SCMA 331 FINAL CH 14

An order for 110 units of Product A has been made. There are currently 60 units of Product A on hand. Each A requires 2 units of Part B. There are 30 units of B available. (a) Calculate the net requirements for A. (b) Calculate the gross requirements for B. (c) Calculate the net requirements for B.

(a) 110 - 60 = 50; (b) 50 × 2 = 100; (c) 100 - 30 = 70

An order for 120 units of Product M has been made. There are currently 30 units of Product M on hand. Each M requires 4 units of Component N. There are 20 units of N on hand. (a) Calculate the net requirements for M. (b) Calculate the gross requirements for N. (c) Calculate the net requirements for N.

(a) 120 - 30 = 90; (b) 90 × 4 = 360; (c) 360 - 20 = 340

By convention, what is the top level in a product structure? A) level 0 B) level 1 C) level T D) level 10 E) level 100

A

Consider the following product structure. (IMAGE) If the demand for product A is 50 units, how many units of component E will be needed? A) 50 B) 100 C) 150 D) 200 E) 300

A

In MRP, system nervousness is caused by: A) management's attempt to continually respond to minor changes in production requirements. B) the use of the lot-for-lot approach. C) management's marking part of the master production schedule as "not to be rescheduled". D) the use of phantom bills of material. E) management's attempt to evaluate alternative plans before making a decision.

A

What lot-sizing technique is generally preferred when inventory holding costs are extremely high? A) lot-for-lot B) EOQ C) POQ D) the Wagner-Whitin algorithm E) All of the above are appropriate for the situation.

A

________ are the time units in a material requirements planning (MRP) system.

Buckets

MRP II is accurately described as: A) MRP software designed for services. B) MRP with a new set of computer programs that execute on microcomputers. C) material resource planning. D) an enhancement of MRP that plans for all levels of the supply chain. E) a new generation of MRP software that extends MRP to planning and scheduling functions.

C

It is week 1 and there are currently 20 As in stock. We need 300 As at the start of week 5. If there are scheduled receipts planned for week 3 and week 4 of 120 As each and A has a lead time of 1 week, when and how large of an order should be placed to meet the requirement of 300 As? A) Week 1, 300 As B) Week 1, 40 As C) Week 5, 40 As D) Week 4, 40 As E) Week 4, 300 As

D

Which of the following is TRUE regarding the POQ lot-sizing method? A) Each POQ interval is recalculated at the time of the order release. B) Each order quantity and POQ interval are recalculated at the time of the order release. C) The POQ interval and all order quantities remain fixed throughout the planning horizon. D) Each order quantity is recalculated at the time of the order release. E) POQ lot sizes are always at least as large as the EOQ lot sizes would be.

D

What is DRP?

DRP is a time-phased stock replenishment plan for all levels of a distribution network.

Capacity planning in closed-loop MRP: A) utilizes feedback about workload from each work center. B) may make use of resource requirements profiles (load reports). C) may smooth work center loads with such tactics as overlapping and lot splitting. D) does not add capacity, but rather seeks effective use of existing capacity. E) All of the above are true.

E

Consider the following product structure. (IMAGE) If the demand for product A is 50 units, how many units of component E will be needed? A) 4 B) 100 C) 200 D) 250 E) 300

E

Distortion in MRP systems can be minimized when safety stock is held at the: A) purchased component or raw material level. B) work-in-process level. C) finished goods level. D) A and B E) A and C

E

Effective use of MRP and other dependent demand models does not require which of the following? A) master production schedule B) bill of materials C) inventory availability D) lead times E) cost of individual components

E

________ is a lot-sizing technique that generates exactly what is required to meet the plan.

Lot-for-lot

Gross material requirements do not take into account the amount of inventory on hand.

True

Wheeled Coach uses ________ as the catalyst for low inventory, high quality, tight schedules, and accurate records.

material requirements planning or MRP

Bills of material organized by major subassemblies or by product options are called ________.

modular bills

A(n) ________ is a bill of material for components, usually subassemblies, that exist only temporarily; they are never inventoried.

phantom bills of material

An order has been placed for 50 units of Product A and 60 units of Product B. There are currently 35 units of Product B on hand. Each A requires 2 units of Part C; each B requires 5 units of C. There are 160 units of C available. (a) Calculate the net requirements for B. (b) Calculate the gross requirements for C. (c) Calculate the net requirements for C.

