Deck 14: Material Requirements Planning Mrpand Erp

Question 1

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

Answer 1

True

Question 2

What is MRP? Identify four benefits from its use.

Answer 2

MRP or material requirements planning is a dependent demand technique that uses a bill of material,inventory,expected receipts,and a master production schedule to determine material requirements.The benefits of MRP include (1)better response to customer orders, (2)faster response to market changes, (3)improved utilization of facilities and labor,and (4)reduced inventory levels.

Question 3

MRP is generally practiced on items with dependent demand.

Answer 3

True

Question 4

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

Question 5

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.

Question 6

By convention,the top level in a product structure is designated level 1.

Question 7

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

Question 8

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

Question 9

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

Question 10

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.

Question 11

Which of the following is NOT one of the four key tasks that Wheeled Coach insists are necessary for successful MRP implementation?

A)The material plan must meet both schedule requirements and facility capabilities.
B)The plan must be executed as designed.
C)Inventory investment must be minimized.
D)Excellent record integrity must be maintained.
E)The process must adhere to stringent quality control standards.

Question 12

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

Question 13

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

Question 14

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

Question 15

Describe the role of record accuracy in Wheeled Coach's successful use of MRP.

Question 16

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.

Question 17

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

Question 18

Which of the following is NOT a key benefit of MRP?

A)increased quality
B)better response to customer orders
C)faster response to market changes
D)improved utilization of facilities and labor
E)reduced inventory levels

Question 19

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

Question 20

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.

Question 21

The minimum record accuracy required for successful MRP is approximately which of the following?

A)lower than 90%
B)90%
C)95%
D)97%
E)99%

Question 22

Consider the following product structure. If the demand for product A is 50 units,how many units of component E will be needed?

A)4
B)100
C)200
D)250
E)300

Question 23

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.

Question 24

Consider the following product structure.Fifty units of Product A are needed.How many units of B,C,D,E,and F are needed?

Question 25

By convention,what is the top level in a product structure?

A)level 0
B)level 1
C)level T
D)level 10
E)level 100

Question 26

Consider the following product structure. If the demand for product A is 50 units,how many units of component E will be needed?

A)50
B)100
C)150
D)200
E)300

Question 27

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

Question 28

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)?

Question 29

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?

Question 30

Firms making many different final products use ________ to facilitate production scheduling.

A)planning bills
B)modular bills
C)phantom bills
D)overdue bills
E)gross requirements bills

Question 31

Low-level coding means that:

A)a final item has only a few levels in the BOM structure.
B)the code being used 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)the lowest-paid staff member in the production department performs the coding.

Question 32

A paint company mixes ten different base colors into 3,000 different color options.If production scheduling is organized around the ten different base colors ,then the bills of material are classified as which of the following?

A)phantom
B)planning
C)modular
D)low-level
E)A and B

Question 33

Consider the following product structure.Forty units of Product A are needed.How many units of B,C,D,E,F,and G are needed?

Question 34

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.

Question 35

A grill assembly takes 20 washers.Instead of listing these washers separately,they are grouped into a single kit for production.How is the bill of material for the washers classified?

A)"pseudo"
B)planning
C)modular
D)low-level
E)A and B

Question 36

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

Question 37

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

Question 38

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

Question 39

Consider the following product structure.Fifty units of Product A are needed.How many units of B,C,D,and E are needed?

Question 40

Bills of material organized by major subassemblies or by product options are called ________.

Question 41

An order for 110 units of Product M has been placed.There are currently 30 units of Product M on hand.Each M requires 4 units of Component N.There are 20 units of N on hand.What are the net requirements for N?

A)150
B)170
C)300
D)320
E)440

Question 42

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.

Question 43

When safety stock is deemed absolutely necessary,the usual policy is to build it into (increase)the inventory requirement of the MRP logic.

Question 44

An order for 120 units of Product M has been made.There are currently 30 units of Product M on hand.Each M requires 4 units 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.

Question 45

(a)Consider the product structure shown below.Assuming 1 A is to be made,how many units of each of the other items would need to be made?
(b)If there are 20 of every item except A in on-hand inventory,how many As can be assembled?

Question 46

It is week 1 and there are currently 20 As in stock.We need 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 As
B)Week 1,40 As
C)Week 5,40 As
D)Week 4,40 As
E)Week 4,300 As

Question 47

________ are the result of adjusting gross requirements for inventory on hand and scheduled receipts.

Question 48

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

Question 49

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.

Question 50

An order for 110 units of Product A has been placed.There are currently 60 units of Product A on hand.Each A requires 4 units of Part B.There are 20 units of B available.What are the net requirements for B?

A)20
B)120
C)180
D)240
E)440

Question 51

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

Question 52

An order for 50 units of Product A and 60 of B has been placed.There are currently 25 units of Product B on hand.Each A requires 2 units of Part C;each B requires 5 units of C.There are 160 units of C available.What are the net requirements for C?

A)115
B)175
C)240
D)690
E)700

Question 53

In MRP,the number of units projected to be available at the beginning of each time period refers to:

A)net requirements.
B)scheduled receipts.
C)planned order releases.
D)projected on hand.
E)the amount necessary to cover a shortage.

Question 54

An order has been placed for 50 units of Product A and 60 units of Product B.There are currently 35 units of Product B on hand.Each A requires 2 units of Part C;each B requires 5 units 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.

Question 55

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.

Question 56

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

Question 57

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

Question 58

An order for 110 units of Product A has been made.There are currently 60 units of Product A on hand.Each A requires 2 units 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.

Question 59

Consider the following product structure. 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

Question 60

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

A)any
B)none
C)raw materials
D)finished goods
E)either C or D

Question 61

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.

Question 62

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.

Question 63

MRP is an excellent tool for scheduling components with variable lead times.

Question 64

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

Question 65

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

A)lot-for-lot
B)EOQ
C)POQ
D)the Wagner-Whitin algorithm
E)All of the above are appropriate for the situation.

Question 66

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.

Question 67

What is the process of tracing upward in the bill of material from the component to the parent item in order to determine the cause for the component requirement?

A)net requirements planning
B)time fencing
C)pegging
D)backtracking
E)leveling

Question 68

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

A)lot-for-lot
B)EOQ
C)POQ
D)Wagner-Whitin algorithm
E)the quantity discount model

Question 69

________ are the time units in a material requirements planning (MRP)system.

Question 70

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

Question 71

Time fences divide that segment of the master schedule that can be revised from that section that is "not to be rescheduled."

Question 72

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.

Question 73

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.

Question 74

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

Question 75

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

Question 76

What is one of the tools that is particularly useful in reducing system nervousness in an MRP system?

A)modular bills
B)time phasing
C)time fences
D)lot sizing
E)closed loop system

Question 77

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)?

Question 78

What are time fences? Why are they used?

Question 79

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.

Question 80

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