Ch15 Resource Planning Exam Prep

CHAPTER 15

RESOURCE PLANNING

CHAPTER LEARNING OBJECTIVES

1. Use the material requirements planning (MRP) process to determine orders in a variable demand environment and document product structures through bills of material. Refer to Section 15.1.

2. Use capacity requirements planning (CRP) to calculate overloads and underloads and discuss options for levelling the load on a system. Refer to Section 15.2.

3. Discuss the basics of enterprise resource planning (ERP), including how it is used, key modules, and implementation issues. Enterprise resource planning (ERP) is software that allows companies to organize and manage their business processes by sharing information across functional areas; transform transactional data into useful information to support business decisions in other parts of the company; and connect with supply chain and customer management applications to help businesses share information—inside and outside the company. Key modules of the ERP systems include:

• finance/accounting module

• sales/marketing module

• production/materials management module

• human resources module

ERP implementation can be capital intensive. Small-market and midsize-market companies with time and budget constraints have a hard time implementing ERP.

4. Explain how software related to ERP is used, including the complexities of integrating multiple business software systems. ERP and its related software include customer relationship management (CRM), product lifecycle management (PLM), and supply chain management (SCM). These types of software systems can work together. For example, customer and supplier collaboration on design with PLM can reduce time to market for new products and services.

TRUE-FALSE STATEMENTS

1. Material requirements planning (MRP) translates the master production schedule into requirements for components, subassemblies, and raw materials.

Answer: True

Difficulty: Easy

Learning Objective: Use the material requirements planning (MRP) process to determine orders in a variable demand environment and document product structures through bills of material.

Section Reference: 15.1 Material Requirements Planning (MRP)

2. One objective of material requirements planning (MRP) is to utilize all available capacity.

Answer: False

Difficulty: Easy

Learning Objective: Use the material requirements planning (MRP) process to determine orders in a variable demand environment and document product structures through bills of material.

Section Reference: 15.1 Material Requirements Planning (MRP)

3. A material requirements planning (MRP) system serves as both an inventory control system and as a production scheduling system.

Answer: True

Difficulty: Medium

Learning Objective: Use the material requirements planning (MRP) process to determine orders in a variable demand environment and document product structures through bills of material.

Section Reference: 15.1 Material Requirements Planning (MRP)

4. Material requirements planning (MRP) is useful for managing and scheduling discrete demand items.

Answer: True

Difficulty: Medium

Learning Objective: Use the material requirements planning (MRP) process to determine orders in a variable demand environment and document product structures through bills of material.

Section Reference: 15.1 Material Requirements Planning (MRP)

5. A forecast of dependent demand requirements is one of the major inputs into the MRP process.

Answer: False

Difficulty: Medium

Learning Objective: Use the material requirements planning (MRP) process to determine orders in a variable demand environment and document product structures through bills of material.

Section Reference: 15.1 Material Requirements Planning (MRP)

6. Very simple products typically do not require material requirements planning (MRP) to plan production or monitor inventory levels.

Answer: True

Difficulty: Medium

Learning Objective: Use the material requirements planning (MRP) process to determine orders in a variable demand environment and document product structures through bills of material.

Section Reference: 15.1 Material Requirements Planning (MRP)

7. The master production schedule (MPS) is a major output of the MRP process.

Answer: False

Difficulty: Easy

Learning Objective: Use the material requirements planning (MRP) process to determine orders in a variable demand environment and document product structures through bills of material.

Section Reference: 15.1 Material Requirements Planning (MRP)

8. The optimal time required to manufacture a product is called its cumulative lead time.

Answer: False

Difficulty: Easy

Learning Objective: Use the material requirements planning (MRP) process to determine orders in a variable demand environment and document product structures through bills of material.

Section Reference: 15.1 Material Requirements Planning (MRP)

9. Modular bills of material are used to group small, loose parts together into a kit.

Answer: False

Difficulty: Medium

Learning Objective: Use the material requirements planning (MRP) process to determine orders in a variable demand environment and document product structures through bills of material.

Section Reference: 15.1 Material Requirements Planning (MRP)

10. For information concerning on-hand quantities, lot sizes, and lead time, figures can be found in the master production schedule (MPS).

