Ch14 MRP & ERP – Test Bank | 10th Global Edition

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Operations Management, 10e, Global Edition (Heizer/Render)

Chapter 14 Material Requirements Planning (MRP) and ERP

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

Diff: 1

Topic: Global company profile

Objective: no LO

2) MRP is generally practiced on items with dependent demand.

Diff: 1

Topic: Dependent demand

Objective: no LO

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

Diff: 1

Topic: Dependent demand

Objective: no LO

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

Diff: 2

Topic: Dependent demand

Objective: no LO

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

Diff: 2

Topic: Dependent demand

Objective: no LO

6) Since MRP is quite detailed in nature, it has no influence on the longer-range, less detailed aggregate planning.

Diff: 2

Topic: Dependent inventory model requirements

Objective: no LO

7) The master production schedule is a forecast of demand for families of products.

Diff: 1

Topic: Dependent inventory model requirements

Objective: no LO

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

Diff: 1

Topic: Dependent inventory model requirements

Objective: LO14-2

9) A bill of material lists all components, ingredients, and materials needed to produce one unit of an end item.

Diff: 2

Topic: Dependent inventory model requirements

Objective: LO14-1

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

Diff: 1

Topic: Dependent inventory model requirements

Objective: LO14-1

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

Diff: 2

Topic: Dependent inventory model requirements

Objective: LO14-1

12) The Aggregate Plan, derived from the Master Production Schedule, specifies in more detail how much of which products is to be made at what times.

Diff: 2

Topic: Dependent inventory model requirements

Objective: LO14-2

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

Diff: 2

Topic: Dependent inventory model requirements

Objective: LO14-1

14) 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.

Diff: 2

Topic: Dependent inventory model requirements

Objective: LO14-1

15) 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.

Diff: 1

Topic: MRP structure

Objective: LO14-3

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

Diff: 1

Topic: MRP structure

Objective: LO14-2

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

Diff: 2

Topic: MRP management

Objective: LO14-2

18) Time fences divide that segment of the MPS that can be revised from that section that is "frozen."

Diff: 1

Topic: MRP management

Objective: LO14-2

19) MRP is an excellent tool for scheduling products with variable lead times.

Diff: 1

Topic: MRP management

Objective: LO14-2

20) Finite capacity scheduling, unlike MRP, recognizes the capacity limitations of departments and machines when building schedules.

Diff: 1

Topic: MRP management

Objective: LO14-2

21) If parts and subassemblies common to a variety of products are managed through the supermarket concept, formal order releases for such parts are not necessary.

Diff: 1

Topic: MRP management

Objective: LO14-2

22) 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.

Diff: 2

Topic: Lot-sizing techniques

Objective: LO14-4

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

Diff: 2

Topic: Lot-sizing techniques

Objective: LO14-4

24) The economic part period is a fraction of a time bucket.

Diff: 1

Topic: Lot-sizing techniques

Objective: LO14-4

25) The Wagner-Whitin algorithm is the most widely used MRP lot-sizing technique.

Diff: 2

Topic: Lot-sizing techniques

Objective: LO14-4

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

Diff: 1

Topic: Lot-sizing techniques

Objective: LO14-4

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

Diff: 2

Topic: Extensions of MRP

Objective: LO14-5

28) 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.

Diff: 2

Topic: Extensions of MRP

Objective: LO14-6

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

Diff: 2

Topic: Extensions of MRP

Objective: LO14-6

30) When safety stock is deemed absolutely necessary, the usual policy is to build it into the projected on-hand inventory of the MRP logic.

Diff: 2

Topic: MRP structure

Objective: LO14-2

31) By convention, the top level in a bill of material is designated level 1.

Diff: 2

Topic: Dependent inventory model requirements

Objective: no LO

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

Diff: 2

Topic: MRP in services

Objective: no LO

33) While ERP may provide a strategic advantage over competitors, it is so complex that many companies cannot adjust to it.

Diff: 2

Topic: Enterprise resource planning (ERP)

Objective: LO14-7

34) 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.

Diff: 2

Topic: Enterprise resource planning (ERP)

Objective: LO14-7

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

Diff: 1

Topic: Enterprise resource planning (ERP)

Objective: LO14-7

36) 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.

Diff: 1

Topic: Global company profile

Objective: no LO

37) Wheeled Coach insists all of the following tasks are key to successful MRP use except

A) materials plan must meet both schedule requirements and facility capabilities

B) plan must be executed as designed

C) inventory investment must be minimized

D) excellent record integrity must be maintained

E) stringent quality control

Diff: 2

Topic: Global company profile

Objective: no LO

38) 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

Diff: 1

Topic: Dependent demand

Objective: no LO

39) The phrase "demand related to the demand for other products" describes

A) a dependent variable

B) dependent demand

C) recursive demand

D) regression analysis

E) independent demand

Diff: 1

Topic: Dependent demand

Objective: no LO

40) 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.

