ch.12 OP mgmt – Flashcards
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MRP works best if the inventory items have dependent demand.
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TRUE
MRP is best for dependent demand scenarios.
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Low level coding represents items less than $18 per unit.
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FALSE
Low-level coding codes items at their lowest BOM levels.
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Independent demand tends to be more 'lumpy' than dependent demand meaning that we need large quantities followed by periods of no demand.
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FALSE
Dependent demand is more lumpy.
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Lumpy demand for components results primarily from the periodic scheduling of batch production.
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TRUE
Batch production leads to lumpy demand for components.
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MRP is used within most MRP II and ERP systems.
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TRUE
MRP II and ERP systems incorporate MRP.
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The master production schedule states which end items are to be produced, in addition to when and how many.
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TRUE
These are critical inputs into MRP.
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Net requirements equal gross requirements minus safety stock.
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FALSE
If safety stock is required, net requirements will be higher.
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The master schedule needs to be for a period long enough to cover the stacked or cumulative lead time necessary to produce the end items.
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TRUE
This ensures that materials plans can be adequately formulated.
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Initially, a master production schedule - the output from MRP - may not represent a feasible schedule.
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TRUE
Management must make more detailed capacity requirements planning to determine whether these more specific capacity requirements can be met and some adjustments in the master production schedule may be required.
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MRP, considering inventory position, bills of material, open purchase orders and lead times guarantees a feasible production plan if the inputs to MRP are accurate.
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FALSE
MRP may lead to an infeasible production plan if capacity requirements are not considered.
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The bill of materials indicates how much material will be needed to produce the quantities on a given master production schedule.
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FALSE
The bill of materials indicates how much material will be needed to produce one unit of the item in question.
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A bill of materials contains a listing of all the assemblies, parts, and materials needed to produce one unit of an end item.
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TRUE
The bill of materials indicates how much material will be needed to produce one unit of the item in question.
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The bill of materials contains information on lead times and current inventory position on every component required to produce the end item.
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FALSE
Inventory records contain this information.
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The inventory records contain information on the status of each item by time period.
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TRUE
Inventory records also contain information on lead times and current inventory position.
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An assembly-time chart indicates gross and net requirements taking into account the current available inventory.
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FALSE
Assembly-time charts have to do with capacity, not inventory.
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MRP II did not replace or improve the basic MRP.
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TRUE
MRP II incorporates basic MRP.
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The gross requirements at one level of an MRP plan determine the gross requirements at the next lower level continuing on down to the lowest levels shown on the bill of material.
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FALSE
Released order quantities at one level determine gross requirements at the next lower level.
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The gross requirements value for any given component is equal to the net requirements of that component's immediate parent multiplied by the quantity per parent.
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FALSE
Released order quantities for the parent lead to gross requirements of the child.
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The term pegging refers to identifying the parent items that have generated a given set of material requirements for a part or subassembly.
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TRUE
Pegging ties items to their parents.
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A net-change MRP system is one that is updated periodically but not less frequently than once a week.
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FALSE
A net-change system is updated as transactions occur.
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One reason that accurate bills of material are important is that errors at one level become magnified at lower levels because of the multiplication process used by MRP.
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TRUE
Small higher-level errors can be magnified into larger lower-level errors.
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A regenerative MRP system is one that is updated continuously - every time there is a schedule change.
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FALSE
Regenerative systems are updated periodically.
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One of the primary output reports of MRP concerns changes to planned orders.
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TRUE
Changes to planned orders can be outputs from MRP systems.
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Safety time is sometimes used in MRP rather than safety stock quantities.
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TRUE
Safety time is a substitute for safety stock.
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Lot-for-lot ordering in MRP provides coverage for some predetermined number of periods using forecasted demand to extend beyond the orders already received for those periods.
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FALSE
This is fixed-period ordering.
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MRP output reports are divided into two main groups - daily and weekly.
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FALSE
The two groups are primary and secondary.
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In MRP, EOQ models tend to be less useful for materials at the lowest levels than for upper level assemblies of the bill of materials since higher-level assemblies have larger dollar investments.
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FALSE
EOQ is more useful at lower levels since lower-level items often have less lumpy demand.
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Load reports show capacity requirements for departments or work centers which may be more or less than the capacity available in that work center.
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TRUE
Load reports facilitate the formulation of feasible production schedules.
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ERP began in manufacturing organizations but has spread into service organizations.
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TRUE
Over time ERP has spread into a wide variety of organizations.
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MRP II is simply an improved version of MRP that processes faster and can plan for a larger number of end items.
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FALSE
MRP II takes into account capacity requirements.
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Lot-for-lot ordering in MRP eliminates the holding costs for parts that are carried over to other periods.
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TRUE
Lot-for-lot ordering minimizes holding costs.
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Capacity requirements planning (CRP) is an important feature in MRP+.
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FALSE
CRP is a feature of MRP II.
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Project Management approaches can help in a conversion to an ERP system.