Answer: False

Difficulty: Medium

Learning Objective: Use the material requirements planning (MRP) process to determine orders in a variable demand environment and document product structures through bills of material.

Section Reference: 15.1 Material Requirements Planning (MRP)

11. Lot sizing rules are used in MRP to determine work or purchase order quantities.

Answer: True

Difficulty: Medium

Learning Objective: Use the material requirements planning (MRP) process to determine orders in a variable demand environment and document product structures through bills of material.

Section Reference: 15.1 Material Requirements Planning (MRP)

12. Planned order releases at one level of a product structure generate gross requirements at the next level.

Answer: True

Difficulty: Medium

Learning Objective: Use the material requirements planning (MRP) process to determine orders in a variable demand environment and document product structures through bills of material.

Section Reference: 15.1 Material Requirements Planning (MRP)

13. The periodic order quantity (POQ) lot-sizing technique places orders every demand period.

Answer: False

Difficulty: Medium

Learning Objective: Use the material requirements planning (MRP) process to determine orders in a variable demand environment and document product structures through bills of material.

Section Reference: 15.1 Material Requirements Planning (MRP)

14. Material requirements planning (MRP) is more useful for simple products and less useful for complex products.

Answer: False

Difficulty: Easy

Learning Objective: Use the material requirements planning (MRP) process to determine orders in a variable demand environment and document product structures through bills of material.

Section Reference: 15.1 Material Requirements Planning (MRP)

15. The total length of time to purchase an item from a supplier is called its cumulative lead time.

Answer: False

Difficulty: Easy

Learning Objective: Use the material requirements planning (MRP) process to determine orders in a variable demand environment and document product structures through bills of material.

Section Reference: 15.1 Material Requirements Planning (MRP)

16. The quantities reported on a master production schedule may reflect a combination of actual and forecasted demand.

Answer: True

Difficulty: Medium

Learning Objective: Use the material requirements planning (MRP) process to determine orders in a variable demand environment and document product structures through bills of material.

Section Reference: 15.1 Material Requirements Planning (MRP)

17. The quantities displayed on a master production schedule represent production and not actual demand.

Answer: True

Difficulty: Medium

Learning Objective: Use the material requirements planning (MRP) process to determine orders in a variable demand environment and document product structures through bills of material.

Section Reference: 15.1 Material Requirements Planning (MRP)

18. A phantom bill of material is appropriate when a product consists of assemblies that are later combined to form a variety of final products.

Answer: False

Difficulty: Medium

Learning Objective: Use the material requirements planning (MRP) process to determine orders in a variable demand environment and document product structures through bills of material.

Section Reference: 15.1 Material Requirements Planning (MRP)

19. Because the item master file is an input into the MRP process, it should be updated to reflect any revisions or changes.

Answer: True

Difficulty: Medium

Learning Objective: Use the material requirements planning (MRP) process to determine orders in a variable demand environment and document product structures through bills of material.

Section Reference: 15.1 Material Requirements Planning (MRP)

20. Firms that successfully implement an MRP system no longer require cycle counting of inventory.

Answer: False

Difficulty: Medium

Learning Objective: Use the material requirements planning (MRP) process to determine orders in a variable demand environment and document product structures through bills of material.

Section Reference: 15.1 Material Requirements Planning (MRP)

21. A matrix is used to organize and display the information generated by the MRP process.

Answer: True

Difficulty: Medium

Learning Objective: Use the material requirements planning (MRP) process to determine orders in a variable demand environment and document product structures through bills of material.

Section Reference: 15.1 Material Requirements Planning (MRP)

22. Capacity requirement planning (CRP) converts the material plan into labour and machine workloads.

Answer: True

Difficulty: Easy

Learning Objective: Use capacity requirements planning (CRP) to calculate overloads and underloads and discuss options for levelling the load on a system.

Section Reference: 15.2 Capacity Requirements Planning (CRP)

23. Capacity requirements planning (CRP) projects the load from a given material plan onto the capacity of a system.

Answer: True

Difficulty: Medium

Learning Objective: Use capacity requirements planning (CRP) to calculate overloads and underloads and discuss options for levelling the load on a system.

