Question 1

The purpose of a master production schedule (MPS) is to break down the aggregate planning decisions into such details as order sizes and schedules for individual subassemblies and resources by week and day.

Accepted Answer

False

Question 2

Which of the following is true of the lot-for-lot (LFL) rule?
A) It minimizes the costs associated with production setups.
B) It ignores the costs associated with purchase orders.
C) It maximizes the amount of inventory that needs to be carried.
D) It masks the true nature of dependent demand.

Accepted Answer

The lot-for-lot (LFL) rule focuses on meeting demand exactly as it occurs, which means it does not consider the costs associated with placing multiple purchase orders.

Question 3

The lot-for-lot (LFL) rule is best applied when:
A) inventory-carrying costs are high.
B) space constraints are low.
C) costs associated with purchase orders are high.
D) setup costs are moderate.

Accepted Answer

The lot-for-lot (LFL) ordering policy is most effective when inventory-carrying costs are high because it aims to minimize inventory levels by ordering just enough to meet immediate needs, thus reducing the costs associated with holding inventory.

Question 4

In manufacturing, a _____ is a statement of how many finished items are to be produced and when they are to be produced.
A) master production schedule
B) capacity requirements plan
C) materials requirements plan
D) planned order receipt

Accepted Answer

A master production schedule outlines the quantity, timing, and specifications for the production of finished goods. It is the backbone of the manufacturing planning process, as it serves as the basis for creating detailed plans for production, procurement, and inventory management. Option B (capacity requirements plan) and option C (materials requirements plan) are related but distinct planning processes that come after the master production schedule has been established. Option D (planned order receipt) is not a standard term used in manufacturing planning.

Question 5

Resource management for most service-providing organizations generally requires as many intermediate levels of planning as it does for manufacturing.

Accepted Answer

Service-providing organizations often require fewer intermediate levels of planning in resource management compared to manufacturing organizations due to the intangible nature of their outputs and the direct interaction with customers.

Question 6

Which of the following is true of a master production schedule (MPS)
A) Its primary output is a time-phased report for scheduling raw materials purchase.
B) It provides a means for evaluating alternative schedules in terms of capacity requirements.
C) Its input is obtained from the materials requirements planning.
D) It projects the requirements for the individual parts based on the demand for the finished goods.

Accepted Answer

The master production schedule (MPS) helps evaluate alternative schedules in terms of capacity requirements by detailing what is to be produced and when, ensuring that production aligns with capacity constraints.

Question 7

Which of the following lot sizing rules bases the order quantity on a standard-size container or pallet load
A) The lot-for-lot rule
B) The fixed-order quantity rule
C) The periodic-order quantity rule
D) The gross requirements rule

Accepted Answer

The fixed-order quantity rule bases the order quantity on a standard-size container or pallet load, which enables efficient handling and storage. This rule helps minimize inventory carrying costs and ordering costs.

Question 8

A company currently has 100 items in inventory. The demand for the next four months is 500, 800, 900, and 300 units. Determine the monthly production rate if a level strategy is selected with the goal of ending the fourth month with 400 units in inventory.
A) 500 units/month
B) 700 units/month
C) 900 units/month
D) 1100 units/month

Accepted Answer

We need to use the level production strategy where the production rate is constant for all months in order to end the fourth month with 400 units in inventory.

Total demand for four months = 500 + 800 + 900 + 300 = 2500 units
Target ending inventory for the fourth month = 400 units
Starting inventory = 100 units

So, the total production for four months will be:
Production = Total demand + Ending inventory - Starting inventory
Production = 2500 + 400 - 100
Production = 2800 units

Monthly production = Total production / Number of months
Monthly production = 2800 / 4
Monthly production = 700 units/month

Therefore, the best choice is B) 700 units/month.

