Deck 12: Resource Planning

Question 1

For items manufactured in-house,one component of lead time is waiting time.

Answer 1

True

Question 2

Material requirements planning (MRP)is a computerized information system developed specifically to aid in managing dependent demand inventory and scheduling replenishment orders.

Answer 2

True

Question 3

Julius testing: Dependent demand occurs because the quantity required is a function of the demand for other items held in inventory.

Answer 3

True

Question 4

Lumpy dependent demand can result from continuous independent demand.

Question 5

Lot-for-lot (L4L)is a rule that maintains the same order quantity each time an order is issued.

Question 6

An enterprise process is a company-wide process that cuts across functional areas,business units,geographic regions,and product lines.

Question 7

For items manufactured in-house,one component of lead time is processing time.

Question 8

A parent is any item that may go through one or more operations to be processed into one or more components.

Question 9

Gross requirements are the total demand derived from all parent production plans.

Question 10

The master production schedule (MPS)details how many end items will be produced within specified periods of time.

Question 11

ERP systems allow an organization to view its operations as functional areas rather than having to try to put together the different information pieces produced by its various functions and divisions.

Question 12

A purchased item has one or more components because it comes from a supplier.

Question 13

Part commonality tends to increase inventory costs.

Question 14

A resource planning process takes sales and operations plans; processes information in the way of time standards,routings,and other information on how the firm produces its services or products; and then plans the input requirements.

Question 15

Part commonality refers to the degree to which a component has more than one immediate parent.

Question 16

The ability of one piece of software to interact with others is called interoperability.

Question 17

The bill of materials is a record of all the components of an item,the parent-component relationships,and usage quantities derived from engineering and process designs.

Question 18

An end item is an item that has at least one parent and at least one component.

Question 19

Enterprise resource planning (ERP)systems are small,functional information systems areas that support many enterprise processes and data storage needs.

Question 20

A purchased item may have one or more parents.

Question 21

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

Question 22

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

Question 23

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

Question 24

An item is called a dependent demand item because demand is dependent on customer preferences.

Question 25

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

Question 26

Faster response to market changes and reduced inventory levels are both benefits of MRP.

Question 27

Distribution requirements planning (DRP)is an inventory control and scheduling technique that applies MRP principles to distribution inventory.

Question 28

The master production schedule is part of the material requirements plan that specifies how many end items will be produced within specified periods of time.

Question 29

Environmental management and MRP do not work well together.

Question 30

Timed phased product structure,unlike Bill of materials,adds the concept of lead times.

Question 31

MRP is generally practiced on items emanating from independent demand.

Question 32

MRP II ties MRP to the company's financial system.

Question 33

In MRP,the inventory record divides the future into time periods called time baskets.

Question 34

Finite capacity scheduling is an algorithm designed to schedule a group of orders appropriately across the entire shop.

Question 35

One technique for projecting time-phased capacity requirements for workstations is capacity requirements planning.

Question 36

The bill of resources (BOR)is a record of all the required material,equipment time,staff,and other resources needed,the parent-component relationships,and the usage quantities.

Question 37

Safety stock is never used with material requirements planning systems.

Question 38

An intermediate item must have a least one components and least one parent.

Question 39

An action bucket is the first week's entry of the planned order release row.

Question 40

The principles of MRP should not be applied to distribution systems.

Question 41

An intermediate item is a subassembly.

Question 42

A term for systems that are large,integrated information systems which support many enterprise processes and data storage needs is called

A) material resource planning.
B) standard resource planning.
C) effective resource planning.
D) enterprise resource planning.

Question 43

An item made from water more components is referred to as a parent item.

Question 44

Using a periodic order quantity generates a high level of average inventory because it creates inventory remnants.

Question 45

Planned lead time for purchased items is

A) setup time plus processing time plus waiting time.
B) setup time plus materials handling time plus waiting time.
C) time difference between when the order was issued and when it would be received from the supplier.
D) order processing time.