Section Reference: 15.2 Capacity Requirements Planning (CRP)

24. A load profile displays underloads and overloads.

Answer: True

Difficulty: Easy

Learning Objective: Use capacity requirements planning (CRP) to calculate overloads and underloads and discuss options for levelling the load on a system.

Section Reference: 15.2 Capacity Requirements Planning (CRP)

25. Effective capacity is determined by multiplying the rated capacity by utilization and efficiency.

Answer: True

Difficulty: Medium

Learning Objective: Use capacity requirements planning (CRP) to calculate overloads and underloads and discuss options for levelling the load on a system.

Section Reference: 15.2 Capacity Requirements Planning (CRP)

26. Load levelling is used to resolve underloaded and overloaded capacity conditions.

Answer: True

Difficulty: Easy

Learning Objective: Use capacity requirements planning (CRP) to calculate overloads and underloads and discuss options for levelling the load on a system.

Section Reference: 15.2 Capacity Requirements Planning (CRP)

27. An enterprise resource planning (ERP) system shares information across functional areas.

Answer: True

Difficulty: Medium

Learning Objective: Discuss the basics of enterprise resource planning (ERP), including how it is used, key modules, and implementation issues.

Section Reference: 15.3 Enterprise Resource Planning (ERP)

28. The application modules that comprise the ERP system are designed to support only customer relationship management processes.

Answer: False

Difficulty: Medium

Learning Objective: Discuss the basics of enterprise resource planning (ERP), including how it is used, key modules, and implementation issues.

Section Reference: 15.3 Enterprise Resource Planning (ERP)

29. ERP systems are only concerned with production and marketing processes.

Answer: False

Difficulty: Easy

Learning Objective: Discuss the basics of enterprise resource planning (ERP), including how it is used, key modules, and implementation issues.

Section Reference: 15.3 Enterprise Resource Planning (ERP)

30. Enterprise resource planning integrates business processes at the expense of customer interaction.

Answer: False

Difficulty: Medium

Learning Objective: Discuss the basics of enterprise resource planning (ERP), including how it is used, key modules, and implementation issues.

Section Reference: 15.3 Enterprise Resource Planning (ERP)

31. ERP application modules can be used alone or in combination.

Answer: True

Difficulty: Medium

Learning Objective: Discuss the basics of enterprise resource planning (ERP), including how it is used, key modules, and implementation issues.

Section Reference: 15.3 Enterprise Resource Planning (ERP)

32. Single-source ERP systems are often easier to integrate than systems built using the best-in-breed approach.

Answer: True

Difficulty: Medium

Learning Objective: Discuss the basics of enterprise resource planning (ERP), including how it is used, key modules, and implementation issues.

Section Reference: 15.3 Enterprise Resource Planning (ERP)

33. The last stage in ERP implementation involves analyzing business processes.

Answer: False

Difficulty: Easy

Learning Objective: Discuss the basics of enterprise resource planning (ERP), including how it is used, key modules, and implementation issues.

Section Reference: 15.3 Enterprise Resource Planning (ERP)

34. Customer relationship management (CRM) software plans and executes business processes that involve customer interactions.

Answer: True

Difficulty: Medium

Learning Objective: Explain how software related to ERP is used, including the complexities of integrating multiple business software systems.

Section Reference: 15.4 ERP and Related Software: Connectivity and Integration

35. Customer relationship management systems change the focus from managing products to managing customers.

Answer: True

Difficulty: Medium

Learning Objective: Explain how software related to ERP is used, including the complexities of integrating multiple business software systems.

Section Reference: 15.4 ERP and Related Software: Connectivity and Integration

MULTIPLE CHOICE QUESTIONS

36. Material requirements planning (MRP) is a useful for all of the following except

a) dependent demand items.

b) discrete demand items.

c) independent demand items.

d) erratic orders.

Answer: c

Difficulty: Medium

Learning Objective: Use the material requirements planning (MRP) process to determine orders in a variable demand environment and document product structures through bills of material.

Section Reference: 15.1 Material Requirements Planning (MRP)

37. All of the following are inputs into the MRP process except

a) the master production schedule.

b) the product structure file.

c) the item master file.

d) the planned order report.

