Deck 12: MRP and ERP

Question 1

The master schedule needs to be for a period long enough to cover the stacked or cumulative lead time necessary to produce the end items.

Answer 1

True

Question 2

A net-change MRP system is one that is updated periodically but not less frequently than once a week.

Answer 2

False

Question 3

The inventory records contain information on the status of each item by time period.

Answer 3

True

Question 4

The master production schedule states which end items are to be produced, in addition to when and how many.

Question 5

A bill of materials contains a listing of all the assemblies, parts, and materials needed to produce one unit of an end item.

Question 6

The gross requirements value for any given component is equal to the net requirements of that component's immediate parent multiplied by the quantity per parent.

Question 7

The bill of materials contains information on lead times and current inventory position on every component required to produce the end item.

Question 8

MRP works best if the inventory items have dependent demand.

Question 9

The term pegging refers to identifying the parent items that have generated a given set of material requirements for a part or subassembly.

Question 10

Initially, a master production schedule-the output from MRP-may not represent a feasible schedule.

Question 11

MRP II did not replace or improve the basic MRP.

Question 12

Net requirements equal gross requirements minus safety stock.

Question 13

Independent demand tends to be more "lumpy" than dependent demand, meaning that we need large quantities followed by periods of no demand.

Question 14

MRP, considering inventory position, bills of material, open purchase orders, and lead times guarantees a feasible production plan if the inputs to MRP are accurate.

Question 15

The bill of materials indicates how much material will be needed to produce the quantities on a given master production schedule.

Question 16

The gross requirements at one level of an MRP plan determine the gross requirements at the next lower level continuing on down to the lowest levels shown on the bill of material.

Question 17

An assembly-time chart indicates gross and net requirements taking into account the current available inventory.

Question 18

Lumpy demand for components results primarily from the periodic scheduling of batch production.

Question 19

MRP is used within most MRP II and ERP systems.

Question 20

Low-level coding represents items less than $18 per unit.

Question 21

In MRP, EOQ models tend to be less useful for materials at the lowest levels than for upper-level assemblies of the bill of materials since higher-level assemblies have larger dollar investments.

Question 22

Which of the following is a direct input into capacity requirements planning?
(I) the master production schedule
(II) routing information
(III) current shop loads
(IV) planned-order releases

A) II, III, and IV only
B) I, II, and IV only
C) I, III, and IV only
D) I and II only
E) I, II, III, and IV

Question 23

ERP began in manufacturing organizations but has spread into service organizations.

Question 24

In many organizations, information flows much more freely within functions than it does across functions. __________ represents an expanded effort to overcome this tendency.

A) MRP
B) ERP
C) CRP
D) MRPII
E) DRP

Question 25

Project management approaches can help in a conversion to an ERP system.

Question 26

MRP II is simply an improved version of MRP that processes more quickly and can plan for a larger number of end items.

Question 27

MRP can apply to services, especially when it is focused on:
(I) work-in-process inventory.
(II) finished goods inventory.
(III) service components.
(IV) materials that are part of the service process.

A) II and IV only
B) I and III only
C) I, II, and IV only
D) I, III, and IV only
E) III and IV only

Question 28

Which of the following is absolutely necessary for successful implementation and operation of MRP?
(I) accurate inventory records
(II) accurate demand forecasts
(III) accurate holding and backordering costs
(IV) accurate bills of materials

A) I, II, and IV only
B) I, III, and IV only
C) I, II, and III only
D) I and II only
E) I, II, III, and IV

Question 29

One of the primary output reports of MRP concerns changes to planned orders.

Question 30

Backflushing takes place:

A) when inventory records need updating.
B) after some bills of material have been found to be inaccurate.
C) after production has been completed.
D) when customer orders are being reconciled.
E) when previous periods' planned releases are converted to scheduled receipts.

Question 31

Lot-for-lot ordering in MRP eliminates the holding costs for parts that are carried over to other periods.

Question 32

Load reports show capacity requirements for departments or work centers which may be more or less than the capacity available in that work center.

Question 33

A regenerative MRP system is one that is updated continuously, every time there is a schedule change.

