Test Questions Flashcards
- Customer relationship management supports lean principles because:
A. on-time delivery relies on production simplification.
B. both address equal service to all customers.
C. it creates the demand for lean supplies.
D. it encompasses quality at the source.
D. it encompasses quality at the source.
Overall explanation
Both customer relationship management and lean focus on the elimination of waste through quality at the source
- Supply chain variation frequently occurs when:
A. customers place larger orders than necessary.
B. a valley and a peak exist in product demand history.
C. product shortages are followed by price increases.
D. variation in historical demand skews the quantitative forecast.
A. customers place larger orders than necessary.
Overall explanation
Supply chain distortion may occur when customers place larger orders than necessary
- Which of the following forms the basis for simple regression equations?
A. Finding a line of least squares on a chart that shows how one variable actually behaved in the past versus one that is predicted to behave in a particular way
B. Building a normal distribution or bell curve to indicate the magnitude and frequency of the deviation from the average
C. Using exponential smoothing to weigh the information one wants to predict against the information that is used to predict it
D. Finding the line of best fit through a set of data on a chart that interrelates two types of variables and shows their actual historical values
D. Finding the line of best fit through a set of data on a chart that interrelates two types of variables and shows their actual historical values
Overall explanation
Simple regression (also called linear regression) uses the least-squares method. As defined in the Dictionary, the least squares method is a “method of curve fitting that selects a line of
best fit through a plot of data to minimize the sum of squares of the deviations of the given points from the line.”
- What does scheduling a constraint involve?
A. Finding methods to maximize utilization of the constraint
B. Getting rid of the bottleneck
C. Allowing the process to stabilize after optimization
D. Subordinating the constraint to the other processes
A. Finding methods to maximize utilization of the constraint
Overall explanation
The second of the five focusing steps in the theory of constraints, deciding how to exploit the constraint to the system, is key. The other answers are not directly related to scheduling a constraint.
- A product can be produced at a rate of two per minute. This is known as:
A. delivery time.
B. cycle time.
C. lead time.
D. cumulative lead time.
B. cycle time.
Overall explanation
Cycle time is the time between the completion of two units
- Which of the following functions is responsible for paying an invoice once it is approved?
A. Accounts receivable department
B. Warehouse
C. Cost accounting department
D. Accounts payable department
D. Accounts payable department
Overall explanation
The accounts payable department is responsible for processing the payment once an invoice is approved.
- What is the key to reducing the organization’s overall terminal handling costs for a time period?
A. Use the air transportation mode more often.
B. Maximize the number of shipments handled by the same carrier.
C. maximize the weight of individual shipments.
D. Use a customs broker.
C. maximize the weight of individual shipments.
Overall explanation
By increasing the weight of individual shipments and creating more TL shipments, there will be fewer shipments during a particular time period and, therefore, lower terminal handling,
pickup and delivery, and billing and collecting costs.
- Records for a part dimension over time show that it has a single mean and that values tend to cluster around the mean. This type of distribution is likely to be referred to as:
A. binomial.
B. Pareto.
C. z-bar.
D. normal.
D. normal.
Overall explanation
The APICS Dictionary describes a normal distribution as a “statistical distribution where most of the observations fall fairly close to one mean.” In addition, the “deviation from the mean is as likely to be plus as it is to be minus. When graphed, the normal distribution takes the form of a bell-shaped curve.”
- Based on the information provided below, what is the total capacity requirement for the work center in hours?
Run time 15 min per piece
Setup time 1 hour
Queue time 8 hours
Move time 8 hours
Quantity to order 28 pieces
A. 8 hours
B. 16 hours
C. 7 hours
D. 24 hours
A. 8 hours
Overall explanation
To answer this question, first convert the run time in minutes to run time in hours: 15 minutes/60 minutes = 0.25 hours Then calculate the total capacity requirement as follows:(28 pieces x 0.25 hours per piece) + 1-hour setup = 8 hours Setup and run-time are included; move and queue time are not included.
- Using the information provided below, what is the forecast error for the previous week?
