Chapter 12
A net-change MRP system is one that is updated periodically but not less frequently than once a week
FALSE A net-change system is updated as transactions occur
A regenerative MRP system is one that is updated continuously, every time there is a schedule change
FALSE Regenerative systems are updated periodically
The bill of materials indicates how much material will be needed to produce the quantities on a given master production schedule
FALSE The bill of materials indicates how much material will be needed to produce one unit of the item in question
10. MRP, considering inventory position, bills of material, open purchase orders and lead times guarantees a feasible production plan if the inputs to MRP are accurate.
False
11. The bill of materials indicates how much material will be needed to produce the quantities on a given master production schedule.
False
13. The bill of materials contains information on lead times and current inventory position on every component required to produce the end item.
False
15. An assembly-time chart indicates gross and net requirements taking into account the current available inventory.
False
17. The gross requirements at one level of an MRP plan determine the gross requirements at the next lower level continuing on down to the lowest levels shown on the bill of material.
False
18. The gross requirements value for any given component is equal to the net requirements of that components immediate parent multiplied by the quantity per parent.
False
2. Low level coding represents items less than $18 per unit.
False
20. A net-change MRP system is one that is updated periodically but not less frequently than once a week.
False
22. A regenerative MRP system is one that is updated continuously - every time there is a schedule change.
False
25. Lot-for-lot ordering in MRP provides coverage for some predetermined number of periods using forecasted demand to extend beyond the orders already received for those periods.
False
26. MRP output reports are divided into two main groups - daily and weekly.
False
27. In MRP, EOQ models tend to be less useful for materials at the lowest levels than for upper level assemblies of the bill of materials since higher-level assemblies have larger dollar investments.
False
3. Independent demand tends to be more lumpy than dependent demand meaning that we need large quantities followed by periods of no demand.
False
30. MRP II is simply an improved version of MRP that processes faster and can plan for a larger number of end items.
False
32. Capacity requirements planning (CRP) is an important feature in MRP+.
False
34. As long as a forecast is plus or minus 10%, MRP works well.
False
38. MRP really doesnt apply to services since raw material isnt required.
False
7. Net requirements equal gross requirements minus safety stock.
False
Independent demand tends to be more 'lumpy' than dependent demand meaning that we need large quantities followed by periods of no demand.
False
Lot-For-Lot ordering in MRP provides coverage for some predetermined number of periods using forecasted demand to extend beyond the orders already received for those periods.
False
The bill of materials indicates how much material will be needed to produce the quantities on a given master production schedule.
False
Aggregate planning is capacity planning that typically covers a time horizon of one to three months
False, 2-12 Months
An advantage of a "chase" strategy for aggregate planning is that inventories can be kept relatively low
TRUE
Load reports show capacity requirements for departments or work centers which may be more or less than the capacity available in that work center
TRUE Load reports facilitate the formulation of feasible production schedules
Lot-for-lot ordering in MRP eliminates the holding costs for parts that are carried over to other periods
TRUE Lot-for-lot ordering minimizes holding costs
1. MRP works best if the inventory items have dependent demand.
True
12. A bill of materials contains a listing of all the assemblies, parts, and materials needed to produce one unit of an end item.
True
14. The inventory records contain information on the status of each item by time period.
True
16. MRP II did not replace or improve the basic MRP.
True
19. The term pegging refers to identifying the parent items that have generated a given set of material requirements for a part or subassembly.
True
21. One reason that accurate bills of material are important is that errors at one level become magnified at lower levels because of the multiplication process used by MRP.
True
23. One of the primary output reports of MRP concerns changes to planned orders.
True
24. Safety time is sometimes used in MRP rather than safety stock quantities.
True
28. Load reports show capacity requirements for departments or work centers which may be more or less than the capacity available in that work center.
True
29. ERP began in manufacturing organizations but has spread into service organizations.
True
31. Lot-for-lot ordering in MRP eliminates the holding costs for parts that are carried over to other periods.
True
33. Project Management approaches can help in a conversion to an ERP system.
True
35. ERP represents an expanded effort to integrate standardized record-keeping that shares information among different areas of an organization.
True
36. Back flushing takes place after the production has been completed.
True
37. Before a schedule receipt can take place, and order must be placed with a vendor.
True
39. ERP implementation requires support and a direct mandate from the CEO because it impacts so many different functional areas.
True
4. Lumpy demand for components results primarily from the periodic scheduling of batch production.
True
40. ERP automates the tasks involved in performing a business process, such as order fulfillment and financial reporting.
True
5. MRP is used within most MRP II and ERP systems.
True
6. The master production schedule states which end items are to be produced, in addition to when and how many.
True
8. The master schedule needs to be for a period long enough to cover the stacked or cumulative lead time necessary to produce the end items.
True
9. Initially, a master production schedule - the output from MRP - may not represent a feasible schedule.
True
Back flushing takes place after the production has been completed.
True
MRP woks best if the inventory items have dependent demand.
True
Safety time is sometimes used in MRP rather than safety stock quantities.
True
The inventory records contain information on the status of each item by time period.
True
The master production schedule states which items are to be produced, in addition to when and how many
True
The master schedule needs to be for a period long enough to cover the stacked or cumulative lead time necessary to produce the end items.
True
The term pegging refers to identifying the parent items that have generated a given set of material requirements for a part of subassembly.
True
Uncommitted inventory is called
available-to-promise inventory
The MRP input listing the assemblies, subassemblies, parts, and raw materials needed to produce one unit of finished product is the
bill of materials
Scheduled receipts differ from planned receipts in that scheduled receipts
involve orders that have already been placed
In doing aggregate planning for a firm producing paint, the aggregate planners would most likely deal with
just gallons of paint, without concern for the different colors and sizes
Which of the following is not an input to the aggregate planning process
master production schedules
A computer-based information system designed to handle ordering and scheduling of dependent-demand inventories is
material requirements planning
Aggregate planning is capacity planning for
the intermediate range
Using dynamic pricing in response to capacity variability to ensure that perishable inventory is not wasted is known as
yield management