Answer: d

Difficulty: Easy

Learning Objective: Use the material requirements planning (MRP) process to determine orders in a variable demand environment and document product structures through bills of material.

Section Reference: 15.1 Material Requirements Planning (MRP)

38. The product structure file lists all of the following except

a) the product’s demand.

b) the items that go into the product.

c) a brief description of each item.

d) when and in what quantity each item is needed in the assembly process.

Answer: a

Difficulty: Easy

Learning Objective: Use the material requirements planning (MRP) process to determine orders in a variable demand environment and document product structures through bills of material.

Section Reference: 15.1 Material Requirements Planning (MRP)

39. A phantom bill of material is used

a) to group small, loose parts together.

b) when the product is manufactured in major subassemblies.

c) for subassemblies that are immediately consumed in the next stage of production.

d) when due dates have not been calculated.

Answer: c

Difficulty: Medium

Learning Objective: Use the material requirements planning (MRP) process to determine orders in a variable demand environment and document product structures through bills of material.

Section Reference: 15.1 Material Requirements Planning (MRP)

40. A ___ of material is used to plan the production of products with many optional features.

a) K-bill

b) modular bill

c) phantom bill

d) time-phased bill

Answer: b

Difficulty: Medium

Learning Objective: Use the material requirements planning (MRP) process to determine orders in a variable demand environment and document product structures through bills of material.

Section Reference: 15.1 Material Requirements Planning (MRP)

41. The item master file contains all the following except

a) on-hand quantities.

b) lead times.

c) planned order releases.

d) on-order quantities.

Answer: c

Difficulty: Medium

Learning Objective: Use the material requirements planning (MRP) process to determine orders in a variable demand environment and document product structures through bills of material.

Section Reference: 15.1 Material Requirements Planning (MRP)

42. The MRP process of subtracting on-hand quantities and scheduled receipts from gross requirements to produce net requirements is referred to as

a) cycle counting.

b) lot sizing.

c) exploding.

d) netting.

Answer: d

Difficulty: Medium

Learning Objective: Use the material requirements planning (MRP) process to determine orders in a variable demand environment and document product structures through bills of material.

Section Reference: 15.1 Material Requirements Planning (MRP)

43. The MRP process of determining requirements for lower level items based on the master production schedule is referred to as

a) lot sizing.

b) netting.

c) backward scheduling.

d) exploding.

Answer: d

Difficulty: Medium

Learning Objective: Use the material requirements planning (MRP) process to determine orders in a variable demand environment and document product structures through bills of material.

Section Reference: 15.1 Material Requirements Planning (MRP)

44. ___ is a lot-sizing technique that orders for multiple demand periods and is referred to as

a) Lot-for-lot (L4L).

b) Periodic order quantity (POQ).

c) Economic order quantity(EOQ).

d) Multiple order quantity (MOQ).

Answer: b

Difficulty: Medium

Learning Objective: Use the material requirements planning (MRP) process to determine orders in a variable demand environment and document product structures through bills of material.

Section Reference: 15.1 Material Requirements Planning (MRP)

45. Given the following Product Structure Record:

The number of E’s required for each A would be

a) 1.

b) 2.

c) 3.

d) 4.

Answer: c

Difficulty: Medium

Learning Objective: Use the material requirements planning (MRP) process to determine orders in a variable demand environment and document product structures through bills of material.

Section Reference: 15.1 Material Requirements Planning (MRP)

46. Given the following Product Structure Record:

The number of D’s required for each A would be

a) 2.

b) 3.

c) 6.

d) 12.

Answer: d

Difficulty: Medium

Learning Objective: Use the material requirements planning (MRP) process to determine orders in a variable demand environment and document product structures through bills of material.

Section Reference: 15.1 Material Requirements Planning (MRP)

47. Given the following Product Structure Record:

The number of G’s required for each A would be

a) 40.

b) 20.

c) 18.

d) 3.

Answer: a

Difficulty: Medium

Learning Objective: Use the material requirements planning (MRP) process to determine orders in a variable demand environment and document product structures through bills of material.

