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102 Cards in this Set

  • Front
  • Back
The lot for lot sizing rule is most beneficial for an item with which of the following characteristics?

A. High item cost value

B. High setup cost

C. Level and continuous demand

D. Fixed batch size
A. High item cost value
If carrying costs were adjusted upward for all items, with all other parameters remaining the same, economic order quantities would tend to do which of the following as compared to those for the current period?

A. Decrease slightly for one ordering cycle only

B. Increase and remain the same until the carrying cost is revised again

C. Decrease and remain the same until the carrying cost is revised again

D. Not be affected at all
C. Decrease and remain the same until the carrying cost is revised again
Which of the following is a valid reason to order a quantity other than that suggested by the EOQ formula, given that all other conditions for use of the formula are met?

I. Inadequate shelf space
II. Item subject to spoilage
III. Cost of the item

A. II only

B. I and II only

C. II and III only

D. I, II and III
B. I and II only
If the order quantity increases and the annual demand is constant, which of the following could occur?

A. Carrying cost increases and ordering cost increases

B. Carrying cost increases and ordering cost decreases

C. Carrying cost and ordering cost do not change

D. Carrying cost decreases and ordering cost decreases
B. Carrying cost increases and ordering cost decreases
Week 1 2 3 4 5
Demand 170 190 180 200 195

Lead time = 4 weeks
Safety stock = 50
Based upon the information above, calculate the reorder point.

A. 740

B. 790

C. 810

D. 1140
B. 790
In which of the following replacement models do you need larger amounts of safety stock?

A. Reorder point

B. Time-phased reorder point

C. Periodic review

D. Kanban
C. Periodic review
A supplier has established a minimum quantity of 50 units of a particular item and a rounding quantity of 10. The Fulbright company only needs 10 units for a custom-engineered product. Which of the following actions should be taken?

A. Order the rounding quantity of 10

B. Order the minimum quantity of 50

C. Order 50 and reject 40 in receiving inspection back to the supplier

D. Order 50 and dispose of 40 in receiving before the receipt is processed.
B. Order the minimum quantity of 50
Opportunity costs include which of the following?

A. Storage facility cost

B. Risk of obsolescence

C. Return on investment for other use of the money

D. Damage cost
C. Return on investment for other use of the money
The company uses a carrying cost value of .25. Which of the following is the most effective way for a planner to reduce actual carrying costs?

A. Reduce the carrying cost used in order quantity calculations to zero

B. Use an order quantity technique that is not based on carrying cost

C. Bypass central stores and stock received material near the point of use

D. Establish a number of days' supply constraint to limit large order quantities
D. Establish a number of days' supply constraint to limit large order quantities
The company has just negotiated to have all of the electronic components purchased from a local distributor changed to consignment. Which of the following actions need to be taken prior to the next receipt for the existing inventory?

A. Give the inventory to the supplier and convert the balances to consignment to standardize on the inventory classification

B. Issue the balances to WIP to zero out raw material inventory

C. Record the on-hand balances as company owned inventory so costs can be segregated

D. Reduce the unit cost to zero to eliminate payments to the supplier upon issue.
C. Record the on-hand balances as company owned inventory so costs can be segregated
ABC classification of inventory is a means to categorize materials in terms of which of the following?

A. Function

B. Type

C. Storage requirements

D. Annual value usage
D. Annual value usage
Safety stocks, which buffer against uncertanties of demand, would most likely be necessary for which of the following types of inventory in a distribution enviroment?

A. Finished goods

B. WIP

C. Raw Materials

D. Semifinished goods
A. Finished goods
Which of the following is a primary objective of cycle counting?

A. Reduce the number of storeroom personnel

B. Identify and fix the causes of errors

C. Make the data processing task easier

D. Eliminate the annual physical inventory
B. Identify and fix the causes of errors
Adding safety lead time, when the demand is relatively continuous, has the same effect as which of the following?

A. Ordering in large quantities

B. Reducing the reorder point

C. Increasing the level of inventory

D. Ordering from local suppliers
C. Increasing the level of inventory
The use of a safety factors table in setting safety stock levels assumes which of the following consitions exists?