Question 34

Lot-for-lot ordering in MRP provides coverage for some predetermined number of periods (such as two or three) that extend beyond the orders already received for those periods.

Question 35

Capacity requirements planning helps managers reconcile __________ with __________.

A) what is needed; what has been done
B) what is needed; what is possible
C) what has been done; who will be doing it
D) what needs to be done; where it will be done
E) what has been done; how much what needs to be done will cost

Question 36

MRP output reports are divided into two main groups, daily and weekly.

Question 37

Scheduled receipts differ from planned receipts in that scheduled receipts:

A) have longer lead times.
B) involve orders that have not yet been placed.
C) have not been pegged with actual customer orders.
D) involve orders that have already been placed.
E) involve exceptions to order quantity policies.

Question 38

One reason that accurate bills of material are important is that errors at one level become magnified at lower levels because of the multiplication process used by MRP.

Question 39

Capacity requirements planning is an important feature in MRP+.

Question 40

Safety time is sometimes used in MRP rather than safety stock quantities.

Question 41

The identification of parent items is called:

A) paternity.
B) pegging.
C) requirement I.D.
D) relationship tracking.
E) master scheduling.

Question 42

An MRP system whose records are updated continuously is referred to as a(n):

A) regenerative system.
B) batch-type system.
C) Plossl-Wright system.
D) net-change system.
E) gross-change system.

Question 43

The output of MRP is:

A) gross requirements.
B) net requirements.
C) a schedule of requirements for all parts and end items.
D) inventory reorder points.
E) economic order quantities and reorder points.

Question 44

Under lot-for-lot, order sizes for component parts are essentially determined directly from which one of the following?

A) gross requirements
B) net requirements
C) economic order quantity
D) gross requirements and net requirements
E) net requirements and amount on hand

Question 45

A visual depiction of the subassemblies and components that are needed to produce and/or assemble a product is called a(n):

A) assembly time chart.
B) product structure tree.
C) MRP II.
D) pegging.
E) Gantt chart.

Question 46

In MRP, under lot-for-lot ordering, planned-order receipts are:

A) identical to scheduled receipts.
B) identical to planned-order releases.
C) open orders (that is, ordered before the first time bucket, but not delivered yet).
D) gross requirements.
E) available-to-promise inventory.

Question 47

In an MRP master schedule, the planning horizon is often separated into a series of time periods called:

A) pegging.
B) lead times.
C) stacked lead times.
D) time buckets.
E) firm, fixed, and frozen.

Question 48

Which is true of a net-change system?

A) It is a batch-type system which is updated periodically.
B) It is usually run at the beginning of each month.
C) The basic production plan is modified to reflect changes as they occur.
D) It is used to authorize the execution of planned orders.
E) It indicates the amount and timing of future changes.

Question 49

An MRP system that is updated periodically to account for all changes which have occurred within a given time interval is called a(n) ________ system.

A) pegging
B) planned order release
C) net-change
D) regenerative
E) exception report

Question 50

Which one of the following is not an input in an MRP system?

A) planned-order schedules
B) bill of materials
C) master production schedule
D) inventory records
E) All are inputs.

Question 51

Which of the following most closely describes dependent demand?

A) demand generated by suppliers
B) estimates of demand using regression analysis of independent variables
C) derived demand
D) demands placed on suppliers by their customers
E) net material requirements

Question 52

The MRP input storing information on the status of each item by time period (e.g., scheduled receipts, lead time, lot size) is the:

A) master production schedule.
B) bill of materials.
C) inventory records.
D) assembly time chart.
E) net requirements chart.

Question 53

In MRP, scheduled receipts are:

A) identical to planned-order receipts.
B) identical to planned-order releases.
C) open orders (that is, ordered before the first time bucket, but not delivered yet).
D) net requirements.
E) available-to-promise inventory.

Question 54

Which one of the following most closely describes net material requirements?

A) gross requirements - amount on hand - scheduled receipts
B) gross requirements - planned receipts
C) gross requirements - order releases + amount on hand
D) gross requirements - planned order releases
E) gross requirements - amount on hand + planned order releases

Question 55

The development and application of MRP depended upon two developments: (1) the recognition of the difference between independent and dependent demand, and (2):

A) computers.
B) development of the EOQ model.
C) inventory control systems.
D) blanket purchase orders.
E) the Internet.