Diff: 2

Topic: Dependent demand

Objective: no LO

41) Which of the following is not a key benefit of MRP?

A) quality increases

B) better response times to customer orders

C) faster response to market changes

D) improved utilization of facilities

E) reduced inventory levels

Diff: 2

Topic: Dependent demand

Objective: no LO

42) 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

Diff: 2

Topic: Dependent inventory model requirements

Objective: no LO

43) A master production schedule specifies

A) the raw materials required to complete the product

B) what component is to be made, and when

C) what product is to be made, and when

D) the labor hours required for production

E) the financial resources required for production

Diff: 2

Topic: Dependent inventory model requirements

Objective: LO14-2

44) The __________ is (are) the MRP input detailing which end items are to be produced, when they are needed, and in what quantities.

A) master production schedule

B) gross requirements

C) inventory records

D) assembly time chart

E) bill of material

Diff: 2

Topic: Dependent inventory model requirements

Objective: LO14-2

45) A master production schedule contains information about

A) quantities and required delivery dates of all subassemblies

B) quantities and required delivery dates of final products

C) inventory on hand for each subassembly

D) inventory on hand for each final product

E) scheduled receipts for each final product

Diff: 2

Topic: Dependent inventory model requirements

Objective: LO14-2

46) The aggregate plan gets input or feedback from which of the following areas?

A) engineering

B) finance, marketing, and human resources

C) the master production schedule

D) procurement, production, and general management

E) all of the above

Diff: 1

Topic: Dependent inventory model requirements

Objective: no LO

47) Which portion of the master production schedule is normally fixed, frozen, or firm?

A) the entire schedule

B) only the aggregate schedule

C) only the middle of the schedule

D) only the near-term portion

E) only the far-term portion

Diff: 2

Topic: Dependent inventory model requirements

Objective: LO14-2

48) In continuous (make-to-stock) operations, the master production schedule is usually expressed in terms of

A) end items

B) modules

C) kits

D) customer orders

E) warehouse orders

Diff: 2

Topic: Dependent inventory model requirements

Objective: LO14-2

49) In job shop (make-to-order) operations, the master production schedule is usually expressed in

A) end items

B) modules

C) kits

D) customer orders

E) warehouse orders

Diff: 2

Topic: Dependent inventory model requirements

Objective: LO14-2

50) The following table is an example of a(n)

A) aggregate plan

B) load report

C) master production schedule

D) capacity plan

E) inventory record

Diff: 2

Topic: Dependent inventory model requirements

Objective: LO14-2

51) A document calls for the production of 50 small garden tractors in week 1; 50 small garden tractors and 100 riding mowers in week 2; 100 riding mowers and 200 garden utility carts in week 3; and 100 riding mowers in week 4. This document is most likely a(n)

A) net requirements document

B) resource requirements profile

C) aggregate plan

D) master production schedule

E) Wagner-Whitin finite capacity document

Diff: 2

Topic: Dependent inventory model requirements

Objective: LO14-2

52) The __________ is the input to material requirements planning which lists the assemblies, subassemblies, parts, and raw materials needed to produce one unit of finished product.

A) bill of material

B) master production schedule

C) inventory records

D) assembly time chart

E) net requirements chart

Diff: 2

Topic: Dependent inventory model requirements

Objective: LO14-1

53) A bill of material lists the

A) times needed to perform all phases of production

B) production schedules for all products

C) components, ingredients, and materials required to produce an item

D) operations required to produce an item

E) components, ingredients, materials, and assembly operations required to produce an item

Diff: 2

Topic: Dependent inventory model requirements

Objective: LO14-1

54) An engineering change notice is used to change a

A) MRP

B) MPS

C) ERP

D) BOM

E) none of the above

Diff: 2

Topic: Dependent inventory model requirements

Objective: LO14-1

55) Firms making many different final products use __________ to facilitate production scheduling.

A) planning bills

B) modular bills

C) phantom bills

D) overdue bills

E) none of the above

Diff: 2

Topic: Dependent inventory model requirements

Objective: LO14-1

56) A bill of material must be updated with the corrected dimensions of a part. The document that details this change is a(n)

A) modular bill

B) engineering change notice

C) resource requirements profile

D) lead time-offset product structure document

E) planning bill

Diff: 1

Topic: Dependent inventory model requirements

Objective: LO14-1

57) The bill of material contains information necessary to

A) place an order to replenish the item

B) calculate quantities on hand and on order

C) convert net requirements into higher level gross requirements

D) convert gross requirements into net requirements

E) convert (explode) net requirements at one level into gross requirements at the next level

Diff: 2

Topic: Dependent inventory model requirements

Objective: LO14-1

58) 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.