(a) 60 - 35 = 25; (b) 50 × 2 + 25 × 5 = 225; (c) 225 - 160 = 65

What information is necessary for an operations manager to make effective use of a dependent inventory demand model?

1) Master production schedule (what is to be made, and when); (2) Specifications or bill of material (materials and parts required to make the product); (3) Inventory availability (what is in stock); (4) Purchase orders outstanding (what is on order, also called expected receipts); and (5) Lead times (how long does it takes to get various components)

An order for 50 units of Product A and 60 of B has been placed. There are currently 25 units of Product B on hand. Each A requires 2 units of Part C; each B requires 5 units of C. There are 160 units of C available. What are the net requirements for C? A) 115 B) 175 C) 240 D) 690 E) 700

A

Which of the following best describes a gross material requirements plan? A) a schedule that shows total demand for an item, and when it must be ordered from a supplier or when production must be started B) an intermediate range plan for the scheduling of families of products C) a chart illustrating whether capacity has been exceeded D) a table that corrects scheduled quantities for inventory on hand E) a schedule showing which products are to be manufactured and in what quantities

A

Which of the following is NOT a key benefit of MRP? A) increased quality B) better response to customer orders C) faster response to market changes D) improved utilization of facilities and labor E) reduced inventory levels

A

Which of the following lot-sizing techniques results in the lowest holding costs? A) lot-for-lot B) EOQ C) POQ D) Wagner-Whitin algorithm E) the quantity discount model

A

Explain the difference between a gross requirements plan and a net requirements plan.

A gross requirements plan is a schedule that shows the total demand for an item (prior to subtraction of on-hand inventory and scheduled receipts) and (1) when it must be ordered from suppliers or (2) when production must be started to meet its demand by a particular date. A net requirements plan adjusts gross requirements for inventory on hand and scheduled receipts.

Firms making many different final products use ________ to facilitate production scheduling. A) planning bills B) modular bills C) phantom bills D) overdue bills E) gross requirements bills

B

Which of the following statements regarding lot-sizing is TRUE? A) EOQ principles should be followed whenever economical. B) Too much concern with lot-sizing results in false accuracy. C) Lot-for-lot cannot be modified for scrap allowance or process constraints. D) The Wagner-Whitin algorithm simplifies lot size calculations. E) All of the above are true.

B

If a load report (resource requirements profile) shows a work center scheduled beyond capacity: A) the company must add capacity by enlarging the facility. B) the company must add capacity by such tactics as overtime and subcontracting. C) the work center's load may be smoothed by such tactics as operations splitting or lot splitting. D) the aggregate plan must be revised. E) the Wagner-Whitin algorithm should be used to rebalance the load.

C

Low-level coding means that: A) a final item has only a few levels in the BOM structure. B) the code being used is the code for the lowest level in the BOM structure. C) a component item is coded at the lowest level at which it appears in the BOM structure. D) the top level of the BOM is below level zero and that BOMs are not organized around the finished product. E) the lowest-paid staff member in the production department performs the coding.

C

What is one of the tools that is particularly useful in reducing system nervousness in an MRP system? A) modular bills B) time phasing C) time fences D) lot sizing E) closed loop system

C

What is the process of tracing upward in the bill of material from the component to the parent item in order to determine the cause for the component requirement? A) net requirements planning B) time fencing C) pegging D) backtracking E) leveling

C

A grill assembly takes 20 washers. Instead of listing these washers separately, they are grouped into a single kit for production. How is the bill of material for the washers classified? A) "pseudo" B) planning C) modular D) low-level E) A and B

E

The minimum record accuracy required for successful MRP is approximately which of the following? A) lower than 90% B) 90% C) 95% D) 97% E) 99%

E

What does the POQ interval equal? A) the number of periods of average demand covered by the safety stock B) the same number of periods that are on the "not to be rescheduled" side of the time fence C) EOQ / maximum gross requirement D) the number of periods until the incoming projected on hand runs out E) EOQ / average demand per period

E

Which of the following is NOT one of the four key tasks that Wheeled Coach insists are necessary for successful MRP implementation? A) The material plan must meet both schedule requirements and facility capabilities. B) The plan must be executed as designed. C) Inventory investment must be minimized. D) Excellent record integrity must be maintained. E) The process must adhere to stringent quality control standards.