Section Reference: 15.1 Material Requirements Planning (MRP)

48. Given the following MRP matrix for Item D:

The planned order release for period 3 would be

a) 100.

b) 160.

c) 270.

d) 300.

Answer: b

Difficulty: Hard

Learning Objective: Use the material requirements planning (MRP) process to determine orders in a variable demand environment and document product structures through bills of material.

Section Reference: 15.1 Material Requirements Planning (MRP)

49. Given the following MRP matrix for Item D:

The planned order release for period 5 would be

a) 100.

b) 120.

c) 160.

d) 270.

Answer: b

Difficulty: Hard

Learning Objective: Use the material requirements planning (MRP) process to determine orders in a variable demand environment and document product structures through bills of material.

Section Reference: 15.1 Material Requirements Planning (MRP)

50. Given the following MRP matrix for Item D:

The planned order receipt for period 6 would be

a) 100.

b) 120.

c) 160.

d) 270.

Answer: d

Difficulty: Hard

Learning Objective: Use the material requirements planning (MRP) process to determine orders in a variable demand environment and document product structures through bills of material.

Section Reference: 15.1 Material Requirements Planning (MRP)

51. Given the following MRP matrix for Item D:

The projected on hand quantity at the end of period 3 would be

a) 0.

b) 20.

c) 60.

d) 70.

Answer: d

Difficulty: Hard

Learning Objective: Use the material requirements planning (MRP) process to determine orders in a variable demand environment and document product structures through bills of material.

Section Reference: 15.1 Material Requirements Planning (MRP)

52. Given the following MRP matrix for Item C:

If each order cost $500 and the holding cost is $0.75 per item per period, the periodic order quantity would be

a) 3 periods of requirements.

b) 2 periods of requirements.

c) 1 period of requirements.

d) 0 period of requirements.

Answer: a

Difficulty: Hard

Learning Objective: Use the material requirements planning (MRP) process to determine orders in a variable demand environment and document product structures through bills of material.

Section Reference: 15.1 Material Requirements Planning (MRP)

53. Given the following MRP matrix for Item C:

If each order cost $500 and the holding cost is $0.75 per item per period, then using the Periodic Order Quantity lot sizing technique, the Planned Order Release for period 1 would be

a) 270.

b) 290.

c) 340.

d) 560.

Answer: c

Difficulty: Hard

Learning Objective: Use the material requirements planning (MRP) process to determine orders in a variable demand environment and document product structures through bills of material.

Section Reference: 15.1 Material Requirements Planning (MRP)

54. Given the following MRP matrix for Item C:

If each order cost $500 and the holding cost is $0.75 per item per period, then using the Periodic Order Quantity lot sizing technique, the Planned Order Release for period 4 would be

a) 270.

b) 290.

c) 340.

d) 560.

Answer: b

Difficulty: Hard

Learning Objective: Use the material requirements planning (MRP) process to determine orders in a variable demand environment and document product structures through bills of material.

Section Reference: 15.1 Material Requirements Planning (MRP)

55. Given the following MRP matrix for Item C:

If each order cost $500 and the holding cost is $0.75 per item per period, then using the Periodic Order Quantity lot sizing technique, the Projected on Hand at the end of period 7 would be

a) 330.

b) 270.

c) 0.

d) 140.

Answer: c

Difficulty: Hard

Learning Objective: Use the material requirements planning (MRP) process to determine orders in a variable demand environment and document product structures through bills of material.

Section Reference: 15.1 Material Requirements Planning (MRP)

56. Given the following Product Structure Record:

The number of F’s required for each A would be

a) 6.

b) 12.

c) 18.

d) 24.

Answer: d

Difficulty: Medium

Learning Objective: Use the material requirements planning (MRP) process to determine orders in a variable demand environment and document product structures through bills of material.

Section Reference: 15.1 Material Requirements Planning (MRP)

57. Given the following Product Structure Record:

The number of G’s required to assemble 10 A’s would be

a) 9.

b) 10.

c) 90.

d) 180.

Answer: c

Difficulty: Medium

Learning Objective: Use the material requirements planning (MRP) process to determine orders in a variable demand environment and document product structures through bills of material.