Question 56

The MRP input stating which end items are to be produced, when they are needed, and what quantities are needed, is the:

A) master schedule.
B) bill of materials.
C) inventory records.
D) assembly time chart.
E) net requirements chart.

Question 57

In MRP, the gross requirements of a given component part are calculated from:

A) net requirements + amount on-hand.
B) gross requirements of the immediate parent.
C) planned orders of the end item.
D) net requirements of end item.
E) planned orders of the immediate parent.

Question 58

The MRP input listing the assemblies, subassemblies, parts, and raw materials needed to produce one unit of finished product is the:

A) master production schedule.
B) bill of materials.
C) inventory records.
D) assembly time chart.
E) net requirements chart.

Question 59

ERP implementation probably will not require:

A) cross-functional teams.
B) just a few weeks to install.
C) intensive training.
D) high funding for both initial cost and maintenance.
E) frequent upgrades after installation.

Question 60

A computer-based information system designed to handle ordering and scheduling of dependent-demand inventories is:

A) computer-aided manufacturing.
B) computer-integrated manufacturing.
C) economic order quantity.
D) material requirements planning.
E) economic run size.

Question 61

Bunny Helpers, Inc., has just received an order for 100 Deluxe Easter Baskets, which must be ready for delivery at the start of week 6. An MRP planner has prepared the following table showing product structure, lead times (orders are lot-for-lot), and quantities on hand: $$\begin{array} { c l l } \text { Deluxe Easter Basket BOM } & \text { Lead Time } & \text { On-Hand } \\\hline \text { Deluxe Easter Basket } & 1 \text { week } & 10 \\\text { Dark Chocolate Truffles (2 per) } & 2 \text { weeks } & 30 \\\text { Carved Chocolate Eggs (4 per) } & 1 \text { week } & 50\end{array}$$ Each Deluxe Basket contains two dark chocolate truffles and four carved chocolate eggs; additionally one bottle of Alka-Seltzer is included for those who overindulge. How many dark chocolate eggs should be ordered?

A) 310
B) 450
C) 500
D) 550
E) 600

Question 62

Comparing known and expected capacity requirements with projected capacity availability is the job of:

A) planned releases.
B) load reports.
C) lot sizing.
D) work loading.
E) time fencing.

Question 63

Bunny Helpers, Inc., has just received an order for 100 Deluxe Easter Baskets, which must be ready for delivery at the start of week 6. An MRP planner has prepared the following table showing product structure, lead times (orders are lot-for-lot), and quantities on hand: $$\begin{array} { c l l } \text { Deluxe Easter Basket BOM } & \text { Lead Time } & \text { On-Hand } \\\hline \text { Deluxe Easter Basket } & 1 \text { week } & 10 \\\text { Dark Chocolate Truffles (2 per) } & 2 \text { weeks } & 30 \\\text { Carved Chocolate Eggs (4 per) } & 1 \text { week } & 50\end{array}$$ Each Deluxe Basket contains two dark chocolate truffles and four carved chocolate eggs; additionally one bottle of Alka-Seltzer is included for those who overindulge. When should an order for carved chocolate eggs be released?

A) at the start of week 2
B) at the start of week 3
C) at the start of week 4
D) at the start of week 5
E) at the start of week 6

Question 64

Bunny Helpers, Inc., has just received an order for 100 Deluxe Easter Baskets, which must be ready for delivery at the start of week 6. An MRP planner has prepared the following table showing product structure, lead times (orders are lot-for-lot), and quantities on hand: $$\begin{array} { c l l } \text { Deluxe Easter Basket BOM } & \text { Lead Time } & \text { On-Hand } \\\hline \text { Deluxe Easter Basket } & 1 \text { week } & 10 \\\text { Dark Chocolate Truffles (2 per) } & 2 \text { weeks } & 30 \\\text { Carved Chocolate Eggs (4 per) } & 1 \text { week } & 50\end{array}$$ Each Deluxe Basket contains two dark chocolate truffles and four carved chocolate eggs; additionally one bottle of Alka-Seltzer is included for those who overindulge. If the firm is using a fixed-period lot size of two periods, what is the order size for the first order?