Diff: 2

Topic: Dependent inventory model requirements

Objective: LO14-1

59) A paint company mixes ten different base colors into 3,000 different color options. If the MPS is organized around the ten different base colors their bills of material are classified as

A) Phantom

B) Planning

C) Modular

D) Low-Level

E) A and B

Diff: 2

Topic: Dependent inventory model requirements

Objective: LO14-1

60) A grill assembly takes 20 washers. Instead of listing these washers separately they are grouped into a single kit for production. The bill of material for the washers is classified as

A) "Pseudo"

B) Planning

C) Modular

D) Low-level

E) A and B

Diff: 2

Topic: Dependent inventory model requirements

Objective: LO14-1

61) The minimum record accuracy required for successful MRP is approximately

A) lower than 90%

B) 90%

C) 95%

D) 97%

E) 99%

Diff: 2

Topic: Dependent inventory model requirements

Objective: no LO

62) Given the following bill of material

If the demand for product A is 50 units, what will be the gross requirement for component E?

A) 4

B) 100

C) 200

D) 250

E) 300

Diff: 2

Topic: Dependent inventory model requirements

AACSB: Analytic Skills

Objective: LO14-1

63) Given the following bill of material

If the demand for product A is 50 units, what will be the gross requirement for component E?

A) 50

B) 100

C) 150

D) 200

E) 300

Diff: 2

Topic: Dependent inventory model requirements

AACSB: Analytic Skills

Objective: LO14-1

64) When safety stock is deemed absolutely necessary, the usual policy is to build it into which category of the MRP logic?

A) Gross Requirements

B) Scheduled Receipts

C) Projected On Hand

D) Net Requirements

E) Planned Order Receipts

Diff: 2

Topic: MRP structure

Objective: LO14-2

65) Given the following bill of material

If the demand for product A is 30 units, and there are 10 units of B on hand and none of C, how many units of part D will be needed?

A) 3

B) 40

C) 70

D) 90

E) 110

Diff: 3

Topic: Dependent inventory model requirements

AACSB: Analytic Skills

Objective: LO14-1

66) Low level coding means that

A) a final item has only a few levels in the BOM structure

B) it 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) none of the above

Diff: 2

Topic: Dependent inventory model requirements

Objective: LO14-1

67) It is week 1 and there are currently 20 As in stock. The MPS calls for 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 A s

B) Week 1, 40 A s

C) Week 5, 40 A s

D) Week 4, 40 A s

E) Week 4, 300 A s

Diff: 2

Topic: MRP structure

AACSB: Analytic Skills

Objective: LO14-3

68) If safety stock is desired it should be built into which portion of MRP?

A) any

B) none

C) raw materials

D) finished assemblies

E) either C or D

Diff: 2

Topic: MRP structure

Objective: LO14-3

69) Each X requires 2 of component Y; each Y requires 4 of part Z. The lead time for assembly of X is 1 week. The lead time for the manufacture of Y is 1 week. The lead time for the procurement of Z is 6 weeks. The cumulative lead time for X is __________ weeks.

A) 6

B) 7

C) 8

D) 10

E) cannot be determined

Diff: 2

Topic: MRP structure

AACSB: Analytic Skills

Objective: LO14-2

70) 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

Diff: 2

Topic: MRP structure

Objective: LO14-3

71) Each R requires 2 of component S and 1 of part T. The lead time for assembly of R is 3 days. The lead time for the manufacture of S is 5 days. The lead time for the manufacture of T is 10 days. The cumulative lead time for R is __________ days.

A) 6

B) 9

C) 13

D) 17

E) cannot be determined

Diff: 2

Topic: MRP structure

AACSB: Analytic Skills

Objective: LO14-2

72) Each R requires 4 of component S; each S requires 3 of part T. The lead time for assembly of R is 1 week. The lead time for the manufacture of S is 2 weeks. The lead time for the procurement of T is 6 weeks. The cumulative lead time for R is __________ weeks.

A) 6

B) 9

C) 12

D) 18

E) 28

Diff: 2

Topic: MRP structure

AACSB: Analytic Skills

Objective: LO14-2

73) 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

Diff: 2

Topic: MRP structure

Objective: LO14-2

74) 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.

Diff: 2

Topic: MRP structure

Objective: LO14-2

75) The MPS calls for 110 units of Product M. There are currently 30 of Product M on hand. Each M requires 4 of Component N. There are 20 units of N on hand. The net requirements for N are

A) 150

B) 170

C) 300

D) 320

E) 440

Diff: 2

Topic: MRP structure

AACSB: Analytic Skills

Objective: LO14-3

76) The MPS calls for 50 units of Product A and 60 of B. There are currently 25 of Product B on hand. Each A requires 2 of Part C; each B requires 5 of C. There are 160 units of C available. The net requirements for C are

A) 115

B) 175

C) 240

D) 690

E) 700

Diff: 3

Topic: MRP structure

AACSB: Analytic Skills

Objective: LO14-3

77) The MPS calls for 110 units of Product A. There are currently 60 of Product A on hand. Each A requires 4 of Part B. There are 20 units of B available. The net requirements for B are

A) 20

B) 120

C) 180

D) 240

E) 440

Diff: 2

Topic: MRP structure

AACSB: Analytic Skills

Objective: LO14-3

78) In MRP record calculations, the appearance of a negative value for the gross requirements of an end item in a specific time bucket

A) signals the need to purchase that end item in that period

B) implies that value was scheduled by the MPS

C) signals the need for a negative planned order receipt in that period

D) is impossible

E) All of the above are true.

