Deck 15: Materials Requirements Planning and ERP

Question 1

Planned lead times

A) usually are longer than actual working times.
B) ignore interference from other jobs.
C) usually are shorter than actual working times.
D) assume the work is expedited and completed as quickly as possible

Answer 1

usually are longer than actual working times.

Question 2

A replenishment-based system derives orders from

A) capacity available.
B) forecast or customer request.
C) bill of materials.
D) master schedule.

Answer 2

forecast or customer request.

Question 3

Successful MRP implementation requires

A) management support, parts explosion, and adequate computer support.
B) marketing support, master schedule, and bill of materials.
C) management support, accurate data, and adequate computer support.
D) none of the above.

Answer 3

management support, accurate data, and adequate computer support.

Question 4

Which of the following is true about MRP systems?

A) Forecast is based on past demand.
B) Lot sizing is EOQ.
C) Demand pattern is random.
D) Objective is to meet manufacturing needs.

Question 5

Successful MRP system implementation includes

A) implementation planning.
B) accurate data.
C) user knowledge.
D) all of the above.

Question 6

Cycle counting

A) is counting a fraction of inventory each day.
B) does not eliminate the need for annual physical inventory.
C) is a way to plan inventory on a cyclic basis.
D) is a way to decide how much to order.

Question 7

The parts explosion results in the following outputs:

A) purchase orders and S&OP (aggregate planning).
B) purchase orders and bill of materials.
C) purchase orders and shop orders.
D) shop orders and inventory orders.

Question 8

The gross requirements of a part in an MRP system are determined from

A) net requirements + on-hand.
B) net requirements of the end item.
C) gross requirements of the immediate part.
D) planned order releases of the immediate parent item.

Question 9

Bills of materials are kept current with changes using

A) master scheduling systems.
B) engineering change order systems.
C) inventory tracking systems.
D) capacity planning systems.

Question 10

End item A requires three component parts: B,C,and D.The bill of materials indicates that for each completed A,one unit of B,2 units of C,and 1 unit of D are required.Current inventory for the four items is as follows: there are 18 As,40 Bs,50 Cs and 35 Ds in stock.If the lead time for all items is one week and there are no scheduled receipts for any item,how many units of product A can be delivered to customers at the start of next week (week 2)?

A) 13
B) 25
C) 31
D) 43

Question 11

The master production schedule for Product A shows a need for 30 units,and Product B shows a need of 25 units.To manufacture a unit of Product A,three units of component C are required.To manufacture a unit of Product B,four units of component C are required.Determine the gross requirements for component C to complete production.

A) 55
B) 190
C) 110
D) 380
E) None of the above.

Question 12

The bill of materials

A) shows how much inventory is available.
B) is a bill sent to the customer for material ordered.
C) is a list of all materials required to produce a part.
D) none of the above.

Question 13

A requirements-based system derives orders from

A) customer requests.
B) forecast.
C) bill of materials.
D) master schedule.

Question 14

Safety stock in an MRP system

A) is never needed.
B) is used to provide flexibility to meet changing customer requirements.
C) must provide a 100% service level.
D) is planned at the part level, independent of the safety stock of other parts

Question 15

Which system specifies the output of the operations function?

A) Parts explosion.
B) Bill of materials.
C) Master scheduling.
D) Capacity planning.

Question 16

Which of the following statements concerning MRP systems is FALSE?

A) MRP is a computer-based inventory planning and control information system designed to handle production scheduling of dependent-demand inventories for batch systems.
B) MRP is designed to determine how much is needed and when the need occurs for items that experience dependent demand (components, subassemblies, parts, and raw materials).
C) MRP systems are based on a replenishment philosophy, which indicates that material should be ordered when stock runs low.
D) The ordering philosophy of MRP may result in "lumpy" demand for component parts.

Question 17

_______ systems use a requirements order philosophy,while _______ systems use a replenishment order philosophy.

A) Order-point, MRP
B) MRP, order-point
C) EOQ, quantity discount
D) P, Q

Question 18

In MRP "scheduled receipts" are

A) identical to "planned order receipts."
B) identical to "planned order releases."
C) identical to "net requirements."
D) open orders not delivered yet.

Question 19

All of the following help to handle uncertainty when operating an MRP system EXCEPT

A) safety stock.
B) safety lead time.
C) safety capacity.
D) backup suppliers.

Question 20

Which of the following most closely describes net material requirements in an MRP system?

A) Gross requirements - planned receipts.
B) Gross requirements - (on-hand + scheduled receipts).
C) Gross requirements - on-hand + scheduled receipts.
D) Gross requirements - planned order releases.