*12 tubes per case
*50 cases per pallet
*Current mean absolute deviation (MAD) = 100
*Previous week:
*Forecast = 5,000 cases
*Sales = 100 pallets
*Scrap loss = 500
A. 0
B. -500
C. 5
D. 500
A. 0
Overall explanation
100 pallets x 50 cases = 5,000, so the error is 0.
- Responding to the customer with the price and availability, promise and confirmation, and advance ship notices best define which of the following terms?
A. Order fulfillment cycle
B. Continuous improvement
C. Order qualifier
D. Focus on quality
A. Order fulfillment cycle
Overall explanation
The order fulfillment process is defined as a series of customer interactions with an organization through the order-filling process, which includes price and availability, promise and confirmation, and advance shipping information.
- What is the purpose of the inventory investment report as part of the logistics resource requirements plan (LRRP)?
A. States actual item-level inventory costs for a past period based in part on shipping costs and inventory balances
B. Determines product family storage profiles for inventory based on product dimensions
C. Projects item-level inventory costs for a weekly planning horizon based in part on shipping costs and inventory balances
D. Projects aggregate inventory levels and related supply chain costs over a planning horizon based in part on product-family level replenishment
D. Projects aggregate inventory levels and related supply chain costs over a planning horizon based in part on product-family level replenishment
Overall explanation
The inventory investment report portion of the LRRP projects aggregate inventory levels and the related supply chain costs over a planning horizon based on product-family level replenishment, shipping costs, and inventory balances.
- When a buyer asks a supplier to design a product according to the buyer’s specifications, the buyer is not responsible for which of the following steps?
A. Detailed product requirements
B. Analysis of test results
C. Production of samples
D. Approval of test procedure
C. Production of samples
Overall explanation
The production of samples is the supplier’s responsibility, who will eventually make the product if tests are successful. The other three actions are all the responsibility of the buyer
- Which of the following actions is likely to improve the accuracy of a sales forecast?
A. Informing sales representatives about the company’s business outlook
B. Increasing the sales quotas to match the sales forecast
C. Adjusting the sales forecast up or down by a certain percentage to offset errors
D. Basing territorial advertising on sales estimates
A. Informing sales representatives about the company’s business outlook
Overall explanation
Using business information would help sales personnel to better determine potential forecasts
- Why does distribution requirements planning have characteristics of a push system?
A. Customer orders push demand to the distribution centers.
B. Inventory is pushed to distribution centers from a central location.
C. Distribution centers push demand to a master production schedule.
D. Inventory transit systems push the material between docks.
B. Inventory is pushed to distribution centers from a central location.
Overall explanation
Inventory is pushed to where it is needed from a central location
- What are the two different types of performance targets that should be used to achieve organizational stretch objectives?
A. Financial and strategic
B. Strategic and tactical
C. Operational and personal
D. Tactical and Financial
A. Financial and strategic
Overall explanation
To achieve organizational stretch objectives, a company must develop two types of performance targets: financial and strategic
- Which of the following processes employs a finite scheduling model of a company’s manufacturing system to determine when an item can be delivered?
A. Engineer-to-order
B. Make-to-order
C. Available-to-promise
D. Capable-to-promise
D. Capable-to-promise
Overall explanation
Capable-to-promise employs a finite scheduling model of the manufacturing system to determine when a new or unscheduled customer order can be delivered. It includes any constraints that might restrict production, such as resource availability, lead times for raw materials or purchased parts, and requirements for lower-level components or subassemblies
- When an organization identifies a supply disruption, what is the first step it should take, according to Accenture?
A. Mobilizing
B. Sensing
C. Operation
D. Analyzing
A. Mobilizing
Overall explanation
According to Accenture, the first step in responding to a supply disruption is mobilizing, which involves enacting the initial response plan and establishing rules for responding to further disruptions.
- A company has decided to locate a new distribution center in an area currently serviced only by the manufacturing warehouse to improve customer service levels with faster deliveries and fewer item stockouts. Which of the following results should they expect?