E

Which of the following statements best compares modular bills and phantom bills? A) Both pertain to assemblies that are not inventoried. B) There is no difference between the two. C) Both pertain to assemblies that are inventoried. D) Modular bills are used for assemblies that are not inventoried, unlike phantom bills. E) Modular bills represent subassemblies that actually exist and are inventoried, while phantom bills represent subassemblies that exist only temporarily and are not inventoried.

E

Which of the following statements regarding the gross material requirements plan is TRUE? A) It shows total demand for an item. B) It shows when an item must be ordered from a supplier or when production must be started. C) It combines a master production schedule with the time-phased schedule. D) It requires several inputs, including an accurate bill of material. E) All of the above are true.

E

MRP can be effective only if very accurate lot sizes are calculated in advance.

False

MRP is an excellent tool for scheduling components with variable lead times.

False

Operations splitting sends pieces to the next operation before the entire lot is completed on the previous operation.

False

________ are the result of adjusting gross requirements for inventory on hand and scheduled receipts.

Net

The time-phased product structure, unlike the bill of material, adds the concept of lead times.

True

Distribution resource planning (DRP) is: A) a transportation plan to ship materials to warehouses. B) a time-phased stock replenishment plan for all levels of a distribution network. C) a shipping plan from a central warehouse to retail warehouses. D) material requirements planning with a feedback loop from distribution centers. E) a material requirements planning package used exclusively by warehouses.

B

For the lot-sizing technique known as lot-for-lot to be appropriate: A) future demand should be known for several weeks. B) setup cost should be relatively small. C) annual volume should be rather low. D) item unit cost should be relatively small. E) the independent demand rate should be very stable.

B

Which lot-sizing technique orders the quantity needed during a predetermined time between orders? A) economic order quantity B) periodic order quantity C) lot-for-lot D) time fencing E) part-period balancing

B

Which of the following statements is TRUE about the MRP plan when using lot-for-lot ordering? A) The quantity of gross requirements for a child item is always equal to the quantity of planned order releases for its parent. B) The quantity of gross requirements for a child item is equal to the quantity of planned order release(s) multiplied by the number of child items used in the parent assembly. C) The quantity of gross requirements for a child item is always equal to the quantity of gross requirements for its parent. D) The quantity and gross requirements for a child item is always equal to the quantity of net requirements for its parent. E) All of the above are true.

B

Why will the POQ almost always outperform the EOQ as an MRP lot-sizing technique?

Both methods produce a balance between setup and holding costs, but the POQ does not create excess inventory as the EOQ does. In other words, the EOQ may result in ending inventory in a period that is insufficient to satisfy the following period's demand. The POQ never does that.

A material requirements plan contains information with regard to all of the following EXCEPT: A) quantities and required delivery dates of all subassemblies. B) quantities and required delivery dates of final products. C) the capacity needed to provide the projected output rate. D) inventory on hand for each final product. E) inventory on hand for each subassembly.

C

A paint company mixes ten different base colors into 3,000 different color options. If production scheduling is organized around the ten different base colors , then the bills of material are classified as which of the following? A) phantom B) planning C) modular D) low-level E) A and B

C

An order for 110 units of Product A has been placed. There are currently 60 units of Product A on hand. Each A requires 4 units of Part B. There are 20 units of B available. What are the net requirements for B? A) 20 B) 120 C) 180 D) 240 E) 440

C

An order for 110 units of Product M has been placed. There are currently 30 units of Product M on hand. Each M requires 4 units of Component N. There are 20 units of N on hand. What are the net requirements for N? A) 150 B) 170 C) 300 D) 320 E) 440

C

Which MRP lot-sizing technique should be considered to be the goal (i.e., the technique of choice under ideal conditions)? A) Wagner-Whitin B) EOQ C) lot-for-lot D) POQ E) Silver-Meal

C

Which of the following is FALSE concerning enterprise resource planning (ERP)? A) It attempts to automate and integrate the majority of business processes. B) It shares common data and practices across the enterprise. C) It is inexpensive to implement. D) It provides and accesses information in a real-time environment. E) ERP software promises reduced transaction costs.

