Deck 9: Material Requirements Planning

Question 1

The deeper one looks into the product creation sequence,the more the requirements of dependent demand items tend to smooth out and become even over time.

Answer 1

False
Explanation: The requirements of dependent demand items tend to become more and more lumpy as we go farther down into the product creation sequence.

Question 2

Computing the quantity of each component that goes into a finished product can be done by expanding (or exploding)each item in a product structure file and summing at all levels.

Answer 2

True
Explanation: To compute the amount of each item needed at the lower levels,each item would need to be expanded ("exploded")and summed.A more efficient procedure is to store parts data in simple single-level lists.That is,each item and component is listed showing only its parent and the number of units needed per unit of its parent.

Question 3

An input to the material requirements planning (MRP)system is an inventory records file.

Answer 3

True
Explanation: This BOM file is one of the three main inputs to the MRP program.(The other two are the master schedule and the inventory records file. )

Question 4

MRP stands for Manufacturing Requirements Planning.

Question 5

An output of MRP is a bill of materials (BOM)file.

Question 6

MRP stands for Material Requirements Planning.

Question 7

The MRP program performs its analysis from the bottom up of the product structure trees,imploding requirements level by level.

Question 8

A modular bill of materials includes items with fractional options.

Question 9

MRP provides the schedule specifying when each part and component of an end item should be ordered or produced.

Question 10

MRP is a logical,easily understandable approach to the problem of determining the number of parts,components,and materials needed to produce each end item.

Question 11

Manufacturing firms maintain bill of materials (BOM)files,which are simply a sequencing of everything that goes into a final product.

Question 12

MRP is most valuable where a number of products are made in batches using the same productive equipment.

Question 13

MRP is least valuable in industries where a number of products are made in batches using the same productive equipment.

Question 14

The master production schedule states the number of items to be produced during specific time periods.

Question 15

A master production schedule is an input to a material requirements planning (MRP)system.

Question 16

The deeper one looks into the product creation sequence,the more the requirements of dependent demand items tend to become more "lumpy."

Question 17

A modular bill of materials is the term for an item that can be produced and stocked as a subassembly.

Question 18

MRP is based on dependent demand.

Question 19

A BOM file is often called a product structure file or product tree because it shows how a product is put together.

Question 20

An input to the material requirements planning (MRP)system is an exception report.

Question 21

The least total cost method (LTC)lot-sizing technique calculates the order quantity by comparing the carrying cost and the setup (or ordering)costs for various lot sizes and then selects the lot in which these are most nearly equal.

Question 22

The lot-for-lot (L4L)lot sizing technique minimizes carrying cost by taking into account setup costs and capacity limitations.

Question 23

The three main inputs to an MRP system are the bill of materials,the master schedule and the inventory records file.

Question 24

The least unit cost method of lot-sizing technique adds ordering and inventory carrying cost for each trial lot size and divides by the number of units in each lot size,picking the lot size with the lowest unit cost.

Question 25

Projected available balance is the amount of inventory that is expected as of the beginning of a period.

Question 26

A lot-for-lot (L4L)lot sizing technique does not take into account setup costs or capacity limitations.

Question 27

The economic order quantity (EOQ)lot sizing technique produces or acquires exactly the amount of product that is needed each time period with none carried over into future periods.

Question 28

The economic order quantity (EOQ)lot sizing technique uses the "square root formula" to balance set-up cost and carrying cost.

Question 29

Low level coding in MRP indicates the exact status of each item managed by the system in "real time."

Question 30

Lot-for-lot (L4L)is the most common lot sizing technique.

Question 31

"Projected available balance" is a term referring to unsold finished goods inventory.

Question 32

Generally,determining lot sizes in MRP systems is simple.

Question 33

The economic order quantity (EOQ)lot sizing technique uses the "square root formula" to balance set-up cost,carrying cost and cost of stock-outs.

Question 34

Net change MRP reflects the exact status of each item managed by the system in "real time."

Question 35

In a net change MRP program,a change in one item will result in a completely new inventory plan and schedule for every item in the master production schedule.

Question 36

In a net change MRP system requirements and schedules are considered rigid and never updated.

Question 37

Net change MRP systems are "activity" driven.