A. Delivery time to existing distribution centers will increase because of the delay in delivering to the new distribution center.
B. Total distribution network safety stock will decrease because there is more inventory in the distribution network.
C. Faster customer deliveries from all locations will enable inventory turns to increase.
D. Total distribution network inventory will increase because of the additional location, though demand will be unchanged.
D. Total distribution network inventory will increase because of the additional location, though demand will be unchanged.
Overall explanation
Any additional facility will introduce extra inventory into the network, given that faster customer deliveries and fewer stockouts are desired.
- Adding a distributor as a channel between manufacturers and retailers will result in all of the following except
A. a decrease in transportation costs.
B. a reduction in the number of shipments from manufacturers.
C. a decrease in the number of transactions for retailers.
D. an increase in the number of transactions for manufacturers.
D. an increase in the number of transactions for manufacturers.
Overall explanation
Natural results of reducing the complexity of transactions between manufacturers and customers include a decrease in the number of transactions for retailers, a decrease in transportation costs, and a reduction in the number of shipments from manufacturers. Transportation costs will also decrease as manufacturers ship to fewer customers (the distributor) and retailers buy from fewer suppliers.
- What data items are included in a manufacturing routing?
A. Average run and queue times
B. Standard setup time and run time per piece
C. Material cost per unit and lead time
D. Sequence of operations and standard move times
B. Standard setup time and run time per piece
Overall explanation
The routing for producing a particular item typically includes standard setup and run times. The average queue time would depend on the work center rather than the routing.
- When measuring shop floor performance, which method will encourage not producing unwanted products?
A. Schedule completion
B. Utilization
C. Efficiency
D. Productivity
A. Schedule completion
Overall explanation
Schedule completion encourages performance to plan.
- Efficiency is defined as the ratio of:
A. standard hours earned to hours per shift per day.
B. hours per shift per day to standard hours earned.
C. standard hours earned to actual production hours.
D. actual production hours consumed to standard hours earned.
C. standard hours earned to actual production hours.
Overall explanation
Efficiency is the ratio of the standard hours earned to the production hours worked
- The following information is available for a work center on day 8. The start workdays and end workdays are based solely on internal setup and run time. Using the critical ratio, which of the following jobs is the next to be started?
Job Start workday End workday
W 11 14
X 10 15
Y 8 12
Z 9 12
A. X
B. W
C. Z
D. Y
D. Y
Overall explanation
The critical ratio (CR) is the time remaining divided by the work remaining. The time remaining and the work remaining are calculated as follows:
Time Remaining = End Workday - Current Day + 1 Work Remaining = End Workday - Start Workday + 1 Note that the +1 is needed in each of these cases because the current workday in
the first case and the start workday in the second case are counted as a full day of work. The critical ratio calculations for each job are shown below:
W * Time Remaining = 14-8 + 1 =7 days * Work Remaining = 14-11 +1 =4 days * Critical Ratio = 7/4 = 1.75
X * Time Remaining = 15-8 + 1 =8 days * Work Remaining = 15-10 + 1 =6 days * Critical Ratio = 8/6 = 1.33
Y * Time Remaining = 12-8 + 1 =5 days * Work Remaining = 12-8 + 1 =5 days * Critical Ratio = 5/5 = 1
Z * Time Remaining = 12-8 + 1 =5 days * Work Remaining = 12-9 + 1 =4 days * Critical Ratio = 5/4 = 1.25
The CR shows the relative priority of the orders at the work center. The rule is to sequence the order with the lowest ratio first. Y has the smallest CR, 1, which means it is on schedule, but
it has the lowest CR and should be started first.
The other
*Time Remaining = 12-8 + 1 =5 days
*Work Remaining = 12-9 + 1 =4 days
*Critical Ratio = 5/4 = 1.25 The CR shows the relative priority of the orders at the work center. The rule is to sequence the order with the lowest ratio first. Y has the smallest CR, 1, which
means it is on schedule, but it has the lowest CR and should be started first. The other jobs are ahead of schedule.
