Deck 20: Production and Inventory Control

Question 1

JIT production systems usually call for very few supplies with single or dual sources under long term contracts.

Answer 1

True

Question 2

The MRP inventory/open order netting function is used to develop "planned order releases".

Answer 2

False

Question 3

MRO inventories include in process and semi finished goods.

Answer 3

False

Question 4

The buyer/planner and supplier scheduler concepts usually require long term contracts.

Question 5

JIT production planning is basically a "pull" system where as MRP is basically a "push" system.

Question 6

Materials Requirement Planning (MRP)uses the Master Planning Schedule (MPS)to "explode" the product Bill of Material (BOM)to calculate the required number of parts needed.

Question 7

MRP and MRP II systems are the same,i.e.MRP II is merely the 2nd evolution of MRP.

Question 8

Once the CRP system issues the routing data,it is no longer necessary to check work center status files.

Question 9

Capacity Requirements Planning (CRP)converts shop orders produced by the MRP system into scheduled work loads for the various work centers.

Question 10

In most firms,forecasting demand is the responsibility of the marketing/sales department.

Question 11

Inventory counts can be 90% accurate and still be useful.

Question 12

MRP logic is based on dependent demand.

Question 13

JIT can be used in most manufacturing situations.

Question 14

Detailed production scheduling comes after the release and dispatching of orders.

Question 15

The Master Production Schedule (MPS)is developed directly from the capacity requirements planning (CRP).

Question 16

Inventories help balance the firm's supply with the market forces of demand.

Question 17

Aggregate planning and master scheduling rely on accurate forecasting of demand.

Question 18

MRP and ERP systems are one in the same.

Question 19

Reporting and monitory production status requires constant feed back from all the relevant people including work station operators.

Question 20

Just-In-Time (JIT)production planning has as its basic theme that "inventory is evil".

Question 21

A good example of independent demand is retail inventory.

Question 22

The ABC Analysis uses the 80-20 concept or the pareto principle.

Question 23

Flow control inventory systems work best in job shop operations.

Question 24

In reorder point inventory systems,safety stock is the maximum lead time usage plus the average lead-time usage.

Question 25

The basic weakness of the EOQ concept is that most users of the formula use average costs.

Question 26

Just-In-Time (JIT)inventory seeks to match factory output tightly to distribution demand for finished goods,i.e.a pull system.

Question 27

Order point or fixed order quantity systems use variable quantities for the reorder points.

Question 28

The most serious problem in using an order point system stems from the fact that it works on the basis of historical rather than actual demand data.

Question 29

JIT inventory control works best under conditions of dependent demand.

Question 30

The first objective of production planning is:

A) To meet customer demand
B) Minimize total costs
C) To coordinate and synchronize resources and work
D) Provide progress surveillance and correction
E) Dispatch orders

Question 31

EOQ logic requires the use of incremental costs.

Question 32

C items require more management supervision because they represent such large numbers of items.

Question 33

Supplier managed inventories can result in major savings by contracting with the supplier to manage,stock and operate MRO,tools,office supplies and other support material.

Question 34

The inventory catalog helps prevent accidental duplication of identical items from different suppliers and internal departments.

Question 35

The Two-Bin system is often used for low-value hardware and supplies whose usage is not recorded in a perpetual record.

Question 36

Acquisition costs are the indirect costs of ordering materials.

Question 37

MRP systems calculate inventory based on the quantity purchased when each order is placed,the purchase lead time and safety stock.

Question 38

Usually,the highest percentage of inventory carrying costs is the opportunity cost.

Question 39

Fixed order interval inventory control systems require a review of perpetual inventory records.

Question 40

EOQ gives the delivery quantity when the carrying costs are at their lowest point.

Question 41

The two costs associated with inventories are:

A) Fixed, variable
B) Carrying, acquisition
C) Overhead, burden
D) Storage, semi fixed
E) Programmed, stand by

Question 42

The relationship between the aggregate plan and Master Production Schedule (MPS)is:

A) The aggregate plan balances the plant's capacity with demand and the MPS translates this plan into numbers of specific products in time frames
B) The aggregate plan is for 6 months and the MPS is for 3 months
C) The aggregate plan uses simulation and the MPS uses regression analysis
D) The MPS calculates labor time and the aggregate calculates labor and material
E) MPS starts with macro units and the aggregate plan starts with micro units

Question 43

EOQ analysis seeks to reveal:

A) The lowest acquisition costs
B) The lowest carrying costs
C) The low point on the TC curve
D) The safety or buffer stock number
E) The lowest purchase price

Question 44

The function of Capacity Requirements Planning (CRP)is to

A) Insure accurate inventory counts
B) Convert shop orders into scheduled work loads for factory work centers
C) Verify that the bill of material is accurate
D) Calculate "encumbered" inventory
E) Confirm that the MPS is accurate

Question 45

The difference between MRP and MRP II is:

