Exam 2

Steering wheels purchased by Ford are an example of dependent demand.

True

The (s, S) continuous review policy is to order the same quantity, Q, when physical inventory reaches the reorder point.

False

The Delphi forecasting approach is applicable for high-risk technology forecasting; large, expensive projects; or major new product introductions

True

Two reasons ERP implementations have been known to fail include: lack of top management commitment and lack of communication between the firm and its ERP software provider.

True

When lean firms share their best practices with supply chain members, this is referred to as yokoten.

True

If your company had an annual purchase cost of items equal to $2,000,000, an annual holding cost of $150,000 and an annual ordering cost of $50,000 this scenario would reveal that:

Your order lot size was higher than the EOQ

Toyota initially designed their JIT program on Ford's manufacturing system.

True

Some of Deming's 14 points actually conflict with many Six Sigma concepts.

False

The true value of CPFR comes from the sophisticated forecasting algorithms that provide companies with highly accurate forecasts, not from the exchange of forecasting information.

False

Which of the following is true under the Periodic Review System?

A higher level of safety stock is needed to buffer against uncertainty in demand over a longer planning horizon, compared to the EOQ system

What inventory factor may be omitted from the basic EOQ derivation because it is a constant?

Annual purchase cost of goods

Using the ________________ multiple software infrastructures and databases may have to be used to link the multiple applications obtained from different vendors.

Best-of-breed solution

Which of the following results from using the chase production strategy? a. The workforce fluctuates in response to the demand pattern b. Finished goods inventories remain constant c. Both A & B

Both A & B

A company sells eggs in boxes with 12 cartons and 12 eggs in each carton, thus there are 144 eggs in each box. The organization wants to construct a P-chart to track the proportion of broken eggs in each sample (shown below). If the company used one box of eggs in each sample in the dataset below, what would be the centerline, upper control limit (UCL), and lower control limit (LCL) for the appropriate P-chart? (Use z = 3.) Choose the closest answer.

Centerline = 0.025, UCL = 0.64, LCL = 0

Which of the following basic production strategies works best with make-to-order manufacturing firms?

Chase Production Strategy

What does the acronym CPFR represent?

Collaborative planning, forecasting, and replenishment

Not all ERP software is designed to provide the exact same tools, nonetheless, some of the common modules usually included in ERP software packages include:

Customer relationship management and Human resource management

Which of the following is considered a disadvantage of utilizing an ERP system?

ERP systems are very complex and have proven difficult to implement

Why are firms migrating to ERP systems?

ERP systems tie together a variety of specialized systems

A weakness of lean systems is that none of its practices are related to the environment or sustainability.

False

Dependent demand must be forecasted to be accurate.

False

Lean production is an operating philosophy or mindset that essentially attempts to minimize the impact of system variability and flaws in forecasting through the use of high safety stock inventories.

False

Lean production, JIT, and Six Sigma quality mean the same thing.

False

MRO supplies are a type of work-in-progress.

False

Organizations practicing lean production often increase their inventory levels in order to create a cushion against variability so that they can investigate and eliminate the weaknesses in their systems.

False

Pareto Analysis means that 20 percent of the items get about 80 percent of the safety stock.

False

Quantitative forecasting methods are based on opinions and intuition, whereas qualitative forecasting methods use mathematical models and relevant historical data to generate forecasts.

False

Radio Frequency Identification (RFID) is beginning to replace bar code inventory tracking, however a weakness is that it requires a direct line of sight for RFID tags to be read.

False

Random variations represent either increasing or decreasing movements over many years due to factors such as population growth, population shifts, cultural changes and income shifts.

False

The three basic production strategies for addressing the aggregate planning problem are the chase production strategy, the level production strategy, and the aggregate production strategy.

False

When a single company that is implementing an ERP system chooses to use one company to provide an operations module, another to provide the sales and marketing application, and yet another company to provide the finance and accounting module, that single company has chosen to utilize the single integrator approach.

False

When designing a manufacturing or service process, a Pareto chart would be an essential tool for evaluating the process in terms of its action elements, waiting periods, and process flow.

False

MRP is the production planning system intended to develop long-range plans (more than a year away) concerning product families manufactured by the organization.

