SCM 4362 Exam 3
In MRP, the only source of uncertainty is supply
False
The Critical Ratio rule uses the information about the processing time of the job in the current work center only
False
The EOQ is based on the assumption of lumpy demand
False
The EOQ is the smallest lot size that a supplier will allow a customer to order
False
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
The economic order quantity (EOQ) lot-sizing technique uses the "square root formula" to balance setup cost, carrying cost, and cost of stock-outs
False
Carrying cost is a function of order size; the larger the order quantity, the higher the inventory carrying cost
True
The manufacturing lot-size problem is basically one of converting requirements into a series of replenishment orders in the planning horizon.
True
The overall objective of inventory management is to achieve satisfactory levels of customer service while keeping inventory costs reasonable
True
The routing specifies each operation to be performed to make the part and which work center will perform the operation.
True
In Theory of Constraints, "exploit the bottleneck(s)," suggests a. creation of a schedule that maximizes the throughput of the bottlenecks. b. repeating the analysis process to look for other bottlenecks. c. considering increasing capacity of the bottleneck. d. scheduling non-bottleneck resources to support the bottleneck.
a. creation of a schedule that maximizes the throughput of the bottlenecks.
Which one of the following would not be a factor in determining the reorder point? a. the EOQ b. the lead time c. the variability of demand d. the demand rate
a. the EOQ
Which sequencing rule ignores all due date information as well as all information about work remaining? a. SPT b. CR c. ST d. ST/O e. All the given rules ignore information on due date & work remaining
a. SPT
Buffers (inventory or time) serve which purpose according to the Theory of Constraints? a. Identify the system bottleneck(s). b. Exploit the bottleneck(s). c. Reduce the capacity at the bottleneck(s). d. Elevate the bottleneck(s).
b. Exploit the bottleneck(s).
In Theory of Constraints, which of the following is represented by "drum"? a. pull scheduling at the non-bottleneck work centers b. Non-bottleneck resources c. Bottleneck resource d. Inventory and/or time buffers
c. Bottleneck resource
The Theory of Constraints (TOC) approach is also referred to as a. Drum - Buffer - Constraint b. Drum - Rope - Constraint c. Drum - Buffer - Rope d. Drum - Buffer - Bottleneck e. Bottleneck -Drum - Constraint
c. Drum - Buffer - Rope
According to Theory of Constraints, buffers should a. be eliminated b. be placed in the initial operation in the routing file c. be actively managed d. all of the options are correct answers
c. be actively managed
Which one of the following is implied by a lead time service level of 95 percent? a. Approximately 95 percent of demand during lead time will be satisfied. b. Approximately 95 percent of inventory will be used during lead time. c. The probability is 0.95 that demand during lead time will exactly equal the amount on hand at the beginning of lead time. d. The probability is 0.95 that demand during lead time will not exceed the amount on hand at the beginning of lead time.
d. The probability is 0.95 that demand during lead time will not exceed the amount on hand at the beginning of lead time.
Which of the following statements is correct? a. Net requirements created by MRP explosion over a multi-period horizon do not reflect the key independent demand assumption of a constant uniform demand. b. Net requirements created by MRP explosion over a multi-period horizon are discrete, because they are stated on a period-by-period basis (time-phased), rather than as a rate. c. Net requirements created by MRP explosion over a multi-period horizon can be lumpy; that is, they can vary substantially from period to period and even have periods with no requirements. d. All of the statements are correct.
d. All of the statements are correct.
Which one of the following lot-sizing rules guarantees an optimal solution when demand is constant? a. KBB b. LFL c. FOQ d. KBB & EOQ
d. KBB & EOQ
Which one of the following statements about lot sizing rules is correct? a. The Lot for Lot (L4L) procedure seeks to create inventory balances. b. The EOQ provides the optimum lot size when the demand is lumpy. c. The Lot for Lot (L4L) procedure is a special case of the fixed order quantity (FOQ) rule. d. None of the statements is correct
d. None of the statements is correct
Safety stock and safety lead-time are mechanisms to cope with a. demand uncertainty. b. lead time uncertainty. c. supply uncertainty. d. all the options are valid.
d. all the options are valid.
