Which of the following is FALSE concerning enterprise resource planning (ERP)?

Which of the following is FALSE concerning enterprise resource planning (ERP)?

A) It attempts to automate and integrate the majority of business processes.
B) It shares common data and practices across the enterprise.
C) It is inexpensive to implement.
D) It provides and accesses information in a real-time environment.
E) ERP software promises reduced transaction costs.


Answer: C

Enterprise resource planning (ERP):

Enterprise resource planning (ERP):

A) seldom requires software upgrade or enhancement.
B) does not integrate well with functional areas other than operations.
C) is inexpensive to implement.
D) automates and integrates the majority of business processes.
E) all of the above


Answer: D

Distribution resource planning (DRP) is:

Distribution resource planning (DRP) is:

A) a transportation plan to ship materials to warehouses.
B) a time-phased stock replenishment plan for all levels of a distribution network.
C) a shipping plan from a central warehouse to retail warehouses.
D) material requirements planning with a feedback loop from distribution centers.
E) a material requirements planning package used exclusively by warehouses.


Answer: B

Which of the following statements regarding MRP in services is TRUE?

Which of the following statements regarding MRP in services is TRUE?

A) MRP is for manufacturing only, and it is not applicable to services.
B) MRP can be used in services, but only in those that offer very limited customization.
C) MRP only works in services for demand that is independent.
D) Services such as restaurant meals illustrate dependent demand, and they require product structure trees, bills-of-material, and scheduling.
E) None of the above is true.


Answer: D

MRP II is accurately described as:

MRP II is accurately described as:

A) MRP software designed for services.
B) MRP with a new set of computer programs that execute on microcomputers.
C) material resource planning.
D) an enhancement of MRP that plans for all levels of the supply chain.
E) a new generation of MRP software that extends MRP to planning and scheduling functions.


Answer: C

If a load report (resource requirements profile) shows a work center scheduled beyond capacity:

If a load report (resource requirements profile) shows a work center scheduled beyond capacity:

A) the company must add capacity by enlarging the facility.
B) the company must add capacity by such tactics as overtime and subcontracting.
C) the work center's load may be smoothed by such tactics as operations splitting or lot splitting.
D) the aggregate plan must be revised.
E) the Wagner-Whitin algorithm should be used to rebalance the load.


Answer: C

Capacity planning in closed-loop MRP:

Capacity planning in closed-loop MRP:

A) utilizes feedback about workload from each work center.
B) may make use of resource requirements profiles (load reports).
C) may smooth work center loads with such tactics as overlapping and lot splitting.
D) does not add capacity, but rather seeks effective use of existing capacity.
E) All of the above are true.


Answer: E

Which MRP lot-sizing technique should be considered to be the goal (i.e., the technique of choice under ideal conditions)?

Which MRP lot-sizing technique should be considered to be the goal (i.e., the technique of choice under ideal conditions)?

A) Wagner-Whitin
B) EOQ
C) lot-for-lot
D) POQ
E) Silver-Meal


Answer: C

Which of the following is TRUE regarding the POQ lot-sizing method?

Which of the following is TRUE regarding the POQ lot-sizing method?

A) Each POQ interval is recalculated at the time of the order release.
B) Each order quantity and POQ interval are recalculated at the time of the order release.
C) The POQ interval and all order quantities remain fixed throughout the planning horizon.
D) Each order quantity is recalculated at the time of the order release.
E) POQ lot sizes are always at least as large as the EOQ lot sizes would be.


Answer: D

What does the POQ interval equal?

What does the POQ interval equal?

A) the number of periods of average demand covered by the safety stock
B) the same number of periods that are on the "not to be rescheduled" side of the time fence
C) EOQ / maximum gross requirement
D) the number of periods until the incoming projected on hand runs out
E) EOQ / average demand per period


Answer: E

Which lot-sizing technique orders the quantity needed during a predetermined time between orders?

Which lot-sizing technique orders the quantity needed during a predetermined time between orders?

A) economic order quantity
B) periodic order quantity
C) lot-for-lot
D) time fencing
E) part-period balancing


Answer: B

Which of the following statements regarding lot-sizing is TRUE?

Which of the following statements regarding lot-sizing is TRUE?

A) EOQ principles should be followed whenever economical.
B) Too much concern with lot-sizing results in false accuracy.
C) Lot-for-lot cannot be modified for scrap allowance or process constraints.
D) The Wagner-Whitin algorithm simplifies lot size calculations.
E) All of the above are true.


Answer: B

For the lot-sizing technique known as lot-for-lot to be appropriate:

For the lot-sizing technique known as lot-for-lot to be appropriate:

A) future demand should be known for several weeks.
B) setup cost should be relatively small.
C) annual volume should be rather low.
D) item unit cost should be relatively small.
E) the independent demand rate should be very stable.


Answer: B

What lot-sizing technique is generally preferred when inventory holding costs are extremely high?

What lot-sizing technique is generally preferred when inventory holding costs are extremely high?

A) lot-for-lot
B) EOQ
C) POQ
D) the Wagner-Whitin algorithm
E) All of the above are appropriate for the situation.


Answer: A

Which of the following statements is TRUE about the MRP plan when using lot-for-lot ordering?

Which of the following statements is TRUE about the MRP plan when using lot-for-lot ordering?

A) The quantity of gross requirements for a child item is always equal to the quantity of planned order releases for its parent.
B) The quantity of gross requirements for a child item is equal to the quantity of planned order release(s) multiplied by the number of child items used in the parent assembly.
C) The quantity of gross requirements for a child item is always equal to the quantity of gross requirements for its parent.
D) The quantity and gross requirements for a child item is always equal to the quantity of net requirements for its parent.
E) All of the above are true.


Answer: B

Which of the following lot-sizing techniques results in the lowest holding costs?

Which of the following lot-sizing techniques results in the lowest holding costs?

A) lot-for-lot
B) EOQ
C) POQ
D) Wagner-Whitin algorithm
E) the quantity discount model


Answer: A

What is one of the tools that is particularly useful in reducing system nervousness in an MRP system?

What is one of the tools that is particularly useful in reducing system nervousness in an MRP system?

A) modular bills
B) time phasing
C) time fences
D) lot sizing
E) closed loop system


Answer: C

In MRP, system nervousness is caused by:

In MRP, system nervousness is caused by:

A) management's attempt to continually respond to minor changes in production requirements.
B) the use of the lot-for-lot approach.
C) management's marking part of the master production schedule as "not to be rescheduled".
D) the use of phantom bills of material.
E) management's attempt to evaluate alternative plans before making a decision.


Answer: A

What is the process of tracing upward in the bill of material from the component to the parent item in order to determine the cause for the component requirement?

What is the process of tracing upward in the bill of material from the component to the parent item in order to determine the cause for the component requirement?

A) net requirements planning
B) time fencing
C) pegging
D) backtracking
E) leveling


Answer: C

Distortion in MRP systems can be minimized when safety stock is held at the:

Distortion in MRP systems can be minimized when safety stock is held at the:

A) purchased component or raw material level.
B) work-in-process level.
C) finished goods level.
D) A and B
E) A and C


Answer: E