- If suppliers and customers seek to reduce inventories and retain service, they will likely find success with:
A. increased customer involvement in the supplier’s day-to-day planning and control.
B. the use of open bid auctions.
C. statistically calculating product lead time.
D. long-term purchase agreements.
A. increased customer involvement in the supplier’s day-to-day planning and control.
Overall explanation
Inventories may be reduced in a supplier/customer partnership by increased customer involvement in the supplier’s day-to- day planning and control.
- Which of the following relationships are most mutually exclusive?
A. Make-to-order and flow manufacturing
B. Engineer-to-order and intermittent production
C. Make-to-stock and line production
D. Assemble-to-order and repetitive manufacturing
A. Make-to-order and flow manufacturing
Overall explanation
Make-to-order will have some custom-engineered parts, while flow is continuous with no design required.
- Which of the following roles of a finished goods warehouse deals with the grouping of different items into an order?
A. Product mixing
B. Service
C. Kitting
D. Transportation consolidation
A. Product mixing
Overall explanation
Product mixing deals with the grouping of different items into an order and the economies that warehouses can provide in doing this. Without a distribution center, customers would have to order and pay LTL transport from each source. Using a distribution center, orders can be placed and delivered from a central location.
- Which is the best way listed to reduce material-handling costs for B2B customers who normally sell one to three pallets of units in a given order cycle?
A. Use cross-docking to immediately build unit loads for all B2B customers upon receipt of finished goods.
B. Change the unit load size and order increment requirement to equal the number of units that can fit on a single pallet.
C. Change the minimum order size to be the number of units to fill one pallet and allow any number of units to be ordered above this amount.
D. Set the unit load size and order increment requirement to equal one full truckload of pallets.
B. Change the unit load size and order increment requirement to equal the number of units that can fit on a single pallet.
Overall explanation
If B2B customers can order only in full pallet increments, this will reduce the amount of material handling for you and for them. For example, the customer will be able to unload the delivery using a forklift rather than manual labor, which would be the case if they ordered, say, a pallet and a half of goods, which is what could occur if only the minimum order size were specified. Since the customers generally sell between one and three pallets per order period, requiring orders of full truckloads would necessitate that some of these pallets being moved into storage and then moved out over time, so this would increase their material-handling costs. Cross-docking may reduce the organization’s material-handling costs, but it would not affect the customer’s material-handling costs.
- The primary objective of a floating-location storage system is to improve:
A. cross-docking.
B. distribution.
C. cube utilization.
D. kitting.
C. cube utilization.
Overall explanation
Since a floating-location storage system enables the storage of goods wherever there is appropriate space for them, it maximizes warehouse space cube utilization.
- In which of the following processes are qualitative techniques appropriately used?
A. Pyramid forecasting
B. Determination of a seasonal index
C. Extrapolation of essentially level data
D. Detection of a demand increase or decrease
Overall explanation
Pyramid forecasting is correct because, at the conclusion of the roll-up process, a qualitative decision can be made before forcing the result down. The other answers are incorrect because seasonal indexing is a quantitative technique
- Increased flexibility in order to meet customer demand changes can be achieved by:
A. reducing lead times.
B. increasing component inventory.
C. increasing lot sizes.
D. reducing scrap.
Overall explanation
Reducing lead times—specifically setup times—allows for more frequent changes to adapt to changes in demand.
- A job shop has an 8-hour workday. If an order in the job shop for 100 pieces starts on the beginning of day 1, when would it be finished?