Question 46

A material requirements plan for each component item is generated from the master production schedule and other sources using an MRP explosion.

Question 47

To match the material requirements plan with a facilities production capacity,the capacity requirements planning technique can be used.

Question 48

Planned lead time for items manufactured in-house includes

A) setup time.
B) process time.
C) materials handling and waiting times.
D) all the above

Question 49

Safety stock is more complex for independent demand items than for dependent demand items.

Question 50

Material requirements planning II allows MRP to be used in services.

Question 51

The lot-sizing rule that generates the highest level of average inventory because it creates inventory remnants is

A) lot-for-lot (L4L).
B) periodic order quantity (POQ).
C) fixed order quantity (FOQ).
D) usage quantity.

Question 52

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

Question 53

A resource planning process takes

A) sales and operation plan; processes information in the way of time standards, routings, and other information on how the firm produces its services or products; and then plans the input requirements.
B) buying and production plan; processes information in the way of time standards, routings, and other information on how the firm produces its services or products; and then plans the input requirements.
C) marketing and distribution plan; processes information in the way of time standards, routings, and other information on how the firm produces its services or products; and then plans the input requirements.
D) modelling and branding plan; processes information in the way of time standards, routings, and other information on how the firm produces its services or products; and then plans the input requirements.

Question 54

The aggregate plan,derived from the master production schedule,specifies in more detail how much which products is to be made and at what times.

Question 55

An action notice is a handwritten memo sent from the supervisor of the department to the line workers.

Question 56

A purchased item is a component received by the company and taken out of inventory.

Question 57

Dependent demand occurs because the quantity required is a function of the demand for other items held in inventory.

Question 58

A periodic order quantity issues orders at predetermined intervals using the same quantity for each order.

Question 59

Service providers must plan for the same resources as in the manufacturing company having demand material driven.

Question 60

Part commonality refers to a degree to which a component has more than one immediate parent.

Question 61

Which of the following statements regarding the output from MRP systems is FALSE?

A) Action notices are generated to make decisions about releasing new orders and adjusting the due dates of scheduled receipts.
B) Typically the capacity limitations of processing equipment are explicitly recognized by MRP systems when planned orders are calculated.
C) A materials requirement plan is generated for each component item.
D) Priority reports such as dispatch lists and supplier schedules are generated.

Question 62

Which one of the following statements concerning MRP is TRUE?

A) One of the main prerequisites for implementing an MRP system is to have products with few BOM levels.
B) The scheduled receipts for a parent item are used to calculate the gross requirements for components of that parent.
C) Some of the key inputs to a computerized MRP system are inventory records, updated bills of material, and a valid master production schedule.
D) Benefits of a successful MRP implementation typically include a decrease in the number of inventory turns, and an increase in the number of expediters.

Question 63

The underlying logic for level-by-level processing in an MRP system is

A) each item in a bill of material must be processed from the bottom up.
B) items without safety stock quantities must be processed before items that have safety stocks greater than zero.
C) items must be processed in order of increasing lead time.
D) all parents of an item must be processed before that item is processed.

Question 64

Which one of the following is an MRP lot-sizing rule that attempts to minimize the amount of average inventory?

A) Periodic order quantity (POQ), with P = 2
B) Fixed order quantity (FOQ)
C) Economic order quantity (EOQ)
D) Lot for lot (L4L)

Question 65

The action notice is a

A) document that records the most recent important actions taken in the context of MRP.
B) legal notice served by a customer whose order was delayed.
C) computer-generated document that helps make decisions about releasing new orders.
D) secret document to prompt actions to be taken against some suppliers.

Question 66

Which one of the following statements about MRP is best?

A) MRP uses a level-by-level processing procedure; the component items are processed first.
B) An action notice should be issued if the scheduled receipt in a period is less than the projected on-hand inventory for that period.
C) The periodic order quantity rule introduces remnants that are used as a buffer against uncertainties.
D) The fixed order quantity rule results in remnants.

Question 67

One of the three types of MRP action notices possible is releasing a new order.Which one of the following statements is TRUE about releasing a new order?