Section Reference: 15.1 Material Requirements Planning (MRP)

58. Given the following MRP matrix for Item E:

The planned order releases for period 1 would be

a) 300.

b) 200.

c) 75.

d) 0.

Answer: d

Difficulty: Hard

Learning Objective: Use the material requirements planning (MRP) process to determine orders in a variable demand environment and document product structures through bills of material.

Section Reference: 15.1 Material Requirements Planning (MRP)

59. Given the following MRP matrix for Item E:

The projected on hand quantity at the end of period 3 would be

a) 0.

b) 100.

c) 300.

d) 500.

Answer: c

Difficulty: Hard

Learning Objective: Use the material requirements planning (MRP) process to determine orders in a variable demand environment and document product structures through bills of material.

Section Reference: 15.1 Material Requirements Planning (MRP)

60. Given the following MRP matrix for Item E:

The planned order releases for period 3 would be

a) 300.

b) 200.

c) 75.

d) 0.

Answer: b

Difficulty: Hard

Learning Objective: Use the material requirements planning (MRP) process to determine orders in a variable demand environment and document product structures through bills of material.

Section Reference: 15.1 Material Requirements Planning (MRP)

61. Given the following MRP matrix for Item E:

The planned order releases for period 4 would be

a) 300.

b) 200.

c) 75.

d) 0.

Answer: a

Difficulty: Hard

Learning Objective: Use the material requirements planning (MRP) process to determine orders in a variable demand environment and document product structures through bills of material.

Section Reference: 15.1 Material Requirements Planning (MRP)

62. A firm has the following gross requirements for Item F. If ordering costs are $60 per order and carrying costs are $0.50 per period.

If L4L ordering is used the planned order releases would be

a) 40 in period 1 and 0 in period 3.

b) 80 in period 2 and 60 in period 3.

c) 60 in period 2 and 80 in period 3.

d) 0 in period 1 and 40 in period 3.

Answer: b

Difficulty: Hard

Learning Objective: Use the material requirements planning (MRP) process to determine orders in a variable demand environment and document product structures through bills of material.

Section Reference: 15.1 Material Requirements Planning (MRP)

63. A firm has the following gross requirements for Item F. If ordering costs are $60 per order and carrying costs are $0.50 per period.

If EOQ lot sizing is used the minimum order quantity would be

a) 85.

b) 100.

c) 120.

d) 150.

Answer: c

Difficulty: Hard

Learning Objective: Use the material requirements planning (MRP) process to determine orders in a variable demand environment and document product structures through bills of material.

Section Reference: 15.1 Material Requirements Planning (MRP)

64. A firm has the following gross requirements for Item F. If ordering costs are $60 per order and carrying costs are $0.50 per period.

If EOQ lot sizing is used to set the minimum order quantity, then the planned order releases would be

a) 40 in period 1 and 0 in period 3.

b) 0 in period 2 and 80 in period 3.

c) 120 in period 2 and 120 in period 3.

d) 100 in period 2 and 100 in period 3.

Answer: c

Difficulty: Hard

Learning Objective: Use the material requirements planning (MRP) process to determine orders in a variable demand environment and document product structures through bills of material.

Section Reference: 15.1 Material Requirements Planning (MRP)

65. A firm has the following gross requirements for Item F. If ordering costs are $60 per order and carrying costs are $0.50 per period.

If EOQ lot sizing is used to set the minimum order quantity, then the projected on hand quantity at the end of period 3 would be

a) 40.

b) 0.

c) 100.

d) 20.

Answer: a

Difficulty: Hard

Learning Objective: Use the material requirements planning (MRP) process to determine orders in a variable demand environment and document product structures through bills of material.

Section Reference: 15.1 Material Requirements Planning (MRP)

66. A firm has the following gross requirements for Item F. If ordering costs are $60 per order and carrying costs are $0.50 per period.

If the periodic order quantity lot sizing rule is used, the number of periods worth of requirements would be

a) 0.

b) 1.

c) 2.

d) 3.

Answer: c

Difficulty: Hard

Learning Objective: Use the material requirements planning (MRP) process to determine orders in a variable demand environment and document product structures through bills of material.