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TRUE
ERP conversions can be complex projects.
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As long as a forecast is plus or minus 10%, MRP works well.
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FALSE
MRP needs accurate forecasts.
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ERP represents an expanded effort to integrate standardized record-keeping that shares information among different areas of an organization.
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TRUE
ERP is intended to facilitate consistent decision-making across the organization.
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Back flushing takes place after the production has been completed.
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TRUE
Records are updated based on end-item production.
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Before a schedule receipt can take place, and order must be placed with a vendor.
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TRUE
A scheduled receipt is an order that has already been placed.
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MRP really doesn't apply to services since raw material isn't required.
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FALSE
MRP can be used in services.
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ERP implementation requires support and a direct mandate from the CEO because it impacts so many different functional areas.
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TRUE
ERP implementation is an organization-wide initiative.
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ERP automates the tasks involved in performing a business process, such as order fulfillment and financial reporting.
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TRUE
ERP extends beyond purchasing and materials management.
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Which of the following most closely describes dependent demand?
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derived demand; Dependent demand results from decisions to produce parent items.
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ERP implementation probably won't require:
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just a few weeks to install; ERP implementation can take years.
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A computer-based information system designed to handle ordering and scheduling of dependent-demand inventories is:
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material requirements planning (MRP); MRP is targeted toward dependent-demand inventories.
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The development and application of MRP depended upon two developments: (1) the recognition of the difference between independent and dependent demand, and (2):
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computers; Computer technology made MRP feasible.
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The output of MRP is:
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a schedule of requirements for all parts and end items; MRP schedules part and end item requirements.
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Which one of the following is not an input in an MRP system?
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planned-order schedules; Planned-order schedules are outputs from MRP.
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The MRP input stating which end items are to be produced, when they are needed, and what quantities are needed, is the:
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master schedule; This is the master schedule.
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In an MRP master schedule, the planning horizon is often separated into a series of times periods called:
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time buckets; Time buckets are discrete time periods.
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The MRP input listing the assemblies, subassemblies, parts, and raw materials needed to produce one unit of finished product is the:
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bill-of-materials; This is the bill of materials.
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A visual depiction of the subassemblies and components that are needed to produce and/or assemble a product is called a(n):
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product structure tree
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The MRP input storing information on the status of each item by time period (e.g., scheduled receipts, lead time, lot size) is the:
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inventory-records
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Which one of the following most closely describes net material requirements?
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gross requirements - amount on-hand - scheduled receipts; On-hand and scheduled receipts must be subtracted from gross requirements.
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In MRP, "scheduled receipts" are:
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open orders (that is, ordered before the first time bucket, but not delivered yet); Scheduled receipts are orders that have already been placed.
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In MRP, under lot-for-lot ordering, "planned-order receipts" are:
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identical to "planned-order releases"; Planned receipts would be equal to planned releases under any lot sizing rule.
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Under lot-for-lot, order sizes for component parts are essentially determined directly from which one of the following?
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net requirements; Net requirements would exactly equal planned releases.
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In MRP, the gross requirements of a given component part are calculated from:
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planned orders of the immediate parent.; Planned orders for parents drive gross requirements for children.
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The identification of parent items is called:
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Pegging; Pegging links children to parents.
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Periodic updating of an MRP system to account for all changes which have occurred within a given time interval is called:
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regenerative; Regenerative systems are updated periodically.
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An MRP system whose records are updated continuously is referred to as a(n):
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net-change system; Net-change systems are updated as transactions occur.
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Which is true of a net-change system?
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The basic production plan is modified to reflect changes as they occur
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Which one of the following most closely describes the MRP approach that is used for components or subassemblies to compensate for variations in lead time?
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safety time; Safety time provides protection against the effects of lead time variation.
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Which of the following lot sizing methods does not attempt to balance ordering (or setup) and holding costs?
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lot-for-lot; Lot-for-lot does not attempt to balance these costs.
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When MRP II systems include feedback, they are known as:
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Closed Loop MRP
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The multiplication process used by MRP to determine lower level requirements is called:
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exploding; Bills of material are exploded into gross requirements for lower level items.
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_______ is choosing how many to order or make
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Lot sizing ; Lot sizing sets the order or batch quantity.
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Which of the following is not usually necessary in order to have an effective MRP system?
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lot-for-lot ordering;; MRP does not depend on lot-for-lot ordering.
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The _________ of ERP makes it valuable as a strategic planning tool.
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Real-time aspect; ERP provides real-time, consistent guidance to decision-making.
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A recent effort to expand the scope of production resource planning by involving other functional areas in the planning process has been:
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manufacturing resources planning;
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Which statement concerning MRP II is false?
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It produces a production plan which includes all resources required.
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Which of these items would be most likely to have dependent demand?
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Xbox batteries; Xbox batteries would only be needed if Xbox consoles were being produced.
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Which of these products would be most likely to have dependent demand?
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automobile engines; Engines would only be necessary when automobiles were being produced.
