Post Test

Question 1

Objectives of the detailed capacity requirements planning process include all of the following except:

-alteration of the master production schedule for effective use of capacity.
-determination of the people and/or machines needed to make the products in the master production schedule.
-adjustment of work plans for effective use of capacity.
-determination of the materials needed to make the products in the master production schedule.

Answer 1

The role of planning the materials to build parents and subassemblies belongs to the material requirements planning process, not the capacity planning process.

Question 2

How does sales differ from demand?

-Sales often exceeds demand.
-Demand often exceeds sales.
-Sales implies what is actually sold, and demand shows the need for the item.
-There is no difference between sales and demand.

Answer 2

Demand shows the need for the product; sales reflects what is sold out the door. If demand exceeds supply, sales will be less than demand.

Question 3

A customer service representative for an assemble-to-order manufacturer is on the phone with a customer who wants to make an immediate purchase and have it shipped as soon as possible. Which of the following values does the representative need to use to make an informed decision?

-Capable to promise
-available to promise
-on-hand inventory
-safety stock

Answer 3

Available-to-promise (ATP) is the uncommitted portion of a company’s inventory and planned production maintained in the master schedule to support customer order promising. The other answers don’t help the customer service representative make an informed decision about whether a new customer request can be fulfilled.

Question 4

What term is used for the set of marketing tools that direct the business offering to the customer?

• Market share
  -product strategies
  -market strategies
• Four P’s

Answer 4

The four Ps are a set of marketing tools—product, price, place, and promotion—that are used to direct the business offering to the customer.

Question 5

Which of these terms can be described as an estimate of future demand?

Answer 5

Sales forecast

Question 6

Which term refers to the electronic exchange of trading documents?

Answer 6

electronic data interchange

Question 7

Senior management agrees to expedite a customer order. After being notified, what should operations managers do first?

Answer 7

Evaluate lateral and downstream operations for impacts on schedules and costs

Question 8

A properly implemented material requirements planning (MRO) system should result in a reduction of what?

Answer 8

inventory and expediting

Question 9

A CEO suggests some additions to the company’s automated dashboard—a number of financial measures as well as information on customer complaints, manufacturing cycle time by product group, and year-to-date spend on education and training. What is this view commonly called?

Answer 9

A balanced scorecard is a list of financial and operations measurements used to evaluate organizational performance. It may include customer, business process, financial, and innovation and learning perspectives. It formally connects overall objectives, strategies, and measurements.

Question 10

A shipment of remote control components is de3livered to a factory and immediately taken to a workstation ready to begin assembly. What is the name of this inventory management technique?

Answer 10

Wall to wall inventory. materials enter a plant and are processed right away as opposed to being logged in an inventory store until a later date.

Question 11

Objectives of the detailed capacity requirements planning process include all of the following except:

• determination of the people and/or machines needed to make the products in the master production schedule
• determination of the materials needed to make the products in the master production schedule
  -adjustment of work plans for effective use of capacity
• alterations of the master production schedule for effective use of capacity

Answer 11

determination of the materials needed to make the products in the master production schedule.

Question 12

Which of these terms refers to activities that provide present benefits without compromising the needs of future generations?

Answer 12

sustainability

Question 13

Which plan bridges strategic and business plans with the master production schedule and execution plans?

Answer 13

sales and operations

Question 14

A company is considering the adoption of a highly automated form of manufacturing technology that will have a major impact on its production process. Which of the following situations will most likely cause the longest delay in the implementation of this new technology?

Answer 14

technology conflict with the company’s existing capabilities and culture will most likely cause the longest delay, because this has to do with changing the people side of the organization.

Question 15

Accurate inventory levels are most influenced by which of the following?

Answer 15

cycle counts. Counting inventory item balances on a regular basis enables control personnel to keep balances correct and enables them to search for the root cause of errors.

Question 16

Accountants use the first-in, first-out valuation method for determining the value of inventory on the financial statements. In a period of rising costs, which will occur in relation to the recorded versus actual cost of goods sold (COGS)?

Answer 16

The recorded COGS will be less than the current COGS, so COGS will be undervalued.

The cost of goods made a month ago will be less than for those made today. The inventory replacement costs of these goods will be higher than their assumed costs were a month ago. Therefore, the inventory will be undervalued.

Question 17

Which correctly identifies the following examples of costs as internal failure (I), external failure (E), appraisal costs (A), and prevention costs (P)?

Answer 17

Scrap = I; product recalls and loss of customers = E; in-line inspections = A; machine maintenance and operator training = P

Scrap is an internal failure cost because it occurs without the customer seeing it. Product recalls and loss of customers are external failure costs because the first is directly experienced by customers and the second is a direct customer reaction to poor quality. In-line inspections are an appraisal cost because this is an example of a quality control activity. Machine maintenance and operator training are examples of prevention costs because these are investments designed to reduce the chances of quality problems occurring in the first place.

Question 18

Which of the following objectives often conflicts with providing the best customer service?