Section Reference: 15.1 Material Requirements Planning (MRP)

67. A firm has the following gross requirements for Item F. If ordering costs are $60 per order and carrying costs are $0.50 per period.

If the periodic order quantity lot sizing rule is used, then planned order releases in Period 2 would be

a) 40 in period 1.

b) 60 in period 2.

c) 120 in period 3.

d) 140 in Period 2.

Answer: d

Difficulty: Hard

Learning Objective: Use the material requirements planning (MRP) process to determine orders in a variable demand environment and document product structures through bills of material.

Section Reference: 15.1 Material Requirements Planning (MRP)

68. Given the following Product Structure Record:

The number of E’s required for each A would be

a) 3.

b) 6.

c) 12.

d) 24.

Answer: c

Difficulty: Medium

Learning Objective: Use the material requirements planning (MRP) process to determine orders in a variable demand environment and document product structures through bills of material.

Section Reference: 15.1 Material Requirements Planning (MRP)

69. Given the following Product Structure Record:

The number of F’s required for each A would be

a) 2.

b) 3.

c) 12.

d) 16.

Answer: d

Difficulty: Medium

Learning Objective: Use the material requirements planning (MRP) process to determine orders in a variable demand environment and document product structures through bills of material.

Section Reference: 15.1 Material Requirements Planning (MRP)

70. Given the following Product Structure Record:

The number of G’s required for each A would be

a) 2.

b) 8.

c) 12.

d) 24.

Answer: b

Difficulty: Medium

Learning Objective: Use the material requirements planning (MRP) process to determine orders in a variable demand environment and document product structures through bills of material.

Section Reference: 15.1 Material Requirements Planning (MRP)

71. Which of the following is not a major input into capacity requirements planning (CRP)?

a) planned order releases

b) routing file

c) load profiles for each work centre

d) open orders file

Answer: c

Difficulty: Medium

Learning Objective: Use capacity requirements planning (CRP) to calculate overloads and underloads and discuss options for levelling the load on a system.

Section Reference: 15.2 Capacity Requirements Planning (CRP)

72. A load profile compares

a) requirements for all lower-level items to higher-level items.

b) cumulative lead times to projected lead times.

c) the quantities in which items should be produced to actual demand.

d) released and planned orders with work centre capacity.

Answer: d

Difficulty: Medium

Learning Objective: Use capacity requirements planning (CRP) to calculate overloads and underloads and discuss options for levelling the load on a system.

Section Reference: 15.2 Capacity Requirements Planning (CRP)

73. All of the following can be used for underloaded conditions except

a) acquiring additional work.

b) pushing work back.

c) pulling work ahead.

d) reducing normal capacity.

Answer: b

Difficulty: Medium

Learning Objective: Use capacity requirements planning (CRP) to calculate overloads and underloads and discuss options for levelling the load on a system.

Section Reference: 15.2 Capacity Requirements Planning (CRP)

74. Which of the following would not be used for an overloaded condition?

a) pulling work ahead

b) rerouting jobs to alternative work centres

c) pushing work back

d) splitting lots between two or more machines

Answer: a

Difficulty: Medium

Learning Objective: Use capacity requirements planning (CRP) to calculate overloads and underloads and discuss options for levelling the load on a system.

Section Reference: 15.2 Capacity Requirements Planning (CRP)

75. Given the following Product Structure Record:

The number of I’s required for each A would be

a) 1.

b) 2.

c) 6.

d) 12.

Answer: c

Difficulty: Medium

Learning Objective: Explain how software related to ERP is used, including the complexities of integrating multiple business software systems.

Section Reference: 15.4 ERP and Related Software: Connectivity and Integration

SHORT-ANSWER ESSAY QUESTIONS

76. How does MRP differ from traditional inventory control systems?

Answer: Material requirements planning (MRP) is a computerized inventory control and production planning system. The main objective of any inventory system is to ensure that material is available when needed. One objective of MRP is to maintain the lowest possible level of inventory. MRP does this by determining when component items are needed and scheduling them to be ready at that time, no earlier and no later. MRP was the first inventory system to recognize that inventories of raw materials, components, and finished goods may need to be handled differently. In the process of planning inventory levels for these various types of goods, the system also planned purchasing activities (for raw materials and purchased components), manufacturing activities (for component parts and assemblies), and delivery schedules (for finished products). Thus, the system was more than an inventory system; it became a production scheduling system as well. With its computerized data base, MRP is able to keep track of the relationship of job orders so that if a delay in one aspect of production is unavoidable, other related activities can be rescheduled, too. MRP systems have the ability to keep schedules valid and up to date.