Diff: 2

Topic: MRP structure

Objective: LO14-3

79) The number of units projected to be available at the end of each time period refers to

A) net requirements

B) scheduled receipts

C) the projected usage of the item

D) the amount projected to be on hand

E) the amount necessary to cover a shortage

Diff: 2

Topic: MRP structure

Objective: LO14-3

80) Linking a part requirement with the parent component that caused the requirement is referred to as

A) net requirements planning

B) a time fence

C) pegging

D) kanban

E) leveling

Diff: 2

Topic: MRP management

Objective: LO14-3

81) 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

Diff: 2

Topic: MRP management

Objective: LO14-3

82) One of the tools that is particularly useful in reducing the system nervousness in the MRP system is (are)

A) modular bills

B) time phasing

C) time fences

D) lot sizing

E) closed loop system

Diff: 2

Topic: MRP management

Objective: LO14-3

83) Which of the following is a step towards integrating JIT and MRP according to the text?

A) smaller buckets

B) increase quality

C) scrap MRP, it does not work with JIT

D) migrate from MRP to ERP

E) All of the above are acceptable steps

Diff: 2

Topic: MRP management

Objective: no LO

84) 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

Diff: 3

Topic: MRP structure

Objective: no LO

85) Material requirements plans specify

A) the quantities of the product families that need to be produced

B) the quantity and timing of planned order releases

C) the capacity needed to provide the projected output rate

D) the costs associated with alternative plans

E) whether one should use phantom bills of material or not

Diff: 2

Topic: MRP structure

Objective: LO14-2

86) Which of the following best differentiates material requirements planning (MRP) from finite capacity scheduling (FCS)?

A) FCS recognizes the finite nature of capacity while MRP does not.

B) FCS works in services while MRP does not.

C) MRP requires time buckets while FCS does not.

D) FCS is an input into traditional MRP systems.

E) FCS uses the Wagner-Whitin algorithm while MRP uses lot-for-lot and EOQ.

Diff: 2

Topic: MRP management

Objective: no LO

87) Which of the following lot-sizing techniques results in the lowest holding costs?

A) lot-for-lot

B) EOQ

C) part-period balancing

D) Wagner-Whitin algorithm

E) the quantity discount model

Diff: 2

Topic: Lot-sizing techniques

Objective: LO14-4

88) 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.

Diff: 2

Topic: MRP structure

Objective: LO14-3

89) What lot-sizing technique is generally preferred when inventory holding costs are extremely high?

A) lot-for-lot

B) EOQ

C) part-period balancing

D) the Wagner-Whitin algorithm

E) All of the above are appropriate for the situation.

Diff: 2

Topic: Lot-sizing techniques

Objective: LO14-4

90) 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

Diff: 2

Topic: Lot-sizing techniques

Objective: LO14-4

91) An item's holding cost is 60 cents per week. Each setup costs $120. Lead time is 2 weeks. EPP is

A) .005

B) 60

C) 72

D) 100

E) 200

Diff: 2

Topic: Lot-sizing techniques

AACSB: Analytic Skills

Objective: LO14-4

92) 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.

Diff: 2

Topic: Lot-sizing techniques

Objective: LO14-4

93) A firm makes numerous models of mowers, garden tractors, and gasoline powered utility vehicles. Some assemblies and parts are common to many end items. To relieve the MPS of performing order releases on these common parts, the firm might choose to use the __________ technique.

A) Wagner-Whitin

B) economic part period

C) supermarket

D) gross material requirements

E) resource requirements profile

Diff: 2

Topic: MRP management

Objective: LO14-1

94) 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.

Diff: 2

Topic: Extensions of MRP

Objective: LO14-6

95) 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

Diff: 2

Topic: Extensions of MRP

Objective: LO14-6

96) 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) MRP augmented by other resource variables

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

Diff: 2

Topic: Extensions of MRP

Objective: LO14-5

97) The extension of MRP which extends to resources such as labor hours and machine hours, as well as to order entry, purchasing, and direct interface with customers and suppliers is

A) MRP II

B) enterprise resource planning

C) the master production schedule

D) closed-loop MRP

E) not yet technically possible

Diff: 2

Topic: Extensions of MRP

Objective: LO14-7

98) Which of the following statements regarding MRP in services is true?

A) MRP is for manufacturing only, and is not applicable to services.

B) MRP can be used in services, but only those that offer very limited customization.

C) MRP does not work in services because there is no dependent demand.