Answer 18

Reducing inventory to keep inventory carrying costs at a minimum

Production’s objective of keeping inventory investment to a minimum is in conflict with marketing’s objective of always having goods available for the customer. A complex distribution system assists in providing the best customer service and is not in conflict. Disrupting the production schedule for shortage runs decreases manufacturing productivity. Building special customer order configurations decreases production’s objectives of making long runs of a small number of standardized products.

Question 19

Large-scale productivity software often experiences implementation delays or initially performs below expectations. What mitigation strategy could be used in this situation?

Answer 19

Budget for additional time and reduced performance after implantation. With productivity software implementations, it is often the case that performance drops below existing and projected levels until the application “works as expected”

Question 20

What type of demand inventory ordering model includes fixed reorder cycles, fixed reorder quantities, optional replenishment, and hybrid models?

Answer 20

Independent

According to the Dictionary definition of inventory ordering system, “independent demand inventory ordering models include fixed reorder cycle, fixed reorder quantity, optional replenishment, and hybrid models, among others.” Dependent demand inventory ordering models include material requirements planning, kanban, and drum-buffer-rope

Question 21

It is assumed that final products and lower-level subassemblies are both made to stock and made to order, which of the following final assembly schedule (FAS) practices should be adopted?

Answer 21

The planning horizon of the FAS should be shorter than that of the master production schedule.

The question describes an assemble-to-order (ATO) environment. In an ATO environment, the master schedule and the FAS are not the same thing. The MPS must produce the subassemblies and have them ready for any customer ATO order where they are brought together and finished. The FAS is said to relieve the MPS plan.

Question 22

Which of the following is more characteristic of a general business contract than a customer supplier partnership?

Answer 22

Distributor provides all of the company’s hardware and standard electrical products.

Question 23

Which of the following modes of transportation does the carrier typically have the highest fixed costs?

Answer 23

In contrast to variable costs, fixed costs do not change with the volume of goods carried. Railways have large fixed costs, for example, tracks, terminals, and vehicles.

Question 24

Information for production and purchasing primarily comes from which of the following planning cycles?

Answer 24

material requirement planning

Question 25

Which of the following can be identified and adjusted at the rough cut capacity planning level?

Answer 25

Total hours of load in excess of plant capacity
Rough-cut capacity planning provides planners with the ability to easily identify overloads and underloads at key bottlenecks or critical work centers (not all work centers) in the plant.

Question 26

How does sales differ from demand?

Answer 26

Demand shows the need for the product; sales reflects what is sold out the door. If demand exceeds supply, sales will be less than demand.

Question 27

Which function of inventory involves the purchase of additional inventory by buyers who expect prices to rise?

Answer 27

Hedge

Question 28

Which of the following invalidates acceptance sampling for purchased items?

Answer 28

Multiple suppliers have different processes, so materials from each must be inspected separately.

Question 29

Which of the following tools is considered an important quality management tool?

Answer 29

Control Chart

The primary use of control charts is to detect assignable causes of variation (as opposed to random variation) in a process. The control chart is one of the seven tools of quality. A Gantt chart is used for (1) machine loading, in which one horizontal line is used to represent capacity and another to represent load against that capacity, or (2) monitoring job progress, in which one horizontal line represents the production schedule and another parallel line represents the actual progress of the job against the schedule in time. An input/output chart is a technique for capacity control where planned and actual inputs and planned and actual outputs of a work center are monitored. A capacity chart measures production output and compares it with the capacity plan, determining if the variance exceeds pre-established limits and taking corrective action to get back on plan if the limits are exceeded.

Question 30

Which of the following are benefits of statistical process control (SPC)?

Answer 30

Fewer inspection steps, quick recognition of problems, and quick recognition of the effects of correction. By removing variance early on in the production process, SPC enables companies to have fewer downstream inspection steps, quick recognition of process problems, and ability to easily monitor the effects of a correction to the process.

Question 30

What is the best reason for closing the loop between master scheduling and sales and operations planning?

Answer 30

One is the plan, and one is the execution of the plan. S&OP is the plan, and master scheduling identifies how the plan will be executed.

Question 31

A business to business customer has quality requirements for all of its approved suppliers. If the supplier also had high delivery reliability, this supplier is typically designates as a preferred supplier. What is the best way to describe this scenario?

Answer 31

Delivery reliability is an order winner. Quality in this scenario is best described as an order qualifier and delivery reliability is best described as an order winner. Given the qualifier of perfect quality that many suppliers are able to meet, a key final purchasing decision point is delivery reliability. Ensuring that purchase deliveries arrive on time is an essential feature of many supplier partnerships.

Question 32

It is highly likely that when diversifying into a different market space that has solid financial opportunities, a company will

Answer 32

acquire an established company. Companies that diversify into an industry where good financial results exist nearly always enter new business by acquiring an established company rather than by forming or acquiring a start-up.

Question 33

In a linear sequence of operations A B C D and E, each operation receives one unit from raw materials of the prior operations and outputs one unit. Operation A produces 11 units a day, operation B produces 6 units a day, operation C produces 10 units per day, operation D produces 9 units a day and operation E, finale assembly, produces 8 units a day. Operations E received inputs from other parts of the process that do not pass through the constraint and it sends it output to shipping. Demand is for 8 units a day. Where is the drum?