False Should be Aggregate

A Master Production Schedule is an engineering document that shows an inclusive listing of all component parts and subassemblies making up the end item.

False Should be Aggregated

Which company probably played the largest role in the development of the Toyota Production System?

Ford

Which of the following describes a global RFID challenge?

Globally, the RFID industry does not have its own UHF spectrum allocation.

In the ABC Inventory Matrix shown, inventory in area Y suggests:

Inventory that matches sales.

Which of the following is a disadvantage of carrying too much inventory?

It creates an unnecessary waste of scarce resources.

The Quick Response program, developed in the 1980's, was an offshoot of the following supply chain concept:

Just-in-Time

Lean production systems are sometimes referred to as pull systems because demand from customers activates the production actions of the manufacturing facilities. In order for this demand to be communicated to everyone in the supply chain/manufacturing facility a signal must be passed from downstream processing centers to the upstream processing centers. This system of relaying signals is referred to as a:

Kanban System

Japanese manufacturing firms sometimes create cooperative coalitions with their suppliers in order to provide the suppliers with a certain degree of financial support. What are these cooperative coalitions called?

Keiretsu Networks

According to the textbook, which of the following is considered a reason that ERP implementations fail?

Lack of communication within an organization

Which of the following seeks to develop short range plans seeking to effectively and efficiently manage components and/or subassemblies over time period of few days to a few weeks?

Material requirements plan

If an available-to-promise (ATP) for any period is negative, the deficit must be subtracted from the:

Most recent positive ATP

Waste in Japan is also referred to as:

Muda

Which of the following MRP terms represents a committed order awaiting delivery for a specific period?

Scheduled receipt

What component of a time series has variations in demand which show peaks and valleys that repeat over a consistent interval such as hours, days, weeks, months, or years?

Seasonal Variations

Which person was a key figure in developing the Toyota Production System and also developed the concept of poka-yoke?

Shingo

The following time-series approach to forecasting uses historical data to generate a forecast and works well when demand is fairly stable over time:

Simple Moving Average

Which one of the following is NOT a type of qualitative forecasting?

Simple moving average

The ___________ solution picks all the desired applications from a single vendor for the ERP system.

Single integrator

In 2016, Spin Master, did not properly forecast demand for their new product, Hatchimals, causing ___________ for their distributors.

Stockouts

According to the textbook, the top three challenges for CPFR implementation include all of the following EXCEPT:

Supplier lead times

When linear trend forecasts are developed, demand would typically be:

The dependent variable

An ERP system is generally a multi-module application software for managing an enterprise's internal functional activities, as well as its suppliers and customers.

True

One of the benefits of CPFR include integration of planning, forecasting, and logistics activities.

True

Regression analysis is commonly used in the cause-and-effect forecasting model.

True

Statistical process control (SPC) allows firms to compare process performance to desired levels or required standards.

True

Statistical process control uses control charts to monitor the outputs of a process to identify variations due to assignable causes and variations due to common causes.

True

The calculated forecast for May is 46, using the actual demand shown in the table below, and a 3-month weighted moving average with weights 0.1, 0.4, 0.5 (the heaviest weight applied to the most recent period).

True

The economic order quantity model (EOQ) is the optimal independent demand order quantity that minimizes total annual inventory costs.

True

The goal of a good forecasting technique is to minimize the deviation between actual demand and the forecast.

True

The inventory turnover ratio shows how efficiently a firm is using its inventory to generate revenue.

True

The statistical reorder point is calculated as the average demand during the delivery lead time plus the desired safety stock.

True

The term "lean production" essentially refers to the Toyota Production System in its entirety.

True

Toymaker Spin Master, did not properly forecast demands for their new product, Hatchimals, in 2016. This caused stockouts for their distributors.

True

When both the demand and lead time of a product are variable, firms must keep a higher safety stock level compared to variations in just demand, to offer the same service level.

True

Without supply chain trading partners collaborating and exchanging information, the supply chain will always be suboptimal and contain excess inventories, resulting in less-than-maximum supply chain profits.

True

Which of the following is a major cultural issue and big hurdle for widespread implementation of CPFR?