D) Services such as restaurant meals illustrate dependent demand, and require product structure trees, bills-of-material, and scheduling.

E) None of the above is true.

Diff: 2

Topic: MRP in services

Objective: no LO

99) 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 feedback loop from distribution centers

E) a material requirements planning package used exclusively by warehouses

Diff: 2

Topic: MRP in services

Objective: no LO

100) By convention, the top level in a bill of material is

A) level 0

B) level 1

C) level T

D) level 10

E) level 100

Diff: 2

Topic: Dependent inventory model requirements

Objective: LO14-1

101) 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

Diff: 2

Topic: Enterprise resource planning (ERP)

Objective: LO14-7

102) Enterprise resource planning (ERP)

A) has been made possible because of advances in hardware and software

B) uses client/server networks

C) creates commonality of databases

D) uses business application-programming interfaces (BAPI) to access their database

E) All of the above are true of ERP.

Diff: 2

Topic: Enterprise resource planning (ERP)

AACSB: Use of IT

Objective: LO14-7

103) 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) All of the above are true.

Diff: 2

Topic: Enterprise resource planning (ERP)

Objective: LO14-7

104) Which of the following regarding enterprise resource planning (ERP) is true?

A) It involves an ongoing process for implementation.

B) It can incorporate improved, reengineered "best processes."

C) It has a software database that is off-the-shelf coding.

D) ERP systems usually include MRP, financial and human resource information.

E) All of the above are true.

Diff: 2

Topic: Enterprise resource planning (ERP)

Objective: LO14-7

105) All of the following are advantages of enterprise resource planning (ERP) except it

A) creates commonality of databases

B) increases communications and collaboration worldwide

C) helps integrate multiple sites and business units

D) requires major changes in the company and its processes to implement

E) can provide a strategic advantage over competitors

Diff: 2

Topic: Enterprise resource planning (ERP)

AACSB: Communication

Objective: LO14-7

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

Diff: 1

Topic: Global company profile

Objective: no LO

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

Diff: 1

Topic: Dependent demand

Objective: no LO

108) A(n) __________ is a timetable that specifies what is to be made and when.

Diff: 1

Topic: Dependent inventory model requirements

Objective: no LO

109) A(n) __________ is a listing of the components, their description, and the quantity of each required to make one unit of a product.

Diff: 2

Topic: Dependent inventory model requirements

Objective: LO14-1

110) A process-focus facility (for example, a print shop) will likely schedule __________ as the focus of its master production schedule.

Diff: 1

Topic: Dependent inventory model requirements

Objective: LO14-2

111) Bills of material organized by major subassemblies or by product options are called __________.

Diff: 2

Topic: Dependent inventory model requirements

Objective: LO14-1

112) The __________ is used to correct an erroneous dimension, quantity, or other specification in a bill of material.

Diff: 1

Topic: Dependent inventory model requirements

Objective: LO14-1

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

Diff: 2

Topic: Dependent inventory model requirements

Objective: LO14-1

114) __________ are the result of adjusting gross requirements for inventory on hand and scheduled receipts.

Diff: 2

Topic: MRP structure

Objective: LO14-3

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

Diff: 2

Topic: MRP management

Objective: no LO

116) __________, unlike MRP, recognizes that departments and machines have limitations on their capacity that must be observed if the schedule is to be realistic.

Diff: 1

Topic: MRP management

Objective: no LO

117) __________ refers to the time units in a material requirements planning (MRP) system.

Diff: 1

Topic: MRP management

Objective: no LO

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

Diff: 2

Topic: Lot-sizing techniques

Objective: LO14-4

119) The __________ technique may be applicable where a firm's parts and subassemblies are common to a variety of its products.

Diff: 1

Topic: MRP management

Objective: LO14-1

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

Diff: 2

Topic: Extensions of MRP

Objective: LO14-6

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

Diff: 1

Topic: Extensions of MRP

Objective: LO14-6

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

Diff: 2

Topic: Extensions of MRP

Objective: LO14-5

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

Diff: 2

Topic: Enterprise resource planning (ERP)

AACSB: Use of IT

Objective: LO14-7

124) Describe the role of record accuracy in Wheeled Coach's successful use of MRP. Is this company's experience the exception or the rule? Answer in a well-developed paragraph.

Diff: 1

Topic: Global company profile

Objective: no LO

125) What is MRP? Identify four benefits from its use.

Diff: 1

Topic: Dependent demand

Objective: no LO

126) How does the process choice of an organization affect the basis of its master production schedule?

Diff: 2

Topic: Dependent inventory model requirements

Objective: LO14-2

127) 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?

Diff: 2

Topic: Dependent inventory model requirements

Objective: LO14-2

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

Diff: 1

Topic: MRP structure

Objective: LO14-3

129) Describe briefly the information requirements of basic and extended MRP systems. Comment on the challenge of maintaining timely, accurate information for a large manufacturing operation based on MRP.

