Question 1

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

Accepted Answer

Projected available balance refers to the expected inventory level at the start of a period, accounting for current stock, incoming shipments, and anticipated demand.

Question 2

The least unit cost method of lot-sizing adds ordering, stock-out, and inventory carrying costs 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.

Accepted Answer

The least unit cost method of lot-sizing focuses on minimizing the unit cost by considering ordering and inventory carrying costs, but it does not typically include stock-out costs in its calculation.

Question 3

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

Accepted Answer

The EOQ lot-sizing technique uses a formula that calculates the optimal quantity of inventory to order based on setup cost and carrying cost, but does not take into account the cost of stockouts. There is no specific "square root formula" used in EOQ calculations.

Question 4

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.

Accepted Answer

In a net change MRP program, changes are made only for those items directly affected by the change, not for every item in the master production schedule.

Question 5

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

Accepted Answer

The lot-for-lot (L4L) technique orders exactly what is needed for production and does not take into account setup costs or capacity limitations; it aims to minimize carrying costs by not holding excess inventory.

Question 6

Generally, determining lot sizes in MRP systems is simple.

Accepted Answer

Determining lot sizes in MRP systems can be a complex process that involves considering various factors such as lead times, setup costs, inventory carrying costs, and demand variability. It requires careful analysis and decision-making to balance the trade-offs between inventory costs and customer service levels.

Question 7

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

Accepted Answer

The bill-of-materials lists all the components and subassemblies that go into a final assembly, the master schedule specifies when and how many of each finished product is to be produced, and the inventory records file shows the current inventory levels of each component and finished product. These three inputs are essential for an MRP (materials requirements planning) system to calculate the materials and production needs to meet the demand specified in the master schedule.

Question 8

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

Accepted Answer

In a net change MRP system, requirements and schedules are updated immediately whenever a transaction is processed that affects the item. This allows for real-time updates and accurate planning.

Question 9

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

Accepted Answer

The answer of When implemented correctly, MRP links all areas...

Question 10

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

Accepted Answer

Lot-for-lot (L4L) is indeed the most common lot-sizing technique, where the order quantity equals the net requirements for a particular period.

Question 11

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.

Accepted Answer

The economic order quantity (EOQ) lot-sizing technique aims to balance the cost of carrying inventory with the cost of ordering or producing it. As a result, it may result in some inventory being carried over into future periods.

Question 12

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

Accepted Answer

"Projected available balance" refers to an estimate of the future available inventory, considering current inventory levels, planned production, and expected sales, not just unsold finished goods.

Question 13

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.

Accepted Answer

The least unit cost method calculates the order quantity by minimizing the cost per unit, not by equating carrying and setup costs.

Question 14

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.

Accepted Answer

This statement accurately describes the least unit cost method of lot-sizing.

Question 15

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

Accepted Answer

A lot-for-lot (L4L) lot-sizing technique only considers the exact requirements of the demand and does not consider setup costs or capacity limitations.

Question 16

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

Accepted Answer

Low-level coding in MRP (Material Requirements Planning) systems is used to identify the lowest level at which a component appears in the Bill of Materials, not to indicate the real-time status of each item.

Question 17

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.

Accepted Answer

The least total cost method (LTC) lot-sizing technique does compare the carrying cost and setup costs for different lot sizes and selects the one with the most nearly equal costs. Therefore, the statement is true.

Question 18

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

Accepted Answer

Net change MRP is a type of system that calculates changes in inventory based on real-time production, demand, and supply data. It provides accurate and updated information about each item's status, making it possible to optimize production schedules and prevent stockouts. Therefore, the statement is true.

Question 19

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

Accepted Answer

In a net change MRP system, requirements and schedules are constantly updated based on changes in demand or supply, making it a dynamic planning tool.

Question 20

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

Accepted Answer

The economic order quantity (EOQ) lot-sizing technique indeed uses the "square root formula" to balance setup costs and carrying costs.

Quiz 21: Material Requirements Planning