A. Make o order enviroment

B. Assemble to order enviroment

C. The higher the safety factor, the lower the safety stock investment

D. The higher the safety factor, the higher the safety stock investment.
D. The higher the safety factor, the higher the safety stock investment.
Given the following data for product X:

The purchase cost data are as follows
50 @ $10 = $500 January 11
200 @ $8 = $1600 February 6
250 @ $7 = $1750 March 2

If the company is using the FIFO costing method and 10 units were sold on April 7, The cost per unit for the sale is:

A. $8

B. $10

C. $9

D. $7.70
B. $10
Which of the following information would be required for an accurate inventory record?

A. Part description, quantity and location

B. Part cost, reorder point and safety stock

C. Sales records, forecast and production schedule

D. Reorder point, quantity and cost
A. Part description, quantity and location
Sales has noticed that customers are complaining about the service level of a particular service part item. The unit cost is $100. The sales manager has authorized the planner to increase the safety stock on the item by 6 units. The standard deviation is 4. If the current desired service level is 95%, what level must it be changed to in order to increase safety stock levels by the desired quantity? ( refer to the safety factor chart on page 2-17)

A. 98%

B. 99.87%

C. 99.93%

D. 99.997%
C. 99.93%

95% = 1.65 X 4 = 6.6 (round to 7)

6+7 = 13

13/4 = 3.25

3.25 = 99.93% (from table on 2-17)
Last week, a part that was subject to varying demand was replaced in the bill of material structure. It is now obsolete, with no service part demand. Which of the following occurs this week given that the order quantity technique is lot for lot, safety stock technique is statistical, standard deviation of the forecast compared to actual usage is 3 and the desired customer service level is 95%?

A. Customer service level is increased

B. Safety stock is reduced to zero

C. Standard deviation is reduced

D. Safety stock is increased.
B. Safety stock is reduced to zero
Which of the following inventory types most likely requires safety stock in a process enviroment?

A. Finished goods

B. WIP

C. Raw materials

D. Semifinished assemblies
C. Raw materials
The intersection of a row and column in the MRP grid is called a?

A. Manufacturing cell

B. Time Bucket

C. Bucketless display

D. Time Period
B. Time Bucket
Inventory that is on hand but reserved for some specific use is?

A. reserve stock

B. Anticipation stock

C. Allocated stock

D. Buffer stock
C. Allocated stock
Which of the following would most likely be subject to dependent demand?

A. Plastic molding compound

B. Little red wagons

C. Janitorial supplies

D. Electronic spare parts
A. Plastic molding compound
Inventory turns is determined by which of the following formulas?

A. Average inventory divided by total assets.

B. Cost of goods sold divided by average inventory

C. Average inventory divided by stockholders' equity

D. Sales divided by cost of sales
B. Cost of goods sold divided by average inventory
A higher finished goods turns means a

A. Higher warehouse cost

B. Smaller risk of obsolescence

C. lower customer service level

D. Lower cost of goods sold
B. Smaller risk of obsolescence
Which of the following is NOT a benefit of a random location system?

A. Less space required

B. Maintain batch identity

C. Most used items always nearby

D. Overflow stock handled routinely
C. Most used items always nearby
An item is being replaced on a bill of material. The effectivity of the original item ends when the new ites' effectivity begins. This is an example of:

A. Engineering change process

B. Parent child relationship

C. Horizontal dependence

D. Phantom bill of material
A. Engineering change process
What happens when the planning horizon is shorter than an items' cummulative lead time?

A. Customer service level improves

B. Item cummulative lead time shortens

C. Lower level items cannot be planned

D. Higher level items cannot be planned
C. Lower level items cannot be planned
An open order can be defind as:

A. The amount of an order reserved for a customer

B. An assignment to specific orders not yet released

C. An order released to production

D. An order planned to be produced
C. An order released to production
The master production schedule (MPS) is used to:

A. Define what the company plans to produce

B. Plan and control the work in process

C. Calculate the purchase of raw materials

D. Plan articles with dependent demand
A. Define what the company plans to produce
Which of the following is true of safety stock in MRP mechanics?

A. MRP uses safety stock to cover requirements when necessary

B. MRP ignores safety stock in it's calulations

C. MRP generates planned orders to maintain safety stock levels

D. MRP provides safety stock for all items at all levels
C. MRP generates planned orders to maintain safety stock levels
During MRP record balancing where no safety stock is specified, the first net requirements is triggered for a period when the projected available:

A. First becomes negative

B. First becomes zero

C. Is less than the gross requirements for the next period

D. Is less than the lot size
A. First becomes negative
Independent demand for a component part would most likely occur when:

A. It is the child of more than one parent

B. Its usage is a fraction

C. It is a purchased item

D. It is a replacement part
D. It is a replacement part
During the material requirements planning process, the key purpose of the bill of material is to provide:

A. A pick list of components needed for an item

B. A structure to guide the explosion

C. a structure to guide netting

D. Assembly details
B. A structure to guide the explosion
Inventory data used by MRP is:

A. Scheduled receipts

B. Gross requirements

C. Net requirements

D. Planned order releases
A. Scheduled receipts
As MRP nets an item, it calculates net requirements of 20 in period 2. The gross requirements are 125 and scheduled receipts are 25 in period 2. The projected available is 95 in period 1. What is the safety stock?