Question 21

Which of the following statements is correct regarding the use of an MRP system?

A) Many firms have insisted their suppliers also install MRP systems.
B) MRP has essentially eliminated the need for engineering change order systems.
C) With MRP, all component, part, and raw material inventories are managed with order-point systems.
D) All of the above are correct.

Question 22

Which of the following statements concerning MRP system operation is correct?

A) Research has shown that many companies are transitioning from safety stock to safety capacity as a means of dealing with uncertain demand.
B) A properly used MRP system allows for minimal levels of safety stock.
C) Additional safety lead time is a common strategy for reducing inventory levels.
D) All of the above are correct.

Question 23

The main problem with the traditional annual physical inventory count is

A) closing the inventory warehouse for the time needed to conduct the physical inventory count.
B) reconciling the physical inventory count with up to date BOMs.
C) many of the people assigned to this task are inexperienced and make errors.
D) none of the above.

Question 24

A bill of materials

A) is a structured list of all the materials or parts needed to produce one unit of a finished product.
B) is rarely revised once established.
C) will lead to sufficient MRP system performance as long as the "threshold degree" of accuracy of approximately 75% is met.
D) is used as an input for dispatching decisions on the shop floor.

Question 25

Which of the following statements is correct regarding the impact of an MRP system on the purchasing function?

A) Past-due orders are eliminated for the most part.
B) Suppliers have more confidence in the validity of orders they receive.
C) The amount of order expediting is dramatically reduced.
D) All of the above are correct.

Question 26

When a company uses an ERP system,the different functional areas of the business will share a common database.

Question 27

A bill of materials can be coupled with a bill of labor if MRP systems are to be used in service industries.

Question 28

An MRP system makes it possible to

A) manage thousands of products and parts in an environment of unpredictable demand and shifting priorities.
B) translate the parts explosion into a master production schedule to satisfy the aggregate planning requirements.
C) shift the demand for finished products from independent to dependent demand.
D) do all of the above.

Question 29

MRP systems work better in a line flow system compared to a job shop.

Question 30

Integration with which of the following functions is required for an effective ERP system?

A) Finance/accounting.
B) Marketing/sales.
C) Human resources.
D) All of the above.

Question 31

The purpose of lot sizing in MRP is to

A) avoid the need for fixed lot sizes by allowing adjustable lots (lot-for-lot).
B) adjust orders to match the gross requirement, eliminating the need to carry ending inventory.
C) promote economical production lots and purchasing orders.
D) do all of the above.

Question 32

Which of the following is true of ERP systems?

A) Decisions and actions made by sales will be visible to operations.
B) ERP systems can extend across the enterprise, but not to suppliers or customers.
C) ERP systems, though expensive, rarely fail to deliver expected results.
D) All of the above.

Question 33

Forecasting demand in MRP systems is based on the past demand patterns for components.

Question 34

Which of the following would NOT likely be included in a typical computerized inventory record?

A) Lead times and standard costs for each item.
B) A complete materials plan for each item.
C) A history of changes and demand patterns for each item.
D) All of the above are typically included.

Question 35

Which of the following is NOT a major element considered in MRP implementation?

A) Adequate computer support.
B) Available data.
C) Management support.
D) User knowledge, including those outside operations.

Question 36

The purpose of the shop floor control subsystem is to

A) ensure there is adequate capacity to meet the needs of the master production schedule.
B) manage the many orders placed with external suppliers.
C) release and manage orders to make sure they are completed on time.
D) perform all of the above .

Question 37

A manufacturing execution system (MES)

A) is another name for a shop floor control system.
B) provides information on job priorities using dispatching rules.
C) supports managers in the adjustment of lead times to meet customer needs.
D) has all of the above features.

Question 38

Which of the following is NOT an element of an MRP system?

A) Inventory record.
B) Shop floor control.
C) Capacity planning system.
D) Sales and operations planning system.

Question 39

When MRP is extended all the way to the final customer,this is called

A) customer requirements planning.
B) order release planning.
C) enterprise resource planning.
D) distribution requirements planning.

Question 40

Which of the following is correct regarding future demand for component parts?

A) Future demand in an order-point system is based on the master production schedule.
B) Future demand in an MRP system is based on the past history of demand for each component part.
C) Future demand in an MRP system is based on the master production schedule.
D) None of the above.

Question 41

The master schedule should be frozen inside the production lead time.

Question 42

MRP is a type of pull system.

Question 43

Compare and contrast MRP systems and order-point systems of managing inventories.When do firms prefer MRP systems to order-point systems?
Can MRP systems be used while managing capacity in a factory?
Provide sufficient justification for your answer.

Question 44

The master schedule is prepared for product families.