The lot-for-lot (L4L) procedure a. uses all the information provided by the requirements schedule. b. uses the POQ formula to compute an economic time between orders (TBO). c. is based on the assumption of constant uniform demand. d. creates order quantities that are exactly equal to net requirements
d. creates order quantities that are exactly equal to net requirements
One way of dealing with the shop-floor complexity is by a. lot-sizing b. determination of planned order quantities c. disaggregation d. priority sequencing rules e. none of the options is correct
d. priority sequencing rules
Which of the following statement(s) is (are) correct? a. In a one machine system, the order in which jobs are processed has no effect on total time to do all the jobs. b. In a one machine system, the SPT rule for sequencing the order of jobs will result in minimizing average job completion (flow) time. c. In a one machine system, the EDD rule for sequencing the order of jobs will result in minimizing average lateness d. In a two machine system, Johnson's rule for sequencing the order of jobs will result in minimizing the total time to do all the jobs on both the machines e. All options are true
e. All options are true
Which of the following statement is(are) true in ROP analysis? a. This analysis determines the safety stock quantity b. ROP increases if Safety Stock increases c. ROP increases if the Standard Deviation of Demand increases d. Safety Stock increases if Lead Time increases e. All statements are true
e. All statements are true
Which one of the following is not generally a determinant of the reorder point? a. rate of demand b. length of lead time c. lead time variability d. stockout risk e. item purchase cost
item purchase cost
In an A-B-C system, the typical percentage of the number of items in inventory that is classified as A items is about which one of the following?
20
PAC is located in which part (phase) of the MPC framework?
Back end
Which of the following are functions of inventory? A. Protecting against demand and supply uncertainty B. Avoiding production disruptions through the use of work in process inventory C. Meeting anticipated customer demand D. All of the options are functions of inventory
D. All of the options are functions of inventory
The need for safety stocks can be reduced by an operations strategy which A. increases lead time. B. increases lead time variability. C. increases lot sizes. D. decreases ordering costs. E. all of the options are incorrect
E. all of the options are incorrect
For a certain item, it was observed that the holding cost per annum per unit was equal to the setup cost per order. What can we say about the EOQ in this case?
EOQ =Sqrt (2A) , where A is the annual demand.
A CR (Critical ratio) > 1 of a job implies that the job is already late
False
An implicit enumeration technique, like a branch and bound, is a heuristic method as it does not evaluate all the possible enumerations of the combinatorial problem
False
At any time, if a set of n jobs is to be scheduled on m machines, there are (n*m) ways to schedule the jobs.
False
Dependent-demand items are those items for which demand is influenced by market conditions and is not related to inventory decision for any other item held in stock.
False
Dispatching involves the use of logic that guides the prioritizing of jobs at the work station. These rules are referred to as lot-sizing rules
False
In a TOC system, inventory buffers before bottleneck resources are eliminated
False
In a single machine job shop, the make-span depends on the rule used for scheduling
False
Inventory items that are found at many points in a supply chain, including finished goods in factories, field warehouses, and distribution centers; spare-parts inventories; office and factory supplies; and maintenance materials are referred to as dependent demand inventories.
False
Johnson's rule when applied in a two-machine case will provide minimum average lateness.
False
KBB will provide the minimum total cost only if the net requirements in MRP are lumpy
False
Lead times are typically made up of operation or machine run time per piece × lot size
False
POQ with T > 1 will minimize inventories.
False
Production activity control (PAC) focuses on material requirement plans
False
Short term capacity planning should be driven by identification and management of non-bottlenecks
False
TOC stands for Theory of Operating Controls
False
The A-B-C approach involves classifying inventory items based on their name.
False
The objective of inventory management is to minimize the cost of holding inventory
False
The reason KBB gives the guaranteed optimal solution is because it explicitly evaluates all possible combinations and selects the best
False
The use of the lot-for-lot procedure tends to increase the lumpiness of the gross requirements of items further down in the BOM
False
There is no cure for reducing MRP nervousness
False
When using ABC analysis, class C items should be reviewed frequently.