C

Which of the following statements regarding Wheeled Coach is FALSE? A) Wheeled Coach has found competitive advantage through MRP. B) Wheeled Coach builds ambulances in a repetitive process. C) Wheeled Coach's MRP system allowed the company to meet tight schedules, but caused inventory to rise. D) Wheeled Coach's MRP system maintains excellent record integrity. E) Low inventory and high quality are two positive outcomes of Wheeled Coach's use of MRP.

C

Demand for a given item is said to be dependent if: A) it originates from the external customer. B) there is a deep bill of material. C) the finished products are mostly services (rather than goods). D) there is a clearly identifiable parent. E) the item has several children.

D

Dependent demand and independent demand items differ in that: A) for any product, all components are dependent-demand items. B) the need for independent-demand items is forecast. C) the need for dependent-demand items is calculated. D) All of the above are true. E) None of the above is true.

D

Enterprise resource planning (ERP): A) seldom requires software upgrade or enhancement. B) does not integrate well with functional areas other than operations. C) is inexpensive to implement. D) automates and integrates the majority of business processes. E) all of the above

D

In MRP, the number of units projected to be available at the beginning of each time period refers to: A) net requirements. B) scheduled receipts. C) planned order releases. D) projected on hand. E) the amount necessary to cover a shortage.

D

Which of the following statements regarding MRP in services is TRUE? A) MRP is for manufacturing only, and it is not applicable to services. B) MRP can be used in services, but only in those that offer very limited customization. C) MRP only works in services for demand that is independent. D) Services such as restaurant meals illustrate dependent demand, and they require product structure trees, bills-of-material, and scheduling. E) None of the above is true.

D

If safety stock is desired, it should be built into which portion of MRP? A) any B) none C) raw materials D) finished goods E) either C or D

E

"Phantom bills" are bills of material for subassemblies that do not exist in reality.

False

A dependent demand item is so called because its demand is dependent on customer preferences.

False

By convention, the top level in a product structure is designated level 1.

False

In MRP, a "bucket" refers to a fixed order quantity, such as an EOQ.

False

What do we mean by closed-loop MRP?

It's a system that provides feedback to the capacity plan, master production schedule, and production plan so planning can be kept valid at all times.

You have seen several methods for lot sizing in MRP. Why is lot sizing important in MRP? Can too much concern be given to lot sizing?

Lot sizing is important because, at the very least, it impacts costs. But too much attention can be paid to lot sizing, which can result in false accuracy due to MRP dynamics. Also, several lot-sizing methods may all produce satisfactory results. Finally, proper lot size is often not possible to determine until after actual requirements are known.

What is MRP? Identify four benefits from its use.

MRP or material requirements planning is a dependent demand technique that uses a bill of material, inventory, expected receipts, and a master production schedule to determine material requirements. The benefits of MRP include (1) better response to customer orders, (2) faster response to market changes, (3) improved utilization of facilities and labor, and (4) reduced inventory levels.

________ is a system that allows, with MRP in place, inventory data to be augmented by other resource variables.

Material requirements planning II or material resource planning or MRP II

________ is a dependent demand technique that uses a bill of material, inventory, expected receipts, and a master production schedule to determine material requirements.

Material requirements planning or MRP

Explain what is meant by "nervousness" of the MRP schedule. Provide an example. Name two tools that are particularly useful in reducing system nervousness in MRP systems.

Nervousness is the reaction to a large number of minor changes, which may introduce instability and havoc into the purchasing and production departments. Two tools for reducing system nervousness are time fences and pegging.

Describe the tactics for load smoothing in MRP.

Overlapping—sends pieces to the second operation before the entire lot is completed on the first operation; Operations splitting—sends the lot to two different machines for the same operation; Lot splitting—breaks up the order and runs part of it earlier (or later) in the schedule.