Trust

Classify the following inventory items as either A, B, or C items using the ABC inventory control system:

a. item 1 (C), item 2 (A), item 3 (C), item 4 (B), item 5 (C)

Calculate the defects per million opportunities (DPMO) given the following: Blake, owner of Blakester's T-shirt Shoppe, keeps track of customer complaints. For each T-shirt sold, there are four possible complaints: T-shirt shrinks, poor quality, design wears off, and doesn't fit right. Each week, Blake calculates the rate of T-shirt "defects" per total T-shirts sold, and then uses this information to determine his company's DPMO. During the past week, his company sold 1200 T-shirts. His company received 22 customer shrinkage complaints, 16 poor quality complaints, 12 design wears off complaints, 8 doesn't fit right complaints.Calculate his firm's DPMO.

12,083

Using the data set below, what would be the forecast for period 5 using a four period weighted moving average? The weights for each period are 0.05, 0.15, 0.30, and 0.50 from the oldest period to the most recent period, respectively. (Choose the closest answer.)

13710

Using the data set below, what would be the forecast for period 5 using the exponential smoothing method? Assume the forecast for period 4 is 14000. Use a smoothing constant of α = 0.4 (Choose the closest answer.)

14030

The College Bookstore sells a unique calculator to college students. The demand for this calculator has a normal distribution with an average daily demand of 20 units and a standard deviation of 4 units per day. The lead time for this calculator is 9 days. Compute the statistical reorder point that results in a 95 percent in-stock probability. Choose the closest answer.

200 units

When demand and delivery lead time are known and constant, daily demand = 8, purchase lead time = 5 days, and the purchase price = $20/unit, then the reorder point is:

40

Use the information below to calculate the number of orders per year when using the EOQ: Annual demand for an item is 43,000 units The cost to place an order is $200 The per unit cost of the item is $50.00 The annual holding rate is 35%

49

Calculate the inventory container size required given the following: Demand rate = 10 parts per hour, Safety stock required = 16%Number of containers = 14, Time to cycle through entire system = 6 hours

5 parts

Using the actual demand shown in the table below, what is the forecast for May (accurate to 1 decimal) using a 3-month weighted moving average and the weights 0.20, 0.35, 0.45 (with the heaviest weight applied to the most recent period. Round to nearest whole number)?

51

Given the following information, calculate the forecast (round to nearest whole number) for period three using exponential smoothing and α = 0.4.

65

Which of the following keeps the production plan's capacity fixed during the planning horizon?

Aggregate Production Plan

The __________ specifies which end product is to be made, how many are required, and when they need to be completed.

Aggregate production plan

The smoothing constant for exponential smoothing must be?

Between 0 and 1

Which of the following would be considered a dependent demand item?

Bicycle tires used to assemble a bicycle

An important outcome of statistical process control is: a. Firms can take corrective actions before process variabilities get out of control b. Firms can visually monitor process performance c. Firms can minimize total inventory cost d. Both A & B

Both A & B

Which of the following is considered an advantage/benefit of utilizing an ERP system?

Enables the company to utilize a single centralized database system, thus eliminating duplicate data entries

The real value of Collaborative Planning, Forecasting and Replenishment (CPFR) comes from:

Exchange of forecasting information

A cause-and-effect diagram is a useful tool for presenting data in an organized fashion, indicating process problems from most to least severe.

False

A lean system is also known as a push system.

False

A type of card called a kanban is used to signal when a process is out of control in a JIT production process.

False

An MRP system has a subassembly with a lot size of 500 units. In terms of filling future requirements, this would mean that planned order releases for the subassembly would always have to be exactly 500 units.

False

It is possible to expect 100 percent forecast accuracy most of the time.

False

Lead Capacity Strategy is a reactive approach that adjusts its capacity in response to demand.

False

The ABC inventory control prioritizes dependent demand inventory items into three groups, A, B, and C. A items receive the smallest amount of safety stock, while C items typically have the most safety stock.

False

The EOQ equation is derived by setting the annual purchase cost equal to the annual holding cost.

False

The Naïve forecast, Mean Profit Leverage, and Mean Square Error are examples of forecasting accuracy measures.

False

The best-of-breed solution picks all the desired applications from a single vendor for the ERP system.

False

The chase production strategy works well when highly skilled workers are needed, especially in a tight labor market.