A. 10

B. 15

C. 20

D. 25
B. 15

95+125=120
125-120=5 net requirement
20-5=15 safety stock requirement
Mrp establishes and maintains which of the following priorities?

A. Factory

B. Work Center

C. Order

D. Capacity
C. Order
When a firm begins to use MRP, inventory levels sometimes rise temporarily. This is because MRP action notices advise planners to:

A. Expedite open orders

B. Balance load and capacity

C. Allocate inventory

D. Establish safety stock
A. Expedite open orders
Regularly, some of a component your shop makes is unusable. Using MRP, you should:

A. Select a vendor

B. Plan safety stock

C. Plan safety lead time

D. Increase lot size
B. Plan safety stock
Which of the following does MRP calculate?

A. Net requirements

B. Independent requirements

C. on-hand

D. Lead time
A. Net requirements
Changing which of the following does NOT directly change MRP output?

Purchase order due date

B. Customer order need date

C. Shop order due date

D. Bill of material effectivity date
B. Customer order need date
Which of the following best describes pegging?

A. List of all of the parents in which a component is used

B. All of the parts required to produce one item

C. List of all of the parents for which there is an existing requirement

D. The process of placing the requirements in their proper period.
C. List of all of the parents for which there is an existing requirement
Which of the following is NOt an MRP exception message?

A. Expedite an open order.

B. Delay an open order

C. Excessive scrap in a shop order

D. Release date of a planned order is past ue.
C. Excessive scrap in a shop order
In a job shop with intermittent production, which of the following elements of lead time usually consumes the most time?

A. Run

B. Queue

C. Setup

D. Move
B. Queue
Which of the following actions will increase the output of products in a factory system?

A. Improve utilization and efficiency

B. Consume material

C. Increase lead time estimates

Rearrange routing sequences
A. Improve utilization and efficiency
In a labor intensive assembly work center, capacity and load are normally computed in terms of:

A. Standard machine hours

B. Material consumed

C. Number of operations

D. Standard labor hours
D. Standard labor hours
A manufacturing routing would typically contain which of the following data items?

I. Standard setup time
II. Run time per piece
II Average Queue time

A. I only
B. I and II only
C. II and III only
D. I, II and III
B. I and II only
The interval between the completion of run time for one operaion and the beginning of the setup at the next operation is called:

A. Postoperation time
B. Queue time
C. Move time
D. Interoperation time
D. Interoperation time
The primary purpose of detailed capacity planning is to evaluate which of the following factors?

I. Load
II. Leadtimes
III. Capacity

A. I only
B. I and II only
C. I and III only
D. II and III only
C. I and III only
Short lead time is favorably affected by which of the following?

I. Small run quantities
II. Frequent product changeovers
III. Short queues
IV. High utilization

A. I only
B. I and III only
C. II and III only
D. I, III and IV only
B. I and III only
For finite loading, which of the following is considered a prerequisite?

A. reliable capacity and load data

B. Reliable due dates

C. Reliable lead times

D. Reliable inventory records
A. reliable capacity and load data
In a job shop enviroment, short lead time is favorably affected by which of the following?

I. High capacity utilization
II. Short setup times and small setup costs
III. High capacity efficiency
IV. High workload

A. II only
B. II and III only
C. I, III and IV only
D. I, II, III and IV
B. II and III only
For finite loading, which of the following is considered a prerequisite?

A. Reliable capacity and load data

B. Reliable due dates

C. Reliable lead times

D. Reliable inventory records
A. Reliable capacity and load data
In a job-shop enviroment, short lead time is favorably affected by which of the following?

I. High capacity utilization
II. Short setup times and small setup costs
III. High capacity efficiency
IV. High workload

A. II only

B. II and III only

C. I,II and IV only

D. I,II,III and IV
B. II and III only
Which of the following statements applies to CRP?

A. CRP is a stand-alone operation; it does not depend on other planning and control activities

B. CRP can be used to compensate for overloaded conditions caused by higher-level load and priority plans

C. CRP contributes to the reduction of erratic lead time

D. CRP is most commonly used in repetitive or process production
C. CRP contributes to the reduction of erratic lead time
Which of the following is a direct input to CRP?