Question 38

The least unit cost method (LUC)lot-sizing technique calculates the order quantity by comparing the carrying cost and the setup (or ordering)costs for various lot sizes and then selects the lot in which these are most nearly equal.

Question 39

The least unit cost method of lot-sizing adds ordering,stock-out and inventory carrying cost for each trial lot size and divides by the number of units in each lot size,picking the lot size with the lowest unit cost.

Question 40

In a net change MRP system requirements and schedules are updated whenever a transaction is processed that has an impact on the item.

Question 41

Time fences are periods of time having some specified level of opportunity for the customer to make changes.

Question 42

MRP systems seek to achieve which of the following?

A) Minimize lot sizes
B) Determine the number of dependent demand items needed
C) Relieve capacity bottlenecks
D) Provide a yardstick for future improvements
E) Improve on JIT methods

Question 43

Which of the following is an input to the master production schedule?

A) Prototype products from product development
B) Aggregate component schedule
C) Peg reports
D) Exception reports
E) Forecasts of random demand from customers

Question 44

Which of the following is one of the main purposes of a MRP system?

A) Educate personnel in basic work rules
B) To determine the amount of materials needed to produce each end item.
C) Stimulate the work force
D) Decrease labor requirements
E) Increase inventory accuracy

Question 45

Which of the following is an input file necessary to run an MRP system?

A) Bill of materials (BOM)file
B) Quality management report
C) Exception reports
D) Planned-order schedules
E) Purchasing contracts

Question 46

One of the main purposes of a MRP system is which of the following?

A) Track inventory levels
B) Create productive capacity
C) Decrease layers of management
D) Develop schedules specifying when each component should be ordered or produced.
E) Upgrade manufacturing's professionalism

Question 47

Which of the following industry types will not benefit greatly from the application of MRP?

A) Fabricate-to-order
B) Assemble-to-stock
C) Assemble-to-order
D) Manufacture-to-order
E) None of the above

Question 48

A BOM file is also called which of the following?

A) Product tree
B) Stocking plan
C) Inventory usage record
D) Production parts plan
E) Time bucket schedule

Question 49

Which of the following is an input to the master production schedule (MPS)?

A) Inventory records file
B) The aggregate plan
C) The bill of materials
D) The exception report
E) Planned order schedules

Question 50

Which of the following is most closely related to the reason a firm might implement MRP?

A) So they can order the right parts
B) So they can order parts sufficient for immediate use
C) So they can insure that parts to arrive prior to when they are needed
D) To assure appropriate quality levels
E) To keep process costs between the LCL and the UCL

Question 51

Which of the following is an input to the master production schedule?

A) Bill of materials (BOM)file
B) Inventory records file
C) Exception reports
D) Planned-order schedules
E) None of the above

Question 52

Which of the following is not a production activity report generated by MRP?

A) Exception report
B) Planning report
C) Performance control report
D) Planned-order schedules
E) Bill of materials report

Question 53

Which of the following is an input file necessary to run an MRP system?

A) Exception report
B) Computer-aided-design files
C) Inventory records file
D) Personnel files
E) Planned order schedule

Question 54

The time-phased plan specifying how many and when the firm plans to build each end item is called the Materials Requirements Plan (MRP. )

Question 55

The time-phased plan specifying how many and when the firm plans to build each end item is called the master production schedule (MPS).

Question 56

When implemented correctly,MRP links all areas of the business.

Question 57

A product tree can do which of the following?

A) Help to compute component usage
B) Reduce product scrap
C) Reduce labor overtime
D) Reduce regular time labor
E) Locate raw material supplies

Question 58

Which of the following industry types have high expected benefits from the application of MRP?

A) Fabricate-to-order
B) Hospitals
C) Assemble-to-order
D) Aircraft manufacturers
E) Oil refineries

Question 59

Which of the following industry types have high expected benefits from the application of MRP?

A) Fabricate-to-stock
B) Fabricate-to-order
C) Assemble-to-stock
D) Continuous process
E) Service and repair parts

Question 60

The customer grace period is a time-span having some specified level of opportunity for the customer to make changes.

Question 61

In an MRP program,the program accesses the status segment of an inventory record according to specific periods called which of the following?

