Historical analogy Moving average Exponential smoothing

C

Which of the following represents a trend in supplier relationships? Fewer partnerships with customers Decrease in the outsourced production of goods and services Reduction in the number of suppliers Increase in the number of transportation providers