Answer 33

at operation B. The drum is at operation B because the pace of the operation is set to match this constraint rate.

Question 34

Which of the following tools is used to determine the root cause of problems?

Answer 34

Cause and effect diagrams

Question 35

What is production activity control responsible for?

Answer 35

Releasing work orders to manufacturing. Production activity control is the function of routing and dispatching the work to be accomplished through the production facility.

Question 36

Which of the following is a voluntary initiative whereby companies embrace, support, and enact, within their sphere of influence, a set of core values in the areas of human rights, labor standards, the environment, and anti-corruption?

Answer 36

United Nations Global Compact

Question 37

An organization implements a dock to stock program with a key supplier. How will this impact the total cost of ownership if the program is implemented correctly?

Answer 37

TCO will be lower due to no receiving and inspection without a higher average cost of poor quality.

Question 38

If a make to stock company shifts its manufacturing operations to make to order, what will be the effect on annual setup costs and delivery lead time?

Answer 38

Annual setup costs will increase and delivery lead time will increase. Moving to an MTO environment means that smaller-volume orders will be created. This will increase the overall factory setup costs. Delivery lead times will also increase

Question 39

What is the primary difference between enterprise resources planning (ERP) and closed loop material requirements planning (MRP)?

Answer 39

ERP integrates additional business functions, including human resources, research and development, logistics, and others. ERP provides more than just manufacturing information; it integrates business functions like human resources, research and development, and logistics. Closed-loop MRP and ERP are both computer-based, and both provide a balance between production, marketing, and information technology.

Question 40

What information can the tracking signal provide that the mean absolute deviation (MAD) and the mean squared error (MSE) cannot?

Answer 40

The tracking signal—the sum of the forecast deviations (not absolute) divided by the MAD—shows the direction of the bias if it is present. MAD uses absolute deviations, and MSE squares the deviations, effectively making them absolute. Therefore, neither of these methods can indicate whether the errors were overall higher or lower than the actual result on average (the bias).

Question 41

The complexity of an environment has contributed to late orders and excessive work in process. To provide a long-term solution, which of the following steps would be taken first?

Answer 41

Document part and assembly flows. Before any changes to the production environment can be undertaken, it is essential that improvement teams understand the nature and flow of the production inventory and assembly processes. Mapping the process will enable improvement teams to identify redundancies, process gaps, and inefficiencies. With this information in hand, teams can then make informed decisions to simplify the product structure, reduce work in process, and implement a pull system.

Question 42

An organization has a product end of life plan that focuses on using up all of the raw materials and components not used in the replacement product being planned? What else needs to be a key part of this plan?

Answer 42

Ensuring that the old product will still be available during a transition period.

Question 43

The economic order quantity (EOQ) for a manufactured part is the quantity at which:

Answer 43

the ordering and carrying costs are equal. The EOQ is a type of fixed order quantity model intended to minimize the combined costs of acquiring and carrying inventory. It is based on certain assumptions, including that demand is constant and known, the item is produced or purchased in batches continuously, order preparation and inventory carrying costs are constant and known, and replacement occurs all at once. Given these assumptions, the EOQ occurs when the ordering cost equals the carrying cost.

Question 44

Distribution requirements planning (DRP) should directly interface with:

Answer 44

master scheduling. The output of the DRP plan is placed in the master schedule along with other sources of demand on items. This enables the planner to completely plan the requirements on an item.

Question 45

A customer service representative for an assemble to order manufacturer is on the phone with a customer who wants to make an immediate purchase and have it shipped as soon as possible. Which of the following values does the rep need to use to make an informed decision?

Answer 45

Available to promise. Available-to-promise (ATP) is the uncommitted portion of a company’s inventory and planned production maintained in the master schedule to support customer order promising. The other answers don’t help the customer service representative make an informed decision about whether a new customer request can be fulfilled.

Question 46

Sales and operations planning is typically performed at which of the following levels?

Answer 46

product family

Question 47

Under the group technology concept, which of the following is true?
- like machines should be grouped in clusters
- machines should be grouped to produce parts of similar form
- manufacturing departments should be laid out according to function
- labor is highly specialized

Answer 47

Machines should be grouped to produce parts of similar form. Group technologies seek to group machines to facilitate the production of like products.

Question 48

In addition to customer orders, the master production schedule (MOS) might handle which of the following types of demand?

Answer 48

Interplant demand

Question 49

Analyzing capital investments by eliminating future cash flows and translating them into equivalent amounts in today’s terms is called

Answer 49

discounts cash flow analysis

Question 50

Two defective inexpensive parts are discovered in a sample during incoming inspection, but the lot itself is accepted, What is done with the defective parts?

Answer 50

Inexpensive items are removed and scrapped through a formal process after being recorded against the lot.

Question 51

What term is used for the set of marketing tools that direct the business offering to the customer?

Answer 51

The four Ps are a set of marketing tools—product, price, place, and promotion—that are used to direct the business offering to the customer.

Question 52

Which of the following activities represents reverse logistics?

Answer 52

Reverse logistics is concerned with the management of the flow of products and materials from the customer back through the supply chain to the originating source.