A) Cubed time units
B) Time buckets
C) BOM units
D) Time modules
E) Time lines

Question 62

In a typical inventory status record which of the following would you not expect to see?

A) Scrap allowance
B) Order quantity
C) Gross requirements
D) Planned-order releases
E) Lost items

Question 63

Which of the following is the planned-order release using an MRP program if the gross requirement is 670 and the inventory on hand is 600?

A) 670
B) 600
C) 530
D) 70
E) None of the above

Question 64

Which of the following is the net requirement using an MRP program if the gross requirement is 1,250 and the inventory on hand is 50?

A) 1,200
B) 1,300
C) 1,150
D) 2,450
E) None of the above

Question 65

What is the name for demand caused by the demand for a higher level item? __________________________

Question 66

Which of the following is the net requirement using an MRP program if the gross requirement is 1,000 and the inventory on hand is 500?

A) 1,000
B) 950
C) 500
D) 400
E) 350

Question 67

If annual demand is 12,000 units,annual holding cost is $15 per unit,and setup cost per order is $25,which of the following is the EOQ lot size?

A) 2,000
B) 1,200
C) 1,000
D) 300
E) 200

Question 68

Which of the following files allows us to retrace a material requirement upward in the product structure through each level,identifying each parent item that created the demand?

A) Planning bill of materials file
B) Modular bill of materials file
C) Super bill of materials file
D) Exception report file
E) Peg record file

Question 69

We would expect to see which of the following in an MRP system's inventory status file?

A) End items produced
B) Late/early delivery records
C) Scrap parts
D) Labor efficiency
E) Computer errors

Question 70

Which of the following is the planned-order release using an MRP program if the gross requirement is 5,000,inventory on hand is 1,200 and planned receipts are 800?

A) 7,000
B) 4,200
C) 3,000
D) 2,000
E) 1,200

Question 71

Which of the following is considered a primary report in an MRP system?

A) Planned order schedule
B) Peg report
C) Planning report
D) Inventory accuracy report
E) Aggregate production plan report

Question 72

Which of the following is a dynamic lot-sizing technique that calculates the order quantity by comparing the carrying cost and the setup (or ordering)costs for various lot sizes and then selects the lot size in which these are most nearly equal?

A) Kanban
B) Just-in-time system
C) MRP
D) Least unit cost
E) Least total cost

Question 73

Which of the following is considered a secondary report in an MRP system?

A) Planned order schedule
B) Exceptions reports
C) Inventory record
D) Firm orders from known customers
E) Engineering change reports

Question 74

Which of the following is a dynamic lot-sizing technique that adds ordering and inventory carrying cost for each trial lot size and divides by the number of units in each lot size,picking the lot size with the lowest unit cost?

A) Economic order quantity
B) Lot-for-lot
C) Least total cost
D) Least unit cost
E) Inventory item averaging

Question 75

Under the lot-for-lot (L4L)lot sizing technique as used in MRP,we would expect which of the following?

A) A consistent lag of supply behind demand
B) Minimized carrying costs
C) Minimized set-up costs
D) A just in time management philosophy
E) Minimized quality problems

Question 76

Which of the following is not a lot sizing technique used in MRP systems?

A) Lot-for-lot (L4L)
B) Economic order quantity (EOQ)
C) Least total cost (LTC)
D) Least unit cost (LUC)
E) Warehouse loading factor (WLF)

Question 77

Which of the following can be used for lot sizing in an MRP system?

A) Low-level coding
B) Time bucket size
C) Least unit cost
D) Inventory record file
E) Peg inventory

Question 78

Which of the following is considered a primary report in an MRP system?

A) Planning reports
B) Performance reports
C) Exception reports
D) Planned order schedules
E) Cycle counting reports

Question 79

Which of the following is a dynamic lot-sizing technique that calculates the order quantity by comparing the carrying cost and the setup (or ordering)costs for various lot sizes and then selects the lot in which these are most nearly equal?

A) Economic Order Quantity
B) Lot for lot
C) Least total cost
D) Least unit cost
E) ABC analysis

Question 80

If annual demand is 6,125 units,annual holding cost is $5 per unit,and setup cost per order is $50,which of the following is the EOQ lot size?

A) 350
B) 247
C) 23
D) 185
E) 78