A) 120
B) 200
C) 280
D) 160
E) 150

Question 65

_______ is choosing how many to order or make.

A) Quantity determination
B) Package sizing
C) Lot sizing
D) Grouping
E) Aggregation

Question 66

Which one of the following most closely describes the MRP approach that is used for components or subassemblies to compensate for variations in lead time?

A) pegging
B) safety stock
C) increased order sizes
D) safety time
E) low-level coding

Question 67

Refer to this product tree: If 40 Ps are needed, and on-hand inventory consists of 15 Ps and 10 each of all other components and subassemblies, how many Cs are needed?

A) 340
B) 350
C) 380
D) 400
E) 590

Question 68

Which of the following is not usually necessary in order to have an effective MRP system?

A) a computer and software
B) an accurate bill of materials
C) lot-for-lot ordering
D) an up-to-date master schedule
E) integrity of file data

Question 69

The multiplication process used by MRP to determine lower-level requirements is called:

A) time-phasing.
B) pegging.
C) netting.
D) projecting.
E) exploding.

Question 70

Bunny Helpers, Inc., has just received an order for 100 Deluxe Easter Baskets, which must be ready for delivery at the start of week 6. An MRP planner has prepared the following table showing product structure, lead times (orders are lot-for-lot), and quantities on hand: $$\begin{array} { c l l } \text { Deluxe Easter Basket BOM } & \text { Lead Time } & \text { On-Hand } \\\hline \text { Deluxe Easter Basket } & 1 \text { week } & 10 \\\text { Dark Chocolate Truffles (2 per) } & 2 \text { weeks } & 30 \\\text { Carved Chocolate Eggs (4 per) } & 1 \text { week } & 50\end{array}$$ Each Deluxe Basket contains two dark chocolate truffles and four carved chocolate eggs; additionally one bottle of Alka-Seltzer is included for those who overindulge. What is the net requirement for dark chocolate truffles to fill this order?

A) 100
B) 140
C) 150
D) 180
E) 200

Question 71

Which statement concerning MRP II is false?

A) It is basically a computerized system.
B) It can handle complex planning and scheduling quickly.
C) It involves other functional areas in the production planning process.
D) It involves capacity planning.
E) It produces a production plan which includes all resources required.

Question 72

An effort to expand the scope of production resource planning by involving other functional areas in the planning process has been:

A) material requirements planning.
B) capacity requirements planning.
C) manufacturing resources planning.
D) just-in-time planning.
E) multifunctional relationships planning.

Question 73

Refer to this product tree: If 17 Ps are needed, and no on-hand inventory exists for any items, how many Cs will be needed?

A) 8
B) 16
C) 136
D) 204
E) 272

Question 74

Which of the following represents an attempt to balance the benefits of stability against the benefits of responding to new information?

A) safety stock
B) safety time
C) bills of material
D) time fences
E) fixed-period lot sizing

Question 75

Which of these items would be most likely to have dependent demand?

A) Xbox batteries
B) toy trains
C) flowers
D) chocolate chip cookies
E) wrist watches

Question 76

When MRP II systems include feedback, they are known as:

A) MRP III.
B) enterprise resource planning.
C) circular MRP.
D) feasible MRP.
E) closed loop MRP.

Question 77

The _________ of ERP makes it valuable as a strategic planning tool.

A) Internet base
B) rapid batch capability
C) employee focus
D) real-time aspect
E) database structure

Question 78

Which of these products would be most likely to have dependent demand?

A) refrigerators
B) automobile engines
C) televisions
D) brownies
E) automobiles

Question 79

Which of the following lot sizing methods does not attempt to balance ordering (or setup) and holding costs?

A) economic order quantity
B) economic run size
C) lot-for-lot
D) part-period
E) all of these

Question 80

Refer to this product tree: If 17 Ps are needed, and on-hand inventory consists of 10 As, 15 Bs, 20 Cs, 12 Ms, and 5 Ns, how many Cs are needed?

A) 48
B) 144
C) 192
D) 212
E) 272