Deck 11: Resource Planning

Question 1

Gross requirements are the total demand derived from all parent production plans.

Answer 1

True

Question 2

Explain the difference between independent and dependent demand and illustrate your explanation with an example.

Answer 2

Examples will vary. The key difference between the two is whether the demand for item A is driven directly or by the demand for item B. End items are typically independent demand since their demand is subject only to customers' appetite. The components used to make up the end item have their demand determined by the number of end items that are required during any production period.

Question 3

If the demand for an independent demand item is continuous and uniform, so will the planned order releases of its components.

Answer 3

False

Question 4

A component is an item that may go through one or more operations to be transformed into or become part of one or more parents.

Question 5

In MRP, a(n) ________ is any item manufactured from one or more components.

Question 6

The projected on-hand inventory in the MPS takes into account scheduled receipts, but not planned receipts.

Question 7

Which of the following is not an example of dependent demand items?

A) shoelaces, shoes
B) wheels, car
C) carafes, coffeemakers
D) ice skates, roller skates

Question 8

A parent is any item manufactured from one or more components.

Question 9

The portion of the master production schedule farthest into the future is often frozen to reduce forecasting requirements.

Question 10

Dependent demand for an item occurs because the quantity required for it varies with the production plans of one or more parents.

Question 11

Table 11.1
Big Truck Tacos has developed the following forecast of demand and accepted orders for their holiday tacos as they enter the Taco Festival Season. They enter the planning period with 65 holiday tacos in inventory as shown in Week 0.

Use Table 11.1 to answer this question. If Big Truck Tacos makes tacos in batches of 20, what should their MPS entry be for the first week of production?

A) 60
B) 80
C) 100
D) 20

Question 12

In MRP, a(n) ________ is an item that may go through one or more operations to be transformed into or become part of one or more parents.

Question 13

Available-to-promise inventory is the amount of end items that marketing can promise to customers by a certain date.

Question 14

Any item manufactured from one or more components is a(n):

A) parent.
B) component.
C) intermediate item.
D) purchased item.

Question 15

The projected on-hand inventory in the MPS takes into account customer orders (booked) as well as the MPS quantities.

Question 16

________ is a computerized information system developed specifically to aid in managing dependent-demand inventory and scheduling replenishment orders.

Question 17

The master production schedule (MPS) is the part of the material requirements planning that specifies when components must be ordered or assembled.

Question 18

Material requirements planning (MRP) is a computerized information system developed specifically to aid in managing dependent demand inventory and scheduling replenishment orders.

Question 19

Under which one of the following circumstances can an MRP system be used to its best advantage?

A) when the item's demand depends only on customer demand
B) when the item's demand is uniform
C) when the item's demand is constant
D) when the item's demand depends on the production plans of its parent(s)

Question 20

Available-to-promise (ATP) quantities are only shown in the first period (if the projected on-hand inventory is greater than zero in the first period), and subsequently in periods when the MPS quantity is greater than 0.

Question 21

Complete the following MPS Record.

Question 22

Gross requirements are the total demand derived from all parent production plans.

Question 23

For items manufactured in-house, one component of the planned lead time is waiting time.

Question 24

A bill of materials is a record of all the components of an item, the parent-component relationships, and the usage quantities derived from engineering and process designs.

Question 25

Table 11.1
Big Truck Tacos has developed the following forecast of demand and accepted orders for their holiday tacos as they enter the Taco Festival Season. They enter the planning period with 65 holiday tacos in inventory as shown in Week 0.

Use Table 11.1 to answer this question. In week 1 the inventory manager discovers, much to his horror, that instead of 65 tacos in inventory, they have only 5 tacos. They had already planned to make exactly what they needed, based on the erroneous inventory number of 65 and they can't alter their week 1 schedule. How many tacos do they need to have on their MPS for the second week of production to correct their shortfall, fulfill backorders, and move forward through the rest of the production period?

A) 80
B) 140
C) 100
D) 110

Question 26

An intermediate item must have at least one parent and at least one component.

Question 27

Operations produces a number of items in one production period. Those items that are not produced for a specific customer order are ________.

Question 28

Part commonality tends to increase inventory costs.

Question 29

Table 11.1
Big Truck Tacos has developed the following forecast of demand and accepted orders for their holiday tacos as they enter the Taco Festival Season. They enter the planning period with 65 holiday tacos in inventory as shown in Week 0.

Use Table 11.1 to answer this question. After scoring a terrific deal on tortillas, Big Truck Tacos decides to produce 120 tacos in weeks 1, 2, and 3. If they make tacos in batches of 20, what should their MPS entry be for the fifth week of production?