False
Which of the following three strategies can be useful in reducing MRP system nervousness? I- Using Time fences II- Using Firm Planned Orders III- Careful use of Lot-Sizing procedures
I, II, and III
Priority sequencing rules determine which of the following? I- Allocation of goods to customers II- Which machine to service next? III- Which job to work on at the work center?
III Only
Which of the below lot-sizing procedures provide an optimal solution in MRP lot-sizing?
KBB
Which of the below activities in MPC provide direct input to PAC?
Material Requirements Planning
Summing the setup times and run times for all remaining operations, and subtracting this from the time remaining until the due date is referred to as
Order Slack (ST) rule
The lowest planning and control level in MPC is
PAC
What type of stock provides protection against irregularities or uncertainties in an item's demand?
Safety Stock
Examining realistic, multiple-machine, dynamic scheduling situations is possible by using
Simulation
A bottleneck is an operation that has the lowest capacity of any operation in the process.
True
A bottleneck resource should never be starved
True
A critical information service provided by MRP is apprising the SFC systems of all changes in material plans
True
A negative SPO (Slack per remaining operations) of a job implies that the job is already late
True
A small change caused by a relatively minor shift in the MPS may amplify the explosion process and use of the discrete lot-sizing procedures.
True
Annual ordering cost is inversely related to order size.
True
In TOC, bottleneck work centers are scheduled using finite loading techniques
True
Interest, insurance, and opportunity costs are all associated with holding costs
True
Johnson's sequencing rule for two machines will minimize the make-span
True
KBB sometimes may yield the same total cost (cost of ordering + cost of carrying) as when some other Lot sizing method is used
True
MRP lot-sizing procedures are designed specifically for the discrete demand case
True
Order point methods are used to determine appropriate order quantities and timing for individual independent-demand product items that are characterized by random customer demand.
True
POQ and LFL will be the same if TBO = 1 period.
True
Sequencing rules simply prioritize jobs at work centers without reference to the capacity
True
The SFC system of PAC is updated on changes in the MRP system
True
The SPT rule represents the best way to pick the next job to run, if the objective is to minimize average time per job, to minimize average number of jobs in the system, or to minimize average job lateness
True
The Theory of Constraints scheduling loads work centers to full capacity by using finite scheduling
True
The average inventory level and the number of orders per year are inversely related: As one increases, the other decreases
True
The average time in the system is directly related to work-in-process inventory and average number of jobs in the system
True
The primary PAC objective is managing the materials flow to meet MPC plans
True
The primary connection between PAC and the rest of the MPC systems comes from material requirements plans.
True
The primary reason for keeping inventories low is that inventory represents a temporary monetary investment in goods on which a firm must pay interest
True
The process with the least capacity is called a bottleneck
True
The quantities and timings for planned order releases are determined via MRP logic using the inventory records, the gross requirements data, and a quantity-determination (lot-sizing) procedure
True
The rate of demand is an important factor in determining the ROP
True
Variability in demand and/or lead time can be compensated for by safety stock
True
When ordering costs are relatively small compared to inventory carrying costs, LFL will yield favorable results
True
An inventory system answers two important questions: when to order and how much to order. Which of the following statements correctly explains how a Q,R system (continuous review system) answers these questions?
Under a Q,R rule, a fixed quantity Q is ordered when the inventory position reaches the order point R
When finite scheduling through bottleneck resources is complete, the result is
a doable MPS
When several jobs arrive at a work center, there is a need for
a system of scheduling and prioritizing
Consider consecutive processes A-B-C, where process A has a capacity of 20 units per hour, process B has a capacity of 25 units per hour, and process C has a capacity of 30 units per hour. Where would an operations manager, with some understanding of TOC, want any buffer inventory? a. in front of process A. b. in front of process B. c. in front of process C. d. inventory should not exist anywhere.
a. in front of process A.