A) Release an order when there is a nonzero quantity in the first period's planned order release row.
B) Release a separate order for service parts.
C) Release an order when there is a nonzero quantity in the scheduled receipt row.
D) Release an order when the first period's gross requirements quantity is equal to zero.

Question 68

If a planned receipt for an item is due in week 6 and the item's lead time is 2 weeks,in which week will the corresponding planned order release occur?

A) Week 2
B) Week 4
C) Week 6
D) Week 8

Question 69

MRP explosion means estimating the total number of

A) subassemblies, components, and raw materials needed for each parent item.
B) raw materials to be purchased from all suppliers.
C) parts to be produced for each parent item.
D) parts needed to be produced less the number of parts on hand for each parent item.

Question 70

The purpose of Finite Capacity Scheduling is to

A) schedule all jobs for a finite amount of time.
B) schedule by hand when MRP fails.
C) schedule a group of jobs across all work centers.
D) limit the total capacity to be used in a day.

Question 71

Which of the following statements about MRP is TRUE?

A) MRP always recognizes capacity limitations in production as well as human resources.
B) MRP recognizes the capacity limitations in production, but not in human resources.
C) Capacity limitations are implicit in all MRP calculations.
D) MRP may generate a planned order release that exceeds current production capacity.

Question 72

Which of the following statements about Enterprise Resource Planning (ERP)is TRUE?

A) ERP allows customers to access the system.
B) ERP does not include quality management.
C) ERP is similar to MRPII, except that it extends to service operations.
D) ERP is specifically designed for salespersons that want to access the system away from the office.

Question 73

Which one of the following systems is an input to the MRP system?

A) shop floor scheduling system
B) financial reporting system
C) master production scheduling system
D) purchasing system

Question 74

Which of the following statements about MRP is TRUE?

A) To be classified as a successful MRP user, a company must use either the L4L or POQ rules for lot sizing.
B) MRP gross requirements for a parent item are equal to the planned order releases of its components.
C) MRP logic is based on the logic of uniform, continuous demand, and item independence.
D) MRP gross requirements for a component depend on the planned order releases of its immediate parents.

Question 75

Which of the following statements about lot-sizing rules for MRP is TRUE?

A) The periodic order quantity (POQ) rule generates a higher level of average inventory, because it creates inventory remnants.
B) FOQ reduces the amount of inventory on hand, by doing a better job of matching the order quantity the projected on-hand inventory quantity.
C) The lot-for-lot rule minimizes inventory investment, but maximizes the number of orders placed.
D) In general, the fixed order quantity rule introduces greater instability into the production process.

Question 76

The Bill of Resources is a list of

A) raw materials needed to provide a service.
B) all resources needed to provide a service.
C) staff time needed to provide a service.
D) staff time needed to manufacture an item.

Question 77

Which best defines the gross requirements for a component item?

A) the forecasted customer demand for the component
B) the amount of safety stock needed to buffer against uncertainties
C) the sum of gross requirements for all parents of the component
D) the total demand for the component derived from all immediate parents

Question 78

MRP can be used to best advantage under which one of the following circumstances?

A) when the item's demand depends only on customer demand
B) when the item's demand is uniform
C) when the item's demand is constant
D) when the item's demand depends on its parent's demand

Question 79

Which one of the following statements about lot-sizing rules is TRUE?

A) The periodic order quantity (POQ) rule seeks to create inventory remnants.
B) If the POQ rule is used, an item's lot size can vary each time an order is placed.
C) The lot for lot (L4L) rule is a special case of the fixed order quantity (FOQ) rule.
D) All lot-sizing rules seek to minimize inventory levels.

Question 80

One of the differences between Enterprise Resource Planning (ERP)and MRPII is that

A) ERP is limited to operations internal to the enterprise.
B) ERP applies only to those operations that are external to the enterprise.
C) ERP is linked to the external supply chain, but MRPII is not.
D) ERP includes both manufacturing and service operations.