A) MRP is closed loop
B) MRP II is the advanced version of MRP
C) MRP II can be used to adjust schedule changes
D) MRP II is a closed loop and primarily converts operating production plans into financial data
E) MRP is the "umbrella" system for MRP II

Question 46

Just-In-Time (JIT)production planning relies on:

A) Close to zero defects from suppliers
B) Low inventory with materials sent directly to work stations
C) Long term, collaborative contracts with suppliers
D) The ability to "pull" production rather than "push" it from the front end
E) All of the above

Question 47

The inventory catalog is a useful tool to:

A) List all inventory "in-process"
B) List all MRO inventory
C) Communicate all approved parts by number and supplier to avoid duplication
D) List all production inventory
E) List all finished goods inventory

Question 48

The inventory/open order netting concept is used to determine the

A) Planned order releases
B) Time phasing
C) Bill of material
D) MPS
E) "On hand" balances

Question 49

A major impact of JIT on purchasing and supply is:

A) Pricing
B) Delivery
C) Quality
D) Quantity
E) Sourcing and contracting

Question 50

In a majority of firms,forecasting demand is the responsibility of the

A) Finance department
B) Marketing/Sales department
C) Production department
D) Product Development department
E) Engineering department

Question 51

JIT systems work the best when the firm:

A) Produces a large number of different products
B) Has widely fluctuating demand
C) Has a large inspection department
D) Production operation set up requirements have short change over times
E) None of the above

Question 52

The multilevel nature of production planning systems requires

A) An elaborate reporting system
B) Supervision by one key manager
C) Coordination of production planning, control and supervisory operating personnel
D) Daily staff meetings
E) A special department to control production

Question 53

When we observe that the production planning system is "dynamic",we are saying

A) MRP systems can not cope with changing demand
B) Outsourcing will help stabilize arriving materials
C) CRP and MRP systems must be constantly reviewed
D) It is wise to re-plan on a weekly basis
E) None of the above

Question 54

ABC analysis provides insight into:

A) Total inventory costs
B) Average inventory costs
C) What items account for the most expenditures
D) What items are critical to avoid stock outs
E) High turnover items

Question 55

Despite the increased use of JIT systems,there are several benefits or advantages to having inventory,they include:

A) Make possible smooth and efficient operations by decoupling individual segments of the total operation
B) Inventories of parts and components produced in-house facilitates economical production runs in various machine-assembly stations
C) Provides "safety" stock for supply interruptions
D) Finished goods inventory help the marketing/sales department satisfy unexpected customer demand to avoid stockouts
E) All of the above

Question 56

Materials Requirements Planning (MRP)is used to determine quantity and timing of required materials under conditions of:

A) Independent demand
B) JIT operations
C) Changing CRP requirements
D) Dependent demand
E) Stable demand

Question 57

The output of MRP and CRP systems is transmitted to the manufacturing organization in the form of

A) Order releases and a dispatch list
B) Alternative routings
C) Personnel allocations
D) Work center load reports
E) All of the above

Question 58

Opportunity cost is a measure of:

A) Inventory acquisition cost
B) Cost of services related to purchasing
C) Cost of operating expenses
D) Alternatives for invested funds
E) Activity based costs

Question 59

MRP inventory is usually a function of:

A) Independent demand
B) Dependent demand
C) Static demand
D) Variable demand
E) Average demand

Question 60

The buyer-planner concept developed because:

A) The supplier scheduler concept did not work well with MRP
B) In many MRP systems, the buyer is the logical person to issue release orders under long term contracts
C) Reliability in terms of quality and delivery must be monitored daily
D) It facilitates closer relationships with suppliers
E) It helps improve supplier flexibility and reliability

Question 61

In MRP systems,the logic of the system answers the inventory question of:

A) Safety stock levels
B) Lead time
C) How much to order
D) When to order
E) The EOQ point

Question 62

The cyclical or fixed order interval inventory system is a:

A) Time-based operation with periodic reviews
B) Form of MRP
C) System that works best with dependent demand
D) Control system for low value items
E) Inventory system best used in a job shop

Question 63

The key input in the EOQ formula is:

A) Variable costs
B) Tooling costs
C) Overhead costs
D) Sunk costs
E) Incremental costs

Question 64

Order point or fixed order quantity systems requires the use of:

A) EOQ
B) MRP II
C) Perpetual inventory records per item
D) "Floating" or variable order points per item
E) All of the above

Question 65

Supplier managed inventories works best for:

A) Production material
B) Direct material
C) A items
D) MRO supplies
E) B items

Question 66

The major mistake most users commit when calculating EOQ is:

A) Using inaccurate demand numbers
B) Using "sunk" cost figures
C) Using average costs
D) Using standard engineering costs
E) Using the wrong labor rates

Question 67

The Just-In-Time (JIT)approach in inventory control is primarily used for:

A) B items
B) A items
C) C items
D) D items
E) E items

Question 68

for the inventory control of personal safety equipment,the most efficient and economical control system is:

A) Two-bin
B) Cyclical
C) MRP
D) Flow control
E) JIT