In Theory of Constraints, which of the following is represented by "rope"? a. pull scheduling at the non-bottleneck work centers b. Non-bottleneck resources c. Bottleneck resource d. Inventory and/or time buffers
a. pull scheduling at the non-bottleneck work centers
The prime objective of PAC is: a. Executing MPC plans b. Efficient use of capacity c. Efficient use of labor d. Efficient use of material
a. Executing MPC plans
Which one of the following lot-sizing rules guarantees an optimal solution in a general MRP environment? a. KBB b. LFL c. FOQ d. EOQ e. KBB & EOQ
a. KBB
Which of the following statements is correct about complete enumeration? a. all possible alternatives are evaluated and compared to pick the best solution. b. only promising alternatives are judiciously selected & evaluated. c. complete enumeration is a heuristic method d. none of the options is correct
a. all possible alternatives are evaluated and compared to pick the best solution.
Theory of Constraints scheduling combines data in which of the following pairs? a. inventory status file and the bill of materials b. the bill of materials (BOM) file with data in the routing file c. planning bill of materials and planned orders d. none of the options is a correct answer
b. the bill of materials (BOM) file with data in the routing file
Which of the following statement is false? a. SPT rule will minimize average job completion (flow) time in the one machine case. b. Johnson's rule will minimize average job completion (flow) time in two machine case c. EDD rule will work well for criteria associated with job lateness d. All rules will give the same make-span in one machine case. e. All of the statements are true
b. Johnson's rule will minimize average job completion (flow) time in two machine case
The general objective of all MRP lot-sizing procedures is to
balance inventory-related costs to achieve a low total cost requirement schedule
Which of the following statement(s) is (are) TRUE? a. In a one machine system, the order in which jobs are processed does have an influence on the total time to process all the jobs. b. In a one machine system, the SPT rule for sequencing the order of jobs will result in maximizing the average flow time. c. In a one machine system, the EDD rule for sequencing the order of jobs will result in minimizing average lateness d. In a two machine system, Johnson's rule for sequencing the order of jobs will result in maximizing the total time to do all the jobs on both the machines
c. In a one machine system, the EDD rule for sequencing the order of jobs will result in minimizing average lateness
The total time to process an entire set of jobs at a work center is referred to as a. Lead time b. Lot-sizing c. Make-span d. shortest processing time
c. Make-span
The economic order quantity (EOQ) procedure a. uses all the information provided by the requirements schedule. b. uses the POQ formula to compute an economic time between orders . c. is based on the assumption of constant uniform demand. d. creates order quantities that are exactly equal to net requirements.
c. is based on the assumption of constant uniform demand.
The Stock-out probability is: a. the probability demand will be satisfied during the ordering lead time b. the percentage of demand that is supplied from inventory c. the probability that inventory will not be sufficient to meet demand during the cycle d. the probability that production will suffer due to insufficient raw materials e. All the options are true
c. the probability that inventory will not be sufficient to meet demand during the cycle
Which of the following is not considered a type of inventory?
customer orders
Which one of the following is not an assumption of the basic EOQ model? a. Decisions for one item can be made independently of decisions made for other items. b. There is no uncertainty in lead-time. c. The amount of an order received is exactly equal to what was ordered. d. Quantity discounts can be taken advantage of for large lot sizes.
d. Quantity discounts can be taken advantage of for large lot sizes.
Which one of the following descriptions best defines customer service level? a. The preferred proportion of annual demand instantaneously filled from stock b. The number of stockouts tolerated per year c. The preferred proportion of days in the year when an item is in stock d. The desired probability of not running out of stock during the lead time
d. The desired probability of not running out of stock during the lead time
Which of the following is an assumption commonly made in using MRP lot-sizing procedures? a. Component requirements are aggregated by time period for planning purposes, so all requirements for each period must be available at the beginning of the period. b. All requirements for future periods must be met and cannot be back ordered. c. The requirements are properly offset for manufacturing lead times. d. All of the options are assumptions commonly made in using MRP lot-sizing procedures.
d. All of the options are assumptions commonly made in using MRP lot-sizing procedures
If no variations in demand or lead time exist, the ROP will equal
demand during lead time
Using the Theory of Constraints scheduling logic in simulation mode can help
negotiate achievable delivery dates and meet customer service goals