A) 60
B) 80
C) 100
D) 120

Question 30

Table 11.1
Big Truck Tacos has developed the following forecast of demand and accepted orders for their holiday tacos as they enter the Taco Festival Season. They enter the planning period with 65 holiday tacos in inventory as shown in Week 0.

Use Table 11.1 to answer this question. After scoring a terrific deal on tortillas, Big Truck Tacos decides to produce 120 tacos in weeks 1, 2, and 3. What is their projected on-hand inventory for week 4?

A) 55
B) 65
C) 75
D) 85

Question 31

Table 11.2
Mutts Amazing Dogs has developed the following demand forecast for The Pitbull, a spicy concoction graced by pepperjack cheese, serrano, habanero, poblano and jalapeno peppers, onion, and a cilantro-lime aioli. They enter the planning period with 20 hotdogs in inventory as shown in Week 0. A few customers have standing orders for hotdogs and they have booked catering events over the next two months. They buy their hotdogs in packages of ten just like you and me.

Use Table 11.2 to answer this question. Mutt decides to operate on a level MPS plan for weeks 1 through 4. What MPS quantity brings them into week 5 with the same ATP as if they had adopted a more traditional approach?

A) 190
B) 150
C) 170
D) 160

Question 32

Table 11.2
Mutts Amazing Dogs has developed the following demand forecast for The Pitbull, a spicy concoction graced by pepperjack cheese, serrano, habanero, poblano and jalapeno peppers, onion, and a cilantro-lime aioli. They enter the planning period with 20 hotdogs in inventory as shown in Week 0. A few customers have standing orders for hotdogs and they have booked catering events over the next two months. They buy their hotdogs in packages of ten just like you and me.

Use Table 11.2 to answer this question. What is their available to promise inventory for week 4?

A) 30
B) 50
C) 70
D) 90

Question 33

Planned receipts are estimates of the amount of inventory available each week after gross requirements have been satisfied.

Question 34

A bill of materials (BOM) shows all of the components of an item, the parent-component relationships, usage quantities, and lot size derived from engineering and process designs.

Question 35

Table 11.2
Mutts Amazing Dogs has developed the following demand forecast for The Pitbull, a spicy concoction graced by pepperjack cheese, serrano, habanero, poblano and jalapeno peppers, onion, and a cilantro-lime aioli. They enter the planning period with 20 hotdogs in inventory as shown in Week 0. A few customers have standing orders for hotdogs and they have booked catering events over the next two months. They buy their hotdogs in packages of ten just like you and me.

Use Table 11.2 to answer this question. The sales manager realizes that he shifted a decimal point for week 3; instead of customer orders for 30, they actually have customer orders for 300. "My bad," he says to no one in particular. The production manager retreats to the sanctity of his office and after dismembering his sales-manager voodoo doll, sets about making things right. What's the proper MPS quantity for week 3 now that the orders are straightened out?

A) 280
B) 270
C) 300
D) 290

Question 36

The periodic order quantity (POQ) rule tends to keep more inventory on hand than the lot-for-lot rule, but less inventory on hand than the fixed order quantity rule.

Question 37

A materials requirements planning (MRP) explosion occurs when the system is bombarded with too many orders to schedule at one time.

Question 38

Complete the following MPS Record

Question 39

Table 11.2
Mutts Amazing Dogs has developed the following demand forecast for The Pitbull, a spicy concoction graced by pepperjack cheese, serrano, habanero, poblano and jalapeno peppers, onion, and a cilantro-lime aioli. They enter the planning period with 20 hotdogs in inventory as shown in Week 0. A few customers have standing orders for hotdogs and they have booked catering events over the next two months. They buy their hotdogs in packages of ten just like you and me.

Use Table 11.2 to answer this question. What should the MPS quantity be for week 5?

A) 190
B) 120
C) 170
D) 160

Question 40

________ is an estimate of the amount of inventory available each week after gross requirements have been satisfied.

Question 41

Scenario 11.2


Inventory amounts indicated in the table are available to produce the end item indicated in this bill of materials.
Use Scenario 11.2 to answer this question. How many additional units of E are needed to produce ten end items?

A) 620
B) 103
C) 236
D) 350

Question 42

Lot-for-lot (L4L) is a rule that maintains the same order quantity each time an order is issued.

Question 43

Use the following MRP record to answer the question.
Which one of the statements concerning item LMN is True?

A) The scheduled receipt of 80 units in week 3 should be expedited so that it is finished in week 2.
B) The planned order release quantity in week 3 is 80 units.
C) The planned receipt quantity in week 6 is 30 units.
D) The projected on-hand inventory in week 8 is 70 units.