Question 9

In the context of aggregate planning options, which of the following costs are an implication of allowing stockouts
A) Inventory-carrying costs
B) Lost sales and customer loyalty costs
C) High labor costs and premiums
D) Separation costs

Accepted Answer

Allowing stockouts may lead to lost sales and dissatisfied customers, which can result in a cost in terms of both lost revenue and customer loyalty. The other options are not necessarily associated with allowing stockouts.

Question 10

A company currently has no items in inventory. The demand for the next four months is 200, 400, 250, and 350 units. Assuming a level production rate of 350 units per month, determine the ending inventory at the end of the fourth month.
A) 100
B) 150
C) 200
D) 250

Accepted Answer

The total demand over four months is 200 + 400 + 250 + 350 = 1200 units. With a production rate of 350 units per month over four months, the total production is 350 * 4 = 1400 units. The ending inventory is the total production minus the total demand, which is 1400 - 1200 = 200 units.

Question 11

__________is the process of translating aggregate plans into short-term operational plans that provide the basis for weekly and daily schedules and detailed resource requirements.
A) Aggregation
B) Execution
C) Disaggregation
D) Enterprise resource planning

Accepted Answer

Disaggregation is the process of breaking down or translating high-level plans, such as aggregate plans, into more detailed operational plans that can be used for scheduling and resource planning. This process helps to ensure that resources are effectively utilized and that production goals are met.

Question 12

For goods-producing firms, at which of the following levels of resource planning does scheduling for individual subassemblies and resources by week and day take place
A) Aggregate planning
B) Disaggregation
C) Execution
D) Demand forecasting

Accepted Answer

Disaggregation is the process of breaking down the aggregate plan into specific actions and tasks that need to be accomplished, such as scheduling for individual subassemblies and resources by week and day. The other options are not directly related to this level of planning. Aggregate planning involves higher-level decision making regarding capacity and production rates. Execution involves actually carrying out the planned activities. Demand forecasting involves predicting future demand for the product.

Question 13

Capacity requirements are computed by multiplying the number of units scheduled for production at a work center by the:
A) the unit resource requirements and then adding in the setup time.
B) the setup time and then subtracting the unit resource requirements.
C) the setup time and then adding in the unit resource requirements.
D) the unit resource requirements and then subtracting the setup time.

Accepted Answer

Capacity requirements are calculated by multiplying the number of units scheduled for production by the unit resource requirements (which includes time per unit for labor and machine) and then adding the setup time required for the production run. This approach ensures that both the variable time per unit and the fixed time for setup are accounted for in determining total capacity needs.

Question 14

In a garments factory, a part requires 0.10 hours of labor per unit in Work Center B and 1 hour of setup time. The planned order release (order size) for a week is 2000 units. Which of the following is the capacity requirement for a week at Work Center B?
A) 101
B) 151
C) 201
D) 251

Accepted Answer

First, we need to calculate the total work time required to produce 2000 units in Work Center B.

Total work time = (0.10 hours/unit x 2000 units) + 1 hour/unit x 1 setup = 201 hours

Therefore, the capacity requirement for a week at Work Center B is 201 hours. The closest option is 201, so the answer is C.

Question 15

A company currently has 500 items in inventory. The demand for the next 2 months is 900 and 1200 units. Assuming a level production rate of 1000 units per month, determine the ending inventory at the end of the second month.
A) 300
B) 400
C) 500
D) 600

Accepted Answer

The company starts with 500 items and produces 1000 units per month for 2 months, totaling 2000 units produced. The total demand over 2 months is 900 + 1200 = 2100 units. Starting inventory plus production is 500 + 2000 = 2500 units. Subtracting the demand (2100 units) from this gives an ending inventory of 400 units.

Question 16

The periodic-order quantity (POQ) can be determined using an economic time interval, which is the economic order quantity (EOQ) divided by _____.
A) on-hand inventory
B) annual demand
C) gross requirements
D) total required inventory

Accepted Answer

The economic time interval is the time between orders that minimizes total inventory costs. It is calculated by dividing the EOQ by the annual demand. Therefore, the correct answer is B, annual demand.