Diff: 2

Topic: MRP structure and Extensions of MRP

Objective: LO14-5

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

Diff: 2

Topic: MRP structure

Objective: no LO

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

Diff: 2

Topic: MRP structure

Objective: no LO

132) An error has been detected in the technical drawing of a product about to be placed on a master production schedule. The part should be 9" by 12", not 9 cm by 12 cm; further, the part should be stainless steel, not ordinary steel. What document transmits the needed change? Where is the corrected information recorded? Why is this important to the master production schedule?

Diff: 2

Topic: Dependent inventory model requirements

Objective: LO14-1

133) What are time fences? Why are they used?

Diff: 2

Topic: MRP management

Objective: no LO

134) 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.

Diff: 2

Topic: MRP management

Objective: no LO

135) Describe finite capacity scheduling. How is it more realistic than MRP?

Diff: 1

Topic: MRP and JIT

Objective: no LO

136) What is the "supermarket" as it is used in MRP? How does it alter the responsibility for dealing with lead-time offsets?

Diff: 2

Topic: MRP management

Objective: no LO

137) You have seen several methods for lot sizing in MRP. Why is lot sizing important in MRP? Can too much concern be given lot sizing? Answer in a well-developed paragraph.

Diff: 2

Topic: Lot-sizing techniques

Objective: LO14-4

138) What does the part-period balancing lot-sizing technique attempt to do in deciding the lot sizes?

Diff: 2

Topic: Lot-sizing techniques

Objective: LO14-4

139) Describe how MRP II differs from MRP.

Diff: 2

Topic: Extensions of MRP

Objective: LO14-5

140) How can MRP and JIT be effectively integrated?

1. Reduce the MRP buckets from weekly to daily to perhaps hourly.

2. The planned receipts that are part of a firm's planned orders in an MRP system are communicated to the work areas and are used to sequence production.

3. Inventory is moved through the plant on a JIT basis.

4. As products are completed, they are moved into inventory in the normal way.

5. A back flush is used to reduce inventory balances.

Another approach is the balanced flow. In this system, execution is achieved by maintaining a carefully balanced flow of materials to assembly areas with small lot sizes.

Diff: 3

Topic: MRP management

Objective: no LO

141) Identify the several lot-sizing algorithms used in MRP. Provide at least one advantage and one disadvantage of each.

Diff: 2

Topic: Lot-sizing techniques

Objective: LO14-4

142) Describe the tactics for load smoothing in MRP.

Diff: 2

Topic: Extensions of MRP

Objective: LO14-5

143) What do we mean by closed-loop MRP?

Diff: 2

Topic: Extensions of MRP

Objective: LO14-6

144) What types of resources might be scheduled via an MRP II system?

Diff: 2

Topic: Extensions of MRP

Objective: LO14-5

145) What is DRP?

Diff: 2

Topic: MRP in services

Objective: no LO

146) Compare MRP in services to MRP in manufacturing. Utilize a simple example in your comparison.

Diff: 2

Topic: MRP in services

Objective: no LO

147) What does enterprise resource planning (ERP) allow an organization to do?

Diff: 2

Topic: Enterprise resource planning (ERP)

AACSB: Use of IT

Objective: LO14-7

148) What are the advantages of enterprise resource planning (ERP)?

Diff: 2

Topic: Enterprise resource planning (ERP)

AACSB: Use of IT

Objective: LO14-7

149) What are the disadvantages of enterprise resource planning (ERP)?

Diff: 2

Topic: Enterprise resource planning (ERP)

AACSB: Use of IT

Objective: LO14-7

150) Consider the following bill of material. Fifty units of Product A are needed. Assuming no on-hand inventory, and no scheduled receipts, explode the bill of material.

Item A: 50 units; Item B: 50 * 2 = 100 units; Item C: (50 * 3) = 150 units; Item D: (50 * 2 * 1) + (50 * 3 * 1) = 250 units; Item E: (50 *3 * 2) = 300 units.

Diff: 2

Topic: MRP structure

AACSB: Analytic Skills

Objective: LO14-1

151) The large parts of a playground A-frame (from which to hang a swing or glider) consist of a ridge pole, four legs, and two side braces. Each pair of legs fastens to the ridge with one fastener set. Each side brace requires two fastener sets for attachment to the legs. Each fastener set includes one zinc-plated bolt, one lock-washer, and one nut.

There is one order outstanding, to make 80 frame kits. There are 200 legs in inventory. There are no other large items in inventory, and no scheduled receipts. Fasteners are available from the small parts area.

a. Draw the product structure tree

b. Calculate the net requirements to fulfill the outstanding order.

Diff: 1

Topic: MRP structure

AACSB: Analytic Skills

Objective: LO14-1

152) A very simple product (A) consists of a base (B) and a casting (C). The base consists of a plate (P) and three fasteners (F). There are currently 30 castings and 100 bases on hand. Final assembly takes one week. The casting has a lead time of three weeks. All other parts have one week lead times. There are no scheduled receipts. All components are lot-for-lot. The MPS requires 80 units of product A in week 5 and 120 in week 8. Produce the MRP for the upcoming eight weeks. Produce a list of all planned order releases.