A. Work order load report

B. Revised schedule of planned manufacturing order releases

C. Routing data

D. Preventative maintenance schedule
C. Routing data
Which of the following is an output of CRP?

A. Routing data

B. Work order load report

C. Preventative maintenance schedule

D. Dispatch list
B. Work order load report
Methods for increasing capacity include:

A. Add shifts

B. Schedule overtime

C. Add equipment

D. All of the above
D. All of the above
Which of the following best describes infinite loading?

A. Loading does not allow capacity to be exceeded during the accumulation process

B. It supports forward, but not backward scheduling

C. It is more complex than finite loading

D. Loads in each period for a work center are accumulated without regard to capacity
D. Loads in each period for a work center are accumulated without regard to capacity
Which of the following is an advantage of CRP?

A. CRP provides time-phased visibility of load and capacity imbalances

B. CRP requires minimal computer processing time

C. CRP clearly shows the effect of master schedule revisions on achieving balance

D. CRP applies equally to any type of production enviroment
A. CRP provides time-phased visibility of load and capacity imbalances
In relation to flexibility of capacity, which of the following statements are true?

I. Qualitative flexibility applies to people, not machines.
II. Quantitative flexibility of machines is affected by qualitative flexibility of workers
III. Quantitative flexibility is affected by utilization level
IV. Qualitative flexibility is enhanced by training the casual workforce

A. I and II only
B. II and III only
C. II, III and IV only
D. I, II, III, and IV
C. II, III and IV only
Applying the capacity-oriented materials management (CORMA) technique has which of the following results?

I. Evenly distributed extension of the lead time for all orders
II. Every loaded order is scheduled within a minimum lead time
III. Maximum utilization of the generally well-utilized work centers.

A. II only
B. III only
C. I and II only
D. II and III only
B. III only
Under process flow scheduling, process trains are scheduled using reverse-flow scheduling, forward-flow scheduling or mixed flow scheduling. This means:

A. An intermediate stage is scheduled first when the main bottleneck moves to a processor in that stage

B. The first stage is scheduled first when demand is low

C. The last stage is scheduled first when the first stage is constrained by material supply

D. Any of these methods can be used
A. An intermediate stage is scheduled first when the main bottleneck moves to a processor in that stage
With respect to the formal process train representation, which of the following statements are true?

I. Illustrates generalized definition of resources
II. Illustrates divergent product structure
III. Supports stage-by-stage scheduling
IV. Supports continuous flow within a stage

A. I only
B. II and III only
C. I, II, and III only
D. I, II, III, and IV
D. I, II, III, and IV
Which of the following are principles of partnerships with suppliers?

A. Mutual need

B. Trust

C. Compatibility of interests

D. All of the above
D. All of the above
Tactical buying is used for which type of materials?

A. Strategic

B. High Value

C. Plagued with quality problems

D. non-strategic
D. non-strategic
When comparing costs, the buyer needs to do which of the following?

A. Consider the procurement cost

B. Consider the total cost of ownership

C. Offset ordering and carrying cost

D. Minimize freight cost
B. Consider the total cost of ownership
What is a disadvantage of single sourcing?

A. Better prices

B. Catastrophic event at the supplier

C. Shorter lead times

D. Too much time to arrange
B. Catastrophic event at the supplier
Which of the following best desribes strategic sourcing?

A. It is the same as tactical buying

B. It should be used for the purchase of all materials

C. It requires a focused approach to sourcing

D. It is not applicable in today's competitive enviroment
C. It requires a focused approach to sourcing
Entering into a strategic relationship has what impact?

A. Reduces the need for planning

B. Reduces the reliance on electronic communication

C. Increases the need for planning

D. Minimizes the need for multiple communication channels
C. Increases the need for planning
Concurrent engineering is best described as:

A. Taking a serial approach to product development

B. Increasing the time to market

C. Relying on a single engineer to perform all of the development

D. Where several development tasks are done in parallel
D. Where several development tasks are done in parallel
When should suppliers be involved in the product development process?

A. As soon as possible

B. At the proto-type stage

C. Only after the formal design specifications have been developed

D. Just before entering into production
A. As soon as possible
When material is shipped FOB origin, it means that title is transferred to the buyer at what point in time?