Jacquie Welkener, operations manager for ABC Technologies, must schedule work for the next five days. Each unit takes 30 minutes to process. Available capacity is 8 hours per day. The production order quantities are 12, 18, 20, 13, and 17 for Monday through Friday, respectively. What should be the production plan?

Sixteen units should be produced each day. Thus, 4 units should be moved from Tuesday to Monday, 2 units should be moved from Wednesday to Tuesday, 2 units should be moved from Wednesday to Thursday, and 1 unit should be moved from Friday to Thursday.

A working MRP system allows a firm to react to even minor changes in production requirements. Discuss both the advantage and disadvantage of having such ability.

The advantage is that it allows the firm to react quickly and, conceivably, to minimize costs. The disadvantage is that the reaction to a large number of minor changes may introduce instability (nervousness) into the purchasing and production departments, which can create havoc.

________ are a way of allowing a segment of the master schedule to be designated as "not to be rescheduled."

Time fences

What are time fences? Why are they used?

Time fences allow a segment of the master schedule to be designated as "not to be rescheduled." They are used to reduce system nervousness in MRP environments.

If the explosion of the bill of material tells MRP how much of each part is needed, how does MRP learn when each of these parts is needed?

Timing is established with the time-phased product structure, which turns a bill of material on its side and adds lead times for each component. Each component is then offset to accommodate lead times.

Product A is made from 2 Bs and 1 C. Lead times for A, B, and C are 2, 3, and 2 weeks respectively. Currently there are 2 Bs and a 5 Cs on hand, with 5 of each scheduled to arrive at the end of week 1. If 20 As are needed during week 4, can the order be completed (it is the start of week 0 currently)?

To produce 20 As requires 40 Bs and 20 Cs at the start of week 2. Since the lead time for B is greater than 2 weeks the order cannot be completed on time.

Closed-loop MRP systems allow production planners to move work between time periods to smooth the load or to at least bring it within capacity.

True

DRP is a time-phased stock-replenishment plan for all levels of a distribution network.

True

Firms may discover that, rather than adapting ERP to the way they do business, they have to adapt the way they do business to accommodate the ERP software.

True

If 100 units of Q are needed and 10 are already in stock, then the gross requirement is 100 and the net requirement is 90.

True

If X consists of one A and one B, and each A consists of one F and two Gs, then A is the "parent" component of G.

True

In general, the lot-for-lot approach should be used whenever economical.

True

Lead times, inventory availability, and purchase orders outstanding are among the five things operations managers must know for effective use of dependent inventory models.

True

MRP is generally practiced on items with dependent demand.

True

Planning bills of material are bills of material for "kits" of inexpensive items such as washers, nuts, and bolts.

True

Reduced inventory levels and faster response to market changes are both benefits of MRP.

True

Smoothing a resource requirements profile to stay within capacity limits may increase setup costs.

True

The lot-for-lot lot-sizing technique is particularly appropriate when demand is not very smooth and set up cost is small compared to holding cost.

True

The quantity required of a dependent demand item is computed from the demand for the final products in which the item is used.

True

The supply-chain systems that result from using ERP in the grocery industry are called efficient consumer response (ECR) systems.

True

Time fences divide that segment of the master schedule that can be revised from that section that is "not to be rescheduled."

True

Wheeled Coach obtains competitive advantage through MRP in part because of their excellent record integrity and insistence on record accuracy.

True

When safety stock is deemed absolutely necessary, the usual policy is to build it into (increase) the inventory requirement of the MRP logic.

True

Describe the role of record accuracy in Wheeled Coach's successful use of MRP.

Wheeled Coach's record integrity is excellent. Record accuracy is recognized as a fundamental ingredient of its successful MRP implementation. Its cycle counters are charged with material audits that not only correct errors but also investigate and correct problems.

A(n) ________ provides feedback to the capacity plan, master production schedule, and production plan so planning can be kept valid at all times.

closed-loop MRP system

A(n) ________ system is packaged business software that automates and integrates the majority of business processes, shares common data and practices across the entire enterprise, and produces information in a real-time environment.

enterprise resource planning or ERP

A(n) ________ can illustrate whether a work center has been scheduled beyond its capacity.

load report or resource requirements profile