Cycle Time
Queue (days) Per Piece (hours) Setup (hours)
10 Saw 1 0.1 2
20 Face 2 0.1 2
30 Turn 2 0.5
5
40 Drill 2
0.3 2
50 Grind 2 0.4 1
A. Day 20
B. Day 23
C. Day 30
D. Day 28
Overall explanation
To calculate the answer, convert everything to hours. The calculation is as follows:
*10 = 8 hrs. of queue + (100 pieces/10 pieces per hour = 10 hours) + 2 hrs. = 20 hrs./8-hr. day = 2.5 days
* 20 = 16 hrs. of queue + (100 pieces/10 pieces per hour = 10 hours) + 2 hrs. = 28 hrs./8-hr. day = 3.5 days
* 30 = 16 hrs. of queue + (100 pieces/2 pieces per hour = 50 hours) + 5 hrs. = 71 hrs./8-hr. day = 8.875 days
* 40 = 16 hrs. of queue + (100 pieces/3.33 pieces per hour = 30 hours) + 2 hrs. = 48 hrs./8-hr. day = 6 days
* 50 = 16 hrs. of queue + (100 pieces/2.5 pieces per hour = 40 hours) + 1 hr. = 57 hrs./8-hr. day = 7.125 days
*2.5 + 3.5 + 8.875 + 6 + 7.125 = 28
- What is a likely role for a planning and inventory management professional during the order processing stage of the order cycle?
A. Administratively process the order.
B. Check inventory levels and planned production schedules to determine availability and location.
C. Validate that the customer performed the order processing correctly.
D. Assess whether the most efficient equipment is being used to assemble the order.
Overall explanation
Other functional areas will perform the administrative functions of processing an order. Planning and inventory management professionals can be involved in a support function by checking inventory levels and planned production schedules to determine availability and location.
- Which of the following is a key element of customer relationship management?
A. Differentiating the company’s customer experience from rivals by superior anticipation and responsiveness
B. Handling customer requests for changes to due dates outside the system
C. Setting filter limits at multiples of MAD
D. Promising from on-hand inventory and future supply
Overall explanation
Differentiating the company’s customer experience from rivals by superior anticipation and responsiveness is one of three important elements of customer relationship management. The others are to increase customer retention and loyalty and to provide insight into the timing and quantity of impending customer orders. Setting filter limits is incorrect because it is an element of demand filters, not customer relationship management. Handling customer change requests is incorrect because changes made by the customer for delivery must be entered into the system. Promising on-hand inventory and future supply is incorrect because this is a characteristic of ATP, not customer relationship management.
- Forecasters and users of forecasts use information on forecast accuracy to understand the reliability and relevance of the data as they are used to determine demand characteristics, variation, and:
A. stability.
B. reliability of the sales and operations planning process.
C. sustainability.
D. customer predictability.
.
Overall explanation
Forecasters and users of forecasts use information on forecast accuracy to understand the reliability and relevance of the data as they are used to determine demand characteristics, variation, and stability
- A supplier produces for countries around the globe. If only domestic customers are considered in demand management, what will the resulting outcome likely be?
A. Demand will be unaffected.
B. Demand will be overstated.
C. Demand will be understated.
D. Not enough information exists to comment.
Overall explanation
When both domestic and international demand are present, ignoring international demand will result in understated requirements.
- The term for a forecasting technique that uses an average of a certain number of observations, with each new observation added and the oldest observation dropped, is:
A. seasonality.
B. exponential smoothing.
C. moving average.
D. trend.
Overall explanation
A moving average is an arithmetic average of a certain number (n) of the most recent observations. As each new observation is added, the oldest observation is dropped.
- In its narrowest sense, an organization that provides only an intangible product is in the:
A. healthcare industry.
B. service industry.
C. real estate industry.
D. hospitality industry.
Overall explanation
The APICS Dictionary, 16th edition, the definition of the service industry is as follows, “1) In its narrowest sense, an organization that provides an intangible product (e.g., medical or legal advice). 2) In its broadest sense, all organizations except farming, mining, and manufacturing. Includes retail trade
- Which of the following features is characteristic of continuous process manufacturing?
A. Large batches
B. Low-cost production
C. Wide product range
D. Responsiveness as an order-winning criterion
Overall explanation
Continuous manufacturing is a type of manufacturing process dedicated to the production of a very narrow range of standard products. The rate of product change and new product information is very low. Significant investment in highly specialized equipment allows for a high volume of production at the lowest manufacturing cost. Thus, unit sales volumes are very large, and price is almost always a key order-winning criterion.