A. When the material is transferred to the carrier

B. When the invoice is paid

C. When the material is delivered to the buyer

D. When the material passes the buyers' dock audit
A. When the material is transferred to the carrier
When material is shipped FOB destination, which of the following is true?

A. In-transit material is owned by the supplier

B. In-transit material is owned by the buyer

C. Freight is paid by the supplier

D. Freight is paid by the buyer
A. In-transit material is owned by the supplier
Which of the following statements best applies to make or buy decisions?

A. Only short-term costs need to be considered.

B. Make or buy decisions need to be re-evaluated periodically

C. Workforce stability should not factor into the decision

D. Current capacity should not be considered
B. Make or buy decisions need to be re-evaluated periodically
Verbal committments:

A. Are not legally binding

B. Are not binding even if later they are confirmed in writing

C. Are binding for values of $500 or less

D. Are never considered contracts
C. Are binding for values of $500 or less
When would the buyer consider the use of blanket orders?

A. To minimize the clerical paper

B. When delaing with short term committments

C. When delaing with large orders

D. When the buyer needs to requisition a specific quantity of material
A. To minimize the clerical paper
The elements of cost analysis include:

A. Direct costs

B. Indirect costs

C. Profit

D. All of the above
D. All of the above
In a fixed price contract, the bulk of the risks are:

A. Assumed by the supplier

B. Assumed by the buyer

C. shared by both parties

D. None of the above
A. Assumed by the supplier
Which of the following is true of a supplier rating system?

A. Can be subjective

B. Should provide objective measurable data

C. Is impediment to continuous improvement

D. Breaks down the trust between the buyer and the supplier
B. Should provide objective measurable data
To be enforceable, a contract must have which of the following elements?

Mutual obligation

B. Competent parties

C. Lawful purpose

D. All of the above
D. All of the above
Which of the following statements applies when establishing performance standards?

A. Supplier certification such as ISO 9000 registration is all that is needed

B. They need to apply to both the supplier and the buyer

C. They should contain only subjective measures

D. The measures should exclude quality
B. They need to apply to both the supplier and the buyer
Hedging is used to:

A. Protect against currency fluctuations

B. Compensate for counter trade

C. Back up a letter of credit

D. Address contingencies in a contract
A. Protect against currency fluctuations
2/10 net 30 is an example of what type of discount?

A. Trade

B. quantity

C. Cash

D. Seasonal
C. Cash
True or False: Company inventory policies are typically specified at the category level by management and implemented at the item level by the planners
True
Which of the following is NOT a purpose of inventory strategy?

A. Service level
B. Dependent demand
C. Independent demand
D. Floor Stock
E. Seasonality
D. Floor Stock
True or false: Raw materials typically constitute the longest portion of cummulative lead time.
True
What are the four classifications of inventory?
Raw materials (RM)
Work in Process (WIP)
Finished Goods (FG)
Maintenance, repair and operating supplies (MRO)
What questions do order review methodologies normally answer?
What is the net demand.

What is the available balance.

What Qty needs to be ordered.

When do orders need to be released.

When do orders need to be received.
Which of the following is NOT an order review methodology?

A. MRP
B. Reorder point
C. Component review
D. Periodic review
E. Visual review
F. Kanban
C. Component review
What is the formula for determing reorder point?
Demand during lead time + safety stock
Reorder point planning is typically used for:

A. Dependent demand
B. Independent demand
C. Process demand
D. Intermittent demand
B. Independent demand
True or False:

Protective capacity provides contigency against unplanned events only, suchs as breakdowns and rework requirements.
True
True or False:

Safety capactiy INCLUDES protective capacity.
True
True or False:

Safety capacity is capacity that is available over and above productive capacity that includes allowance for planned events, including on-shift maintenance and short-term resource contention, as well as unplanned events.
True
Safety Factor=?
Safety Factor=

Safety Stock/Standard Deviation
Safety Stock=?
Safety Stock =

Safety Factor X Standard Deviation
What is the Safety Factor Multiplier for a service level of 84.13%?
1.00
What is the safety factor multiplier for a service level of 95%
1.65
What is the safety factor multiplier for a service level of 99.93%?
3.20
What is the formula for determing the Deviation from target inventory turns?
Inventory turns deviation from target=

(Actual turns-Target Turns/Target turns) X 100
True or False:

Lot or Batch identity can be maintained much more easily with random Bin Locations?
True