Question 44

Which of the following statements concerning MRP is True?

A) Dependent-demand items tend to experience relatively constant demand rates.
B) MRP systems use independent demands for each component item.
C) Capacity requirements planning (CRP) uses open orders (scheduled receipts) and planned order releases to estimate capacity requirements for critical workstations.
D) The most accurate way to forecast dependent demand is to examine past usage rates.

Question 45

Which of the following statements about MRP is True?

A) To be classified as a successful MRP user, a company must use either the L4L or POQ rules for lot sizing.
B) MRP gross requirements for a parent item are equal to the planned order releases of its components.
C) MRP logic is based on the logic of uniform, continuous demand, and item independence.
D) MRP gross requirements for a component depend on the planned order releases of its immediate parents.

Question 46

Which of the following statements about MRP II is best?

A) It is computationally faster than regular MRP.
B) It is limited only to aiding order-launching decisions.
C) It incorporates informal systems through the use of expert systems technology.
D) It provides more extensive information than MRP because it is tied to the company's financial system.

Question 47

Which statement on MRP explosion is best?

A) It calculates the total number of subassemblies, components, and raw materials needed for each parent item.
B) It calculates the total number of raw materials to be purchased from all suppliers.
C) It calculates the total number of parts to be produced for each parent item.
D) It calculates the total number of parts needed to be produced less the number of parts on hand for each parent item.

Question 48

Which one of the following is a feature of MRP II, but not available in basic MRP systems?

A) financial projections
B) action notices
C) dispatch lists
D) capacity reporting

Question 49

Use the following partially completed MRP record to answer the question.
What is the planned order release quantity in week 4?

A) 0 units
B) greater than 0 units but fewer than or equal to 50 units
C) greater than 50 units but fewer than or equal to 100 units
D) greater than 100 units

Question 50

Management wishes to use an FOQ lot-sizing rule for an item based on the economic order quantity. If the annual demand is 1,200 units, the holding cost is $10 per unit per year, and the setup cost is $50 per lot, which one of the following fixed-order quantities is most appropriate?

A) 90 units
B) 110 units
C) 130 units
D) 150 units

Question 51

Scenario 11.1
Sunshine Manufacturing produces three products: X, Y, Z. The production of these end items is controlled by an MRP system. Each end item X is assembled with two components of A and one component of B. Each end item of Y is assembled with two components of C and one component of A. End item Z is assembled from one unit of D and one unit of C; D is manufactured from one unit of A; and C is manufactured from one unit of B.
Use the information in Scenario 11.1. If item C has a manufacturing lead time of two weeks, and a planned receipt of 65 units is needed in week 4, which of the following statements is True?

A) The planned order release in week 2 for item C is 130 units.
B) The gross requirements for item B in week 4 is 65 units.
C) The gross requirements for item B in week 2 is 130 units.
D) The gross requirements for item B in week 2 is 65 units.

Question 52

Management wishes to use a POQ lot-sizing rule for an item that experiences an average demand of 30 units per week. If the desired average lot size is 120 units, what should P be?

A) zero or one week
B) two or three weeks
C) four or five weeks
D) more than five weeks

Question 53

Scenario 11.1
Sunshine Manufacturing produces three products: X, Y, Z. The production of these end items is controlled by an MRP system. Each end item X is assembled with two components of A and one component of B. Each end item of Y is assembled with two components of C and one component of A. End item Z is assembled from one unit of D and one unit of C; D is manufactured from one unit of A; and C is manufactured from one unit of B.
Use the information in Scenario 11.1. Which of the following sequences is an acceptable way to process the inventory records for components A, B, C, and D?

A) A, B, C, D
B) D, A, B, C
C) B, A, D, C
D) C, B, D, A

Question 54

Which one of the following is an input to the MRP system?

A) shop-floor schedules
B) financial reports
C) master production schedule
D) purchasing orders

Question 55

Use the following partially completed MRP record to answer the question.
What are the quantities of planned order releases for item ABC for the first five weeks (weeks 1, 2, 3, 4, and 5)?

A) 30, 0, 60, 0, 145
B) 60, 0, 145, 0, 0
C) 0, 30, 60, 0, 0
D) 30, 0, 60, 145, 0

Question 56

MRP II ties MRP to the company's financial system.

Question 57

Use the following partially completed MRP record to answer the question.
What are the quantities of planned order releases for item XYZ for the first six weeks (weeks 1, 2, 3, 4, 5, and 6)?

A) 20, 30, 0, 40, 20, 0
B) 35, 0, 60, 0, 0, 0
C) 5, 30, 0, 40, 20, 0
D) 35, 0, 0, 40, 20, 0

Question 58

If a planned receipt for an item is due in week 6 and the item's lead time is two weeks, in which week will the corresponding planned order release occur?