- Using the partially completed back schedule simulation below, what is the start date for operation 10 at work center 13? Order Number: 808
Order Number 808
Operation no. Work Center Start Date (am) Queue (days) Operation (days) Finish Date (pm) Wait (days) Move (days)
10 13
3 4
0 1
20 16
2 3
1 1
30 14 2 2
0 1
50 11
1 2
1 1
60 Stores 76
A. Day 50
B. Day 51
C. Day 49
D. Day 52
Overall explanation
Order Number 808
Operation no. Work Center Start Date (am) Queue (days) Operation (days) Finish Date (pm) Wait (days) Move (days)
10 13 51 3 4 58 0 1
20 16 59 2 3 64 1 1
30 14 66 2 2 70 0 1
50 11 71 1 2 74 1 1
60 Stores 76
- What is the amount of bias for the forecast for the three-month period displayed?Sales Forecast
Month 1 1100 1050
Month 2 1200 1250
Month 3 1125 1146
A. 21
B. 3,425
C. 3,446
D. 7
Overall explanation
The amount of bias is figured by comparing the forecast demand with the actual demand. In this example, the cumulative forecast demand is 3,446 and the cumulative actual demand is 3,425. The difference between the two values is +21, which is the amount of bias for the given period, which is in the direction of an overstock.
- Which factor favors use of the road mode of transport over other modes?
A. Low variable costs
B. Lowest carrying cost
C. High capital cost
D. Dispersed market
Overall explanation
Road is best suited for moving goods to a dispersed market because they can provide door-to-door service so long as there is a suitable road.
- Which scheduling technique considers slack time to increase or decrease the calculated lead time of an order?
A. Constraint-based scheduling
B. Forward-flow scheduling
C. Probable scheduling
D. Mixed-flow scheduling
Overall explanation
Probable scheduling considers slack time to increase or decrease the calculated lead time of an order.
- A scheduling system sends part of a lot on to the next stage in processing before it has completed working on all materials it has received. What is the name given to this useful expediting tool?
A. Infinite loading
B. Manufacturing order
C. Split scheduling
D. Overlapped scheduling
Overall explanation
Overlapping occurs when the completed portion of an order at one work center is processed at one or more succeeding work centers before the pieces left behind are finished at the preceding work centers.
- Packing products on incoming shipments so they can be easily sorted at intermediate warehouses or for outgoing shipments based on destination is known as:
A. load-sorting.
B. break-pointing.
C. cross-docking.
D. load-splitting.
Overall explanation
Cross-docking involves packing products on incoming shipments so they can be easily sorted at intermediate warehouses or for outgoing shipments based on the destination.
- The actual queue time of a job at a work center is most impacted by the:
A. lot size of the job.
B. efficiency of the work center.
C. utilization of the work center.
D. priority of the job.
Overall explanation
If dispatching rules push a job to the end of the sequence, the queue time will possibly be longer than planned. The inverse is true if an order is moved up in the sequence.
- If a manufacturer typically produces 80 orders of a given product per year and calculates that three stockouts are acceptable, what is its customer service level?
A. 96%
B. 83%
C. 77%
D. 97%
Overall explanation
Customer Service Level = (Orders per Period - Stockout Chances per Period)/Orders per Period
- Which of the following techniques encourages suppliers to adopt lean principles?
A. Random storage
B. Dedicated storage
C. Kanban
D. Point-of-use
Overall explanation
Kanban is the only response that would impact suppliers
- Which of the following is unaffected by data timeliness in an assemble-to-order environment using backflushing?
A. Notification of rejected receipt
B. Customer order completion
C. Inventory turns calculations
D. Inventory accuracy level
Overall explanation
Inventory turns are calculated monthly and are unaffected by data timeliness.
- Distribution planning plans logistics capacity at the product family and end-item level at which of the following planning levels?
A. Master scheduling and MRP
B. Business planning and MRP
C. Strategic planning and MRP
D. S&OP and master scheduling
Overall explanation
Material requirements planning (MRP), strategic planning, business planning, and master scheduling are all incorrect because strategic planning and MRP are too early and too late to plan distribution logistics at the product family or end-item level, respectively. Distribution logistics planning at the product family and end-item levels occurs during S&OP and master scheduling.
