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19 Cards in this Set
- Front
- Back
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What is Theory of Constraints?
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It is system designed to improve human thinking about problems.
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What is premises of TOC.
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The basic premises of Theory of Constraints (TOC) is that improving any process is done by focusing slowest part of the process called Constraint rather than trying to maximize the efficiency in every part of the process.
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What are the steps in a TOC analysis?
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1- Identify the constraint.
2- Determine the most profitable mix given the constraint. 3- Maximize the flow thru the constraint. 4- Increase capacity at the constrains. 5- Redesign the manufacturing process for greater flexibility and speed. |
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What is delivery time?
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Delivery time =
Wait Time + Throughput Time (Mfg Cycle) Wait Time = Period when customer order is received and production is started. Throughput Time = Process Time + Inspection Time + Move Time + Queue Time |
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The Carson Corporation had the following average data from the most recent year on the time between when the customer's order is initiated to when the finished product is shipped:
Days ---- Inspection Time 0.3 Move Time 0.7 Process Time 5 Queue Time 4 Wait Time 6 What is the Manufacturing Cycle Efficiency Time (MCE)? |
The (MCE) relates the value-added time to the throughput time. By focusing on manufacturing efficiency, businesses have been able to reduce the throughput time by eliminating non-value added activities such as move time, inspection time, and queue time.
MCE = Value-added Time / Throughput Time = 5/10 = 0.5 Value-added time is only the process time. Throughput time is the total of the process time, inspection time, move time, and queue time (or 5 + 0.3 + 0.7 + 4 = 10). |
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The process model used in a theory of constraints (TOC) analysis is called
A. Lean production. B. Drum-buffer-rope. C. Materials requirements planning. D. Just-in-time. |
Answer (B) is correct. Production flow through a constraint is managed using the drum-buffer-rope (DBR) system. The drum (i.e., the beat to which a production process marches) is the bottleneck operation. The constraint sets the pace for the entire process. The buffer is a minimal amount of work-in-process input to the drum that is maintained to ensure that it is always in operation. The rope is the sequence of activities preceding and including the bottleneck operation that must be coordinated to avoid inventory buildup.
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Which one of the following statements describes material requirements planning (MRP)?
A- A planning system that is used to determine the amount and timing of the optimal inventory level B- A software tool that is used to forecast the ordering quantities of inventories that tend to be subject to a variable and continual demand C- A planning system that is used to determine the amount and timing of inventories that are dependent on the demand for finished goods D- A software tool that is used to forecast the schedule of material purchases that tend to be subject to a variable and continual demand |
C is correct.
Of the answer choices provided, the best description of material requirements planning (MRP) is a planning system that is used to determine the amount and timing of inventories that are dependent on the demand for finished goods. This description emphasizes the characteristic that sales demand drives the required inventories all the way from finished goods, through work-in-process, back down to the requirements of individual commodities needed for production. All of the other answer choices are incomplete or partial descriptions of aspects of a MRP system. |
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Of the answer choices provided, the best description of material requirements planning (MRP) is a planning system that is used to determine the
amount and timing of inventories that are dependent on the demand for finished goods. This description emphasizes the characteristic that sales demand drives the required inventories all the way from finished goods, through work-in-process, back down to the requirements of individual commodities needed for production. All of the other answer choices are incomplete or partial descriptions of aspects of a MRP system. |
A is correct
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Three of the basic measurements used by the theory of constraints (TOC) are:
A- gross margin (or gross profit), return on assets, and total sales. B- number of constraints (or subordinates), number of non-constraints, and operating leverage. C- throughput (or throughput contribution), inventory (or investments), and operational expense. D- fixed manufacturing overhead per unit, fixed general overhead per unit, and unit gross margin (or gross profit). |
C is correct.
The theory of constraints uses three measurements: throughput contribution, investments, and operating costs. |
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Which of the following is a typical characteristic of a just-in-time (JIT) production environment?
A- Lot sizes equal to one B- Insignificant setup times and costs C- Push-through systems D- Balanced and level workloads |
C is correct.
The just-in-time (JIT) production environment is characterized by production generated by need. This is a demand-pull system in which sales occur first and trigger the production of units. Typical features of a JIT system include small lot sizes, low setup times/costs, and balanced workloads. Traditional production systems, on the other hand, produce products based on expected demand. They produce on a fixed schedule in a push-through mode. |
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Absorption costing has been the primary product costing method for many years. In recent years, several alternative approaches, including
variable and throughput costing, have been proposed. The focus in these alternative-costing methods is the treatment of ________ costs. A- direct labor B- direct material C- intangible D- variable and fixed |
D is correct.