False

The four categories of inventory are raw materials, intermediate assemblies, work-in-progress and finished goods.

False

The legacy MRP system was programmed to coordinate with other functional areas in the firm.

False

The optimal order quantity for the quantity discount model is always at one of the price breakpoints.

False

Trend variations are wavelike movements that are shorter than a year.

False

Efficient Consumer Response was initially developed in the 1990's for the following industry:

Grocery

When compared to their U.S. counterparts, a benchmarking study found that Japanese auto manufacturers used:

Half the engineering hours to produce a new automobile model

Quantitative forecasts use mathematical techniques that are based on:

Historical data

The EOQ model with quantity discounts attempts to determine:

How many units should be ordered.

Which one of the following statements regarding the economic order quantity (EOQ) is true?

If an order quantity is larger than the EOQ, then the annual holding cost will exceed the annual ordering cost.

A forecast tracking signal is used to determine:

If the forecast bias is within the acceptable control limits

Inaccurate forecasts can result in negative outcomes like:

Imbalances in supply and demand

Which of the following is NOT consistent with the lean philosophy?

Increasing batch sizes to take advantage of economies of scale

Which of the following is NOT one of the three basic methods used to calculate the available-to-promise quantities?

Indiscrete available-to-promise

Which of the following layouts is primarily designed to process parts, components, or jobs requiring the same or similar processing steps, saving duplication of equipment and labor:

Manufacturing Cells

Which of the following is NOT a common module of ERP systems?

Marketing Resources Management

The ___________ planning horizon is shorter than the aggregate production plan's, but must be longer than a firm's production lead time to ensure the end item can be completed within the planning horizon?

Master production schedule

Which strategy uses overtime and subcontracting to cope with the high demand periods ?

Mixed Production Strategy

The primary purpose of the basic economic order quantity (EOQ) model is to: a. Calculate the reorder point, so that replenishments take place at the proper time b. Minimize the sum of purchase cost and holding cost c. Maximize the customer service level d. Calculate the optimum safety stock level e. None of the above

None of the above

The primary purpose of the basic economic order quantity (EOQ) model is to: Calculate the reorder point, so that replenishments take place at the proper time b. Minimize the sum of purchase cost and holding cost c. Maximize the customer service level d. Calculate the optimum safety stock level e. None of the above

None of the above

Which tool is useful for presenting data in an organized fashion, indicating process problems from most to least severe:

Pareto Charts

Cyclical variations are longer than a year and can be influenced by:

Political factors

Which of the following is NOT an assumption of the economic order quantity (EOQ) model?

Production and use occur simultaneously.

When there is not a lot of currently relevant data available it is generally best to use:

Qualitative forecasting

The _______________ is used to check the feasibility of the Master Production Schedule.

Rough-Cut Capacity Plan

Which of the following is TRUE regarding the EOQ figure below?

The EOQ is at lot size G, and curve K is the annual holding cost curve.

Which strategy allows finished goods inventories to accrue and relies on backlogs to handle the demand?

The Level Production Strategy

As tighter control limits are instituted for the tracking signal, there is a greater probability of finding exceptions that require no action, but it also means catching changes in demand earlier.

True

CPFR is more likely to succeed if companies educate their employees on the benefits of the process changes and the disadvantages of maintaining the status quo.

True

Cycle counting means to physically count inventory on a periodic basis.

True

Cyclical variations are longer than a year and are influenced by macroeconomic and political factors.

True

Deming, Crosby, and Juran are all prominent quality professionals whose ideas were vital to the development of Six Sigma.

True

ERP Implosion is the process of converting a parent item's planned order releases into component gross requirements.

True

ERP provides the mechanism for supply chain members to share information so that scarce resources can be fully utilized to meet demand, while minimizing the bullwhip effect and supply chain inventories.

True

ERP systems were designed to coordinate the information requirements for purchasing, planning, scheduling and distribution of an organization operating in a complex multi-unit global environment.

True

Forecast error is the actual quantity minus the forecast.

True

Given the following information, the forecast for period two using exponential smoothing and α = 0.3 is 60.5.

True

In the economic manufacturing quantity model (EMQ), the annual consumption rate must be less than the annual production rate.