Diff: 2

Topic: MRP structure

AACSB: Analytic Skills

Objective: LO14-3

153) Consider the following requirements for a certain product.

Beginning inventory = 500 units

Setup cost = $500 per setup

Lead time = 1 week

Holding cost = $3 per unit per week

a. Develop the lot-for-lot MRP table.

b. Calculate the total relevant costs.

Diff: 1

Topic: Lot-sizing techniques

AACSB: Analytic Skills

Objective: LO14-4

154) Consider the following bill of material. Fifty units of Product A are needed. Assuming no on-hand inventory, explode the bill of material.

Diff: 2

Topic: MRP structure

AACSB: Analytic Skills

Objective: LO14-1

155) Consider the following bill of material. Forty units of Product A are needed. Assuming no on-hand inventory, and no scheduled receipts, explode the bill of material.

Diff: 2

Topic: MRP structure

AACSB: Analytic Skills

Objective: LO14-1

156) Clancy's Motors has the following demand to meet for custom manufactured fuel injector parts. The holding cost for that item is $.75 per month and each setup costs $150. Calculate the order quantity by use of the part-period algorithm. Lead time is 2 months.

EPP = = = 200 units

In Period 1, an order for 250 units should be received; in Period 3, an order for 350 units should be received; in Period 5, an order for 250 units should be received, and in Period 7, an order for 250 should be received, as per the table below.

Diff: 2

Topic: Lot-sizing techniques

AACSB: Analytic Skills

Objective: LO14-4

157) The MPS calls for 120 units of Product M. There are currently 30 of Product M on hand. Each M requires 4 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.

Diff: 1

Topic: MRP structure

AACSB: Analytic Skills

Objective: LO14-3

158) The MPS calls for 110 units of Product A. There are currently 60 of Product A on hand. Each A requires 2 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.

Diff: 1

Topic: MRP structure

AACSB: Analytic Skills

Objective: LO14-3

159) The MPS calls for 50 units of Product A and 60 of B. There are currently 35 of Product B on hand. Each A requires 2 of Part C; each B requires 5 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.

Diff: 1

Topic: MRP structure

AACSB: Analytic Skills

Objective: LO14-3

160) Consider the bill of material for Product J and the data given in the following table. The gross requirements for J are 200 units in week 6 and 250 units in week 8. Develop the MRP tables for each item for an 8-week planning period. Use the lot-for-lot lot-sizing rule.

Diff: 2

Topic: MRP structure

AACSB: Analytic Skills

Objective: LO14-3

161) Each R requires 3 of component S and 3 of material A; each S requires 3 of part T. The lead time for assembly of R is 1 week. The lead time for the manufacture of S is 2 weeks. The lead time for material A is 1 week. The lead time for the procurement of T is 4 weeks.

a. Construct the time-phased product structure.

b. Construct the bill of material.

Diff: 2

Topic: MRP structure

AACSB: Analytic Skills

Objective: LO14-1

162) Each X requires 2 of component Y and 1 of part W. Each Y requires 10 of Z. Each W requires 3 of Q and 2 of R. Lead times are X = 1 week, Y = 1 week, W = 2 weeks, R = 1 week, Z = 3 weeks, and Q = 3 weeks.

a. Construct the time-phased product structure.

b. Construct the bill of material.

Diff: 2

Topic: MRP structure

AACSB: Analytic Skills

Objective: LO14-1

163) A product has the following gross requirements. Which is cheaperlot-for-lot, part period balance, or EOQ lot sizing?

Other data for this scenario include: setup cost = $250, inventory holding cost $2 per unit per week. There is no beginning inventory; there are no scheduled receipts. The usage pattern is expected to continue for the remainder of the year.

EOQ is based on 360/6 = 60 units per week average demand: = 122

Annual setup costs = ∙ 250 + $6,393;

Annual holding costs = ∙ 2 ∙ 52 = $6,344

Total annual costs = $12,737; Cost for six weeks = 12,737 ∙ = $1,469

For part-period balancing, the EPP=250/2 = 125. Total cost for PPB over the six periods is $1,210.

Summary of costs: LFL = $1,500; EOQ = $1,469; PPB = $1,210. PPB is cheapest lot-sizing model for this problem.

Diff: 2

Topic: Lot-sizing techniques

AACSB: Analytic Skills

Objective: LO14-4

164) A product has the following gross requirements. Which is cheaper?lot-for-lot or EOQ lot-sizing?

Other data for this scenario include: setup cost = $1000, inventory holding cost $1 per unit per week. There is no beginning inventory; there are no scheduled receipts. The usage pattern is expected to continue for the remainder of the year.