- Which example is the most sustainable according to the waste hierarchy?
A. Sending recyclable plastics to a recycling center and responsibly disposing of non-recyclable plastics
B. Burning waste oil in an incinerator that produces electricity
C. Sending batteries to a processing center that specializes in the disposal of batteries
D. Disposing of both recyclable and non-recyclable plastic rather than wasting energy cleaning them
Overall explanation
Recycling is higher on the waste hierarchy than recovery or disposal.
- Which example is the most sustainable according to the waste hierarchy?
A. Sending recyclable plastics to a recycling center and responsibly disposing of non-recyclable plastics
B. Burning waste oil in an incinerator that produces electricity
C. Sending batteries to a processing center that specializes in the disposal of batteries
D. Disposing of both recyclable and non-recyclable plastic rather than wasting energy cleaning them
Overall explanation
Recycling is higher on the waste hierarchy than recovery or disposal.
- Which scheduling technique assumes that there will always be sufficient capacity and computes the schedule starting with the due date for the order?
A. Finite forward scheduling
B. Finite backward scheduling
C. Infinite backward scheduling
D. Infinite forward scheduling
Overall explanation
Most systems attempt to backward schedule first, using infinite planning.
- A cash register manufacturer and distributor have a network of dealers. Despite the organization’s return policy, the dealers have been returning too many units for insufficient reasons. What can be done to enforce the policy while ensuring good customer service?
A. Start using a supplier relationship management (SRM) form.
B. Start implementing a warranty policy and accept only warranty returns.
C. Start requiring a return material authorization (RMA) form.
D. Start implementing a waste hierarchy policy and welcome higher returns.
Overall explanation
An RMA is an official request to return products that need to be approved by the responsible party. It will enable the organization to better enforce its existing return policy.
- Trend extrapolation is used in forecasting in which of the following ways?
A. For easier graphing of the forecast
B. For identifying cyclical patterns
C. For identifying the presence of seasonality in product demand
D. For projecting long-range movement
Overall explanation
Extrapolation refers to the process of extending a forecast out a certain number of periods into the future.
- A company operating in a volatile industry, in which demand, and events can frequently throw off predictions, has become frustrated with the unreliability of and its dependence on forecasts. What step could it take to generate better and quicker information about customer demand?
A. Increase inventory.
B. Focus more closely on key competencies.
C. Improve order winners.
D. Collaborate more closely with downstream customers.
Overall explanation
Closer collaboration will mean that upstream partners get downstream customer information directly and immediately. A key benefit of communicating demand rather than only orders is that you can see the reason for certain orders (e.g., to stockpile in advance of a plant shutdown versus a trend of higher sales), and this helps eliminate the bullwhip effect where variability in orders (both high and low) is magnified at each upstream supply chain node.
- The maximum of the output capabilities of a resource is known as:
A. maximum capacity.
B. protective capacity.
C. productive capacity.
D. rated capacity.
Overall explanation
Productive capacity is the maximum of the output capabilities of a resource or the market demand for that output for a given time period.
- A product family is experiencing an upward trend in demand that is adversely affecting customer service. Which of the following forecasting techniques is most applicable?
A. Low alpha factor
B. Trending with bias
C. Single smoothing
D. Double smoothing
Overall explanation
Double smoothing adjusts a single smoothed forecast for an upward or downward trend. The other responses do not weigh the current month enough to pick up trends.
- Which of the following statements defines required capacity?
A. Capacity of a system or resource needed to produce a desired output in a given time period
B. Amount of released or planned work assigned to a specific operation
C. Limits or levels of capacity in order to execute all manufacturing schedules
D. Output in comparison to the capacity plans and adjusted for corrective action
Overall explanation
Required capacity is the capacity of a system or resource needed to produce a desired output in a particular time period.
- What term is used for the distribution route, from raw materials through consumption, along which products travel?
A. Logistics channel
B. Transaction channel
C. Marketing channel
D. Distribution channel