True

Individual biases could negatively impact the effectiveness of the Sales Force Composite forecasting approach, due to the proximity of the sales personnel to the consumers.

True

Lack of communication between the implementing firm and its ERP software provider can become a major hindrance for a successful implementation.

True

Lean thinking and Six Sigma quality are both concerned with achieving low cost and high quality throughout the supply chain.

True

Legacy systems were designed to perform a very specific operational function.

True

MRO supplies are a type of indirect costs.

True

Manufacturing cells are often U-shaped to make operator and material movements easier within the cell.

True

Minimizing the negative impacts of the bullwhip effect on supply chains is one of the goals of an effective CPFR system.

True

System nervousness is when even small changes to upper-level production plans cause major changes in lower-level production plans.

True

The ABC inventory matrix combines two ABC analyses—one is based on current inventory valuation and the other is based on annual inventory dollar usage..

True

Random variations in a Time Series component are due to:

Unpredictable events

Which of the following are among the MOST important elements of the lean production philosophy?

Waste reduction and continuous improvement

What is the most important output of the MRP?

planned order releases

What is considered an acceptable range for a tracking signal?

±3

When demand and delivery lead time are known and constant, the reorder point is the ____.

Demand during the delivery lead time

Independent demand is the:

Demand for a firm's end products.

If at the end of the year, the cost of revenue = $2,500, total revenue = $12,000 and inventory value = $2,000, the inventory turnover ratio would be:

1.250

Using the data set below, what would be the forecast for period 4 using a three period moving average: (Choose the closest answer.)

11883

The College Bookstore sells a unique calculator to college students. The demand for this calculator is constant at 20 units per day. The lead time for this calculator is variable at an average of 9 days with a standard deviation of 2 days. Compute the statistical reorder point that results in a 95 percent in-stock probability. Choose the closest answer.

246

The cost of a product is $5, and the carrying cost rate is 20%; the cost of processing an order is $45 and the annual demand is 1000. What is the economic order quantity (EOQ)?

300

Based on the information in the data set below, what is the mean squared error (accurate to 1 decimal)?

8.0

A company produces 8-pound bags of cat litter; as shown below, it gathered 5 samples with 6 bags in each sample for quality control purposes. The weights of each of the bags are listed below. Determine the mean.

8.06

A company that produces 8 pound bags of cat litter gathered 5 samples of 6 bags each. The weights of each bags' contents are listed below. What would you plot on the mean chart for sample 2?

8.130

Calculate the final discrete available-to-promise quantity for Week 1 using the following table.

ATP1 = 10

The formula for the forecast error, is calculated by using the equation:

Actual demand for period t minus the forecasted demand for period t

Which of the following is an example of how lean programs can help to protect the environment? a. Parts made from recycled materials b. Using rubber from used tires in auto parts c. Batch size reduction to reduce plastics d. All of the above

All of the above

Which of the following MRP terms represents the parts demanded by a parent?

Component

Which of the following quality gurus believed that companies should strive for zero defects and that quality was, in a sense, free since quality improvement programs invariably paid for themselves?

Crosby

Which of the following is NOT one of the Seven Wastes?

Environmental waste

If an item is ordered using its economic order quantity, the annual carrying cost should be:

Equal to the annual ordering cost.

The Five-Ss refer to:

Industrial housekeeping

In a bill of materials, items at which level are independent demand items?

Level 0

Lean production emphasizes all of the following EXCEPT:

Long production runs

Legacy MRP systems typically utilized multiple software packages and databases which caused:

The same information to be stored in multiple locations

While ERP is a relatively new technology, it has grown rapidly since the early 1990s. Which of the following is the reason that has contributed to its rapid growth?

The year 2000 millennium bug

Which one of the following is NOT a reason for firms to carry inventory?

To increase production change/setup costs

A level production strategy works well for make-to-stock manufacturing firms, which typically emphasize immediate delivery of off-the-shelf, standard goods at relatively low prices.

True

Acceptance sampling is a statistical technique that enables a shipment reject or accept decision to be made based on information obtained from a representative sample drawn from the population.

True

An advantage/benefit of utilizing an ERP system includes which of the following? a. ERP systems are designed to take advantage of Internet technology b. ERP systems enable the firm to automate some of the steps of a manufacturing process

c. Both A & B