EOQ is based on 200/4 = 50 units per week average demand: = 316

Annual setup costs = ∙ 1000 = $8,228;

Annual holding costs = ∙ 1 ∙ 52 = $8,216

Total annual costs = $16,444; Cost for four weeks = 16,444 ∙ = $1,265

Summary of costs: LFL = $4,000; EOQ = $1,265. EOQ is cheaper lot-sizing model for this problem.

Diff: 2

Topic: Lot-sizing techniques

AACSB: Analytic Skills

Objective: LO14-4

165) Construct a product structure tree for a movie purchased in DVD format. Assume that it contains a single DVD disk. Don't be concerned with artwork?you may use labeled boxes for your parts and assemblies.

Diff: 2

Topic: Dependent inventory model requirements

AACSB: Analytic Skills

Objective: LO14-1

166) Construct an indented bill of material for a common 3-ring view binder (the kind that lets you slip your own cover sheet into the front panel and spine). Assume the rings to be 1 inch diameter. Don't worry about other dimensions?pay attention to accounting for all of the parts.

Indented bill of material, Three-ring binder

Cover assembly

Front cover

Chipboard interior

Vinyl exterior, inside and outside of front cover

Clear "view" layer, outside

Vinyl pocket, inside

Spine

Chipboard interior

Vinyl exterior, inside and outside of front cover

Clear "view" layer, outside

Back cover

Chipboard interior

Vinyl exterior, inside and outside of front cover

Clear "view" layer, outside

Vinyl pocket, inside

Ring Assembly

Spine

Main spine (holds the three sets of rings and the tabs)

Spring (runs the length of the spine)

Rings (3)

Left ring half

Right ring half

Spacer and tensioner (2)

Clasps (2) (holds the locking tabs in)

Rivets (2)

Locking tabs (2)

Paperwork

Front insert

Spine insert

UPC tag

Diff: 2

Topic: Dependent inventory model requirements

AACSB: Analytic Skills

Objective: LO14-1

167) 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?

Diff: 1

Topic: Extensions of MRP

AACSB: Analytic Skills

Objective: LO14-5

168) Explode the following Bill of materials assuming 1 A is to be made. If there are 20 of every item except A in on-hand inventory how many As can be assembled?

Item A:1, Item B:1, Item C: 3 Item E: 3 Item D:2(3)+4(1)=10 Item F:2(3)+10=16

To find how many As can be constructed first consume all Bs and Cs to make 6As with 14 Bs left and 2Cs. Thus more Cs are needed. Consume 20Ds and 10 Es to make 10 addition Cs. Thus there are now 12 Cs and 14 Bs on hand, use these to produce 4 more As. This leaves 10 Bs, 20 Fs, and 10Es. Since no more Cs can be constructed no more As can be constructed. Thus the maximum number of A's that can be assembled is 6+4=10

Diff: 2

Topic: MRP structure

AACSB: Analytic Skills

Objective: LO14-1

169) 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)?

Diff: 2

Topic: MRP structure

AACSB: Analytic Skills

Objective: LO14-3

170) A manufacturing company is trying to determine the cost of materials used to produce an A. If Fs cost $1 and Ds cost $2 how much does it cost to produce an A (in F and D materials only)?

Using an explosion shows that 10 Ds and 16 Fs are needed to produce 1A. Thus the cost is 10($2)+16($1)= $36

Diff: 2

Topic: MRP structure

AACSB: Analytic Skills

Objective: LO14-1

171) Four A washers, Five B washers, Two C bolts, and a D bolt are required to make one Grill parts kit. If 100 grill part kits are needed how many more washers will be consumed than bolts?

Since A and B are washers and C and D are bolts the difference is 400+500-200-100 = 600 more washers are used than bolts

Diff: 2

Topic: MRP structure

AACSB: Analytic Skills

Objective: LO14-2

172) A company is trying to implement MRP but is having trouble determining which order sizing method will minimize costs. Setup cost is $200 and holding cost is $2/period. If each period is 1 week, gross requirements are 270 units per 10 weeks, and there are 6 planned order releases for every 10 weeks, calculate the cost for lot-for-lot compared to EOQ for an entire year. Assume that EOQ and lot-for-lot are computed as though the usage will occur continually throughout the year.

Using EOQ= sqrt (2DS/H) gives sqrt (2*1404*200/(2*52))= 73 units

Setups per year will be 1404/73 = 19, setup cost is 19*200=$3800

Holding cost is 73/2 * $2(52) = $3796

Setup+Holding=$7596 per year

Lot-for-lot: There is never any inventory in lot for lot, as it is consumed instantly. Thus cost is only set-up, or 6 setups * $200/setup = $1200/10 weeks = $120/week *52 weeks = $6240 per year.

Thus lot-for-lot is cheaper than EOQ for this scenario.

Diff: 2

Topic: Lot-sizing techniques

AACSB: Analytic Skills

Objective: LO14-4