Variable costing expenses all fixed costs, including fixed indirect manufacturing costs. Throughput costing goes even further by expensing all variable anufacturing costs except direct material. By doing this, these methods focus on treatment of variable and fixed costs, including manufacturing costs. |
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The Carson Corporation had the following average data from the most recent year on the time between when the customer's order is initiated to
when the finished product is shipped: Days ---- Inspection Time 0.3 Move Time 0.7 Process Time 5 Queue Time 4 Wait Time 6 What is the delivery cycle time? |
D is correct.
The delivery cycle time is the wait time between the receipt of the customer's order and the start of production plus the throughput time (Process time + Inspection time + Move time + Queue time). Delivery cycle time = Wait time + Process time + Inspection time + Move time + Queue time 16 days = 6 days + 5 days + 0.3 days + 0.7 days + 4 days |
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Materials requirements planning (MRP) sometimes results in
A. Longer idle periods. B. Increased inventory carrying costs. C. Less flexibility in responding to customers. D. Decreased setup costs. |
D is correct.
Among the benefits of MRP are reduced idle time, lower setup costs, lower inventory carrying costs, and increased flexibility in responding to market changes. |
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The immediate goal of a theory of constraints (TOC) analysis is to
A. Smooth production flow to eliminate backup in the system. B. Maximize the efficiency of the entire production process. C. Minimize direct materials cost. D. Maximize contribution margin through the constraint. |
D is correct.
A basic principle of TOC analysis is that short-term profit maximization requires maximizing the contribution margin through the constraint, called the throughput margin or throughput contribution. |
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In a theory of constraints (TOC) analysis, the bottleneck operation (the constraint) corresponds to which part of the drum-buffer-rope model?
A. No part of TOC analysis corresponds to the drum-buffer-rope model. B. Drum. C. Buffer. D. Rope. |
B is correct .
Production flow through a constraint is managed using the drum-buffer-rope (DBR) system. The drum (i.e., the beat to which a production process marches) is the bottleneck operation. The constraint sets the pace for the entire process. The buffer is a minimal amount of work-in- process input to the drum that is maintained to ensure that it is always in operation. The rope is the sequence of activities preceding and including the bottleneck operation that must be coordinated to avoid inventory buildup. |
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Which of the following is not a goal of materials requirements planning?
A. Right time. B. Right customer. C. Right quantity. D. Right part. |
B is correct.
The three basic goals of MRP are the right part in the right quantity at the right time. |
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The process model used in a theory of constraints (TOC) analysis is called
A. Lean production. B. Drum-buffer-rope. C. Materials requirements planning. D. Just-in-time. |
B is correct.
Production flow through a constraint is managed using the drum-buffer-rope (DBR) system. The drum (i.e., the beat to which a production process marches) is the bottleneck operation. The constraint sets the pace for the entire process. The buffer is a minimal amount of work-in-process input to the drum that is maintained to ensure that it is always in operation. The rope is the sequence of activities preceding and including the bottleneck operation that must be coordinated to avoid inventory buildup. |
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The following steps make up the stages of a theory of constraints (TOC) analysis.
I. Determine the most profitable product mix given the constraint. II. Increase capacity at the constraint. III. Identify the constraint. IV. Redesign the manufacturing process. V. Maximize the flow through the constraint. If executed in the correct order, the sequence is A. III, I, II, V, IV. B. III, I, V, II, IV. C. III, II, I, V, IV. D. III, II, I, IV, V. |
B is correct.
The steps in a TOC analysis are (1) identify the constraint, (2) determine the most profitable product mix given the constraint, (3) maximize the flow through the constraint, (4) increase capacity at the constraint, and (5) redesign the manufacturing process for greater flexibility and speed. |
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Three of the basic measurements used by the theory of constraints (TOC) are
A. Throughput (or throughput contribution), inventory (or investments), and operational expense. B. Gross margin (or gross profit), return on assets, and total sales. C. Number of constraints (or subordinates), number of nonconstraints, and operating leverage. D. Fixed manufacturing overhead per unit, fixed general overhead per unit, and unit gross margin (or gross profit). |
A is correct.
Theory of constraints (TOC) analysis describes three basic measurements: throughput contribution (sales – direct materials), investments (raw materials; work-in-process; finished goods; R&D costs; and property, plant, and equipment), and operating costs (all costs except direct materials). |