Difficulty: Medium

Learning Objective: Use the material requirements planning (MRP) process to determine orders in a variable demand environment and document product structures through bills of material.

Section Reference: 15.1 Material Requirements Planning (MRP)

77. What is the difference between independent and dependent demand?

Answer: The demand for the final product, or end items, is referred to as independent demand. Independent demand occurs outside of the firm and must be forecasted. Dependent demand is the demand for component parts, subassemblies, and modules that comprise the end item. The requirements for dependent demand items are calculated, not forecasted. Because dependent demand is calculated and independent demand is forecasted, different inventory control systems are used for each type. MRP is appropriate for dependent demand.

Difficulty: Hard

Learning Objective: Use the material requirements planning (MRP) process to determine orders in a variable demand environment and document product structures through bills of material.

Section Reference: 15.1 Material Requirements Planning (MRP)

78. When is it appropriate to use material requirements planning (MRP)?

Answer: MRP is a useful inventory and production control system for dependent and discrete demand items, complex products, job shop production, and assemble-to-order environments.

Difficulty: Medium

Learning Objective: Use the material requirements planning (MRP) process to determine orders in a variable demand environment and document product structures through bills of material.

Section Reference: 15.1 Material Requirements Planning (MRP)

79. What is the master production schedule (MPS) and what role does in play in the material requirements planning (MRP) process?

Answer: The master production schedule (MPS) specifies which end items or finished products a firm is to produce, how many are needed, and when they are needed. The MPS works within the constraints of the production plan but produces a more specific schedule by individual products. The time frame is more specific as well. An MPS is usually expressed in days or weeks and may extend over several months to cover the complete manufacture of the items contained in the MPS. The MPS drives the MRP process. The schedule of finished products provided by the master schedule is needed before the MRP system can do its job of generating production schedules for component items.

Difficulty: Medium

Learning Objective: Use the material requirements planning (MRP) process to determine orders in a variable demand environment and document product structures through bills of material.

Section Reference: 15.1 Material Requirements Planning (MRP)

80. What is a bill of material?

Answer: The bill of material for a product lists the items that go into the product, includes a brief description of each item, and specifies when and in what quantity each item is needed in the assembly process.

Difficulty: Easy

Learning Objective: Use the material requirements planning (MRP) process to determine orders in a variable demand environment and document product structures through bills of material.

Section Reference: 15.1 Material Requirements Planning (MRP)

81. What is Enterprise Resource Planning (ERP)?

Answer: Enterprise Resource Planning (ERP) is software that organizes and manages a company’s business processes by sharing information across functional areas. It transforms transactional data like sales into useful information that supports business decisions in other parts of the company, such as manufacturing, inventory, procurement, invoicing, distribution, and accounting. In addition to managing all sorts of back-office functions, ERP connects with supply chain and customer management applications, helping businesses share information both inside and outside the company. Thus, ERP serves as the backbone for an organization’s information needs, as well as its e-business initiatives.

Difficulty: Medium

Learning Objective: Discuss the basics of enterprise resource planning (ERP), including how it is used, key modules, and implementation issues.

Section Reference: 15.3 Enterprise Resource Planning (ERP)

82. What steps are necessary to effectively implement Enterprise Resource Planning (ERP)?

Answer: Effective ERP implementation typically requires that a firm analyze its business processes, choose the ERP modules to implement, understand the level of sophistication needed for the business, finalize delivery and access, and link the system with its external partners.

Difficulty: Medium

Learning Objective: Discuss the basics of enterprise resource planning (ERP), including how it is used, key modules, and implementation issues.

Section Reference: 15.3 Enterprise Resource Planning (ERP)

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