Question 17

Aggregate planning:
A) is not driven by demand forecasts.
B) includes detailed staff schedules.
C) helps in defining budget allocations and resource requirements.
D) does not translate forecast into production plans.

Accepted Answer

Aggregate planning is a process that helps organizations in defining budget allocations and resource requirements based on the demand forecasts. It aims to balance the production capacity with the demand to minimize cost and maximize efficiency. Detailed staff schedules are not included in the aggregate planning process, and the forecast is translated into production plans. Therefore, options A, B, and D are incorrect. Option C is the right choice, as it aligns with the primary objective of aggregate planning.

Question 18

Enterprise resource planning (ERP) systems integrate all aspects of a business into a unified information system.

Accepted Answer

ERP systems are designed to bring together information from all areas of a business, including finance, accounting, human resources, supply chain management, customer relationship management, and more, to provide a complete view of the organization's operations.

Question 19

In industries where jobs have low skill requirements, changing workforce levels can be cost effective.

Accepted Answer

In industries where jobs have low skill requirements, such as retail or fast food, it is often cost effective to adjust workforce levels based on demand. This is because workers can be easily trained and replaced, and there is usually a large pool of potential employees available.

Question 20

Which of the following is true of a level production strategy
A) Labor schedules are dynamic.
B) Equipment schedules are stable.
C) There are no capacity restrictions.
D) The production rate keeps changing.

Accepted Answer

A level production strategy is characterized by a stable equipment schedule, where the equipment is utilized consistently over time to produce a constant output rate. This enables a company to maintain a regular production process without fluctuations, which can result in better quality output, reduced costs, and improved scheduling of resources. However, labor schedules may not be dynamic in this strategy, as worker hours may be planned in advance to match the production needs. Capacity restrictions may also exist, as the production rate needs to align with demand. Therefore, option B is the correct answer.

Quiz 13: Resource Management

The purpose of a master production schedule (MPS) is to break down the aggregate planning decisions into such details as order sizes and schedules for individual subassemblies and resources by week and day.

Which of the following is true of the lot-for-lot (LFL) rule?

The lot-for-lot (LFL) rule is best applied when:

In manufacturing, a _____ is a statement of how many finished items are to be produced and when they are to be produced.

Resource management for most service-providing organizations generally requires as many intermediate levels of planning as it does for manufacturing.

Which of the following is true of a master production schedule (MPS)

Which of the following lot sizing rules bases the order quantity on a standard-size container or pallet load

A company currently has 100 items in inventory. The demand for the next four months is 500, 800, 900, and 300 units. Determine the monthly production rate if a level strategy is selected with the goal of ending the fourth month with 400 units in inventory.

In the context of aggregate planning options, which of the following costs are an implication of allowing stockouts

A company currently has no items in inventory. The demand for the next four months is 200, 400, 250, and 350 units. Assuming a level production rate of 350 units per month, determine the ending inventory at the end of the fourth month.

__________is the process of translating aggregate plans into short-term operational plans that provide the basis for weekly and daily schedules and detailed resource requirements.

For goods-producing firms, at which of the following levels of resource planning does scheduling for individual subassemblies and resources by week and day take place

Capacity requirements are computed by multiplying the number of units scheduled for production at a work center by the:

In a garments factory, a part requires 0.10 hours of labor per unit in Work Center B and 1 hour of setup time. The planned order release (order size) for a week is 2000 units. Which of the following is the capacity requirement for a week at Work Center B?

A company currently has 500 items in inventory. The demand for the next 2 months is 900 and 1200 units. Assuming a level production rate of 1000 units per month, determine the ending inventory at the end of the second month.

The periodic-order quantity (POQ) can be determined using an economic time interval, which is the economic order quantity (EOQ) divided by _____.

Aggregate planning:

Enterprise resource planning (ERP) systems integrate all aspects of a business into a unified information system.

In industries where jobs have low skill requirements, changing workforce levels can be cost effective.

Which of the following is true of a level production strategy