A) week 2
B) week 4
C) week 6
D) week 8

Question 59

Which one of the following statements about lot-sizing rules is True?

A) The periodic order quantity (POQ) rule seeks to create inventory remnants.
B) If the POQ rule is used, an item's lot size can vary each time an order is placed.
C) The lot-for-lot (L4L) rule is a special case of the fixed-order quantity (FOQ) rule.
D) All lot-sizing rules seek to minimize inventory levels.

Question 60

Which one of the following is an MRP lot-sizing rule that attempts to minimize the amount of average inventory?

A) periodic order quantity (POQ), with P = 2
B) fixed order quantity (FOQ)
C) economic order quantity (EOQ)
D) lot for lot (L4L)

Question 61

The L4L rule is a special case of the ________.

Question 62

Scenario 11.3
Use this bill of materials and inventory records to answer the questions.


Use Scenario 11.3 to answer this question. How many additional units of F are required to produce 17 end items?

A) 332
B) 329
C) 340
D) 314

Question 63

Scenario 11.3
Use this bill of materials and inventory records to answer the questions.


Use Scenario 11.3 to answer this question. How many additional units of N are required to produce 25 end items?

A) 138
B) 150
C) 124
D) 112

Question 64

Scenario 11.2


Inventory amounts indicated in the table are available to produce the end item indicated in this bill of materials.
Use Scenario 11.2 to answer this question. How many additional units of F are needed to produce twelve end items?

A) 174
B) 192
C) 182
D) 160

Question 65

MRP ________ is a process that converts the requirements of various final products into a material requirements plan that specifies the replenishment schedule of all the subassemblies, components, and raw materials needed by the final products.

Question 66

Among the four core processes of an organization that link activities within and across firms in a supply chain, the ________ interacts with all of them either through its inputs or outputs.

Question 67

A(n ) ________ item has one or more parents but no components.

Question 68

A technique used for projecting time-phased capacity requirements for workstations is called:

A) capacity requirements planning.
B) time-adjusted output control.
C) input-output control.
D) work center planning.

Question 69

A computer-generated memo used by inventory planners to make decisions about releasing new orders and adjusting due dates of scheduled receipts is an:

A) enterprise report.
B) infinite capacity.
C) action notice.
D) input-output report.

Question 70

Which best defines the gross requirements for a component item?

A) the forecasted customer demand for the component
B) the amount of safety stock needed to buffer against uncertainties
C) the sum of gross requirements for all parents of the component
D) the total demand for the component derived from all immediate parents

Question 71

The sums of the quantities in the master production schedule must equal those in the ________.

Question 72

Which of the following is not one of the uses of MRP in promoting a healthy environment?

A) An MRP system can track waste in a bill of materials as a component of an item.
B) When the master production schedule is developed for a product, reports can be generated that project the quantity of waste.
C) When the master production schedule is developed for a product, reports can be generated that project the timing of waste.
D) The MRP system can be used to communicate directly with the International Organization for Standardization to file ISO 9000 documentation.

Question 73

Which of the following is not used to derive an item's gross requirements?

A) the MPS for immediate parents that are end items
B) the planned order releases for immediate parents below the MPS level
C) the MPS components that are not purchased items
D) any other requirements not originating in the MPS, such as the demand for replacement parts

Question 74

Scenario 11.2


Inventory amounts indicated in the table are available to produce the end item indicated in this bill of materials.
Use Figure Scenario 11.2 to answer this question. How many additional units of P are needed to produce ten end items?

A) 46
B) 38
C) 0
D) 13

Question 75

Scenario 11.2


Inventory amounts indicated in the table are available to produce the end item indicated in this bill of materials.
Use Scenario 11.2 to answer this question. How many additional units of D are needed to produce seven end items?

A) 40
B) 22
C) 68
D) 10

Question 76

The ________ is a record of all components of an item, the parent-component relationships, and usage quantities derived from engineering and process design.

Question 77

Scenario 11.3
Use this bill of materials and inventory records to answer the questions.


Use Scenario 11.3 to answer this question. How many additional units of E are required to produce 33 end items?

A) 1,112
B) 2,046
C) 928
D) 1,180

Question 78

Scenario 11.3
Use this bill of materials and inventory records to answer the questions.


Use Scenario 11.3 to answer this question. How many additional units of E are required to produce 20 end items?

A) 644
B) 720
C) 712
D) 692

Question 79

A(n) ________ is an intermediate item that is assembled from one or more components.

Question 80

________ is the degree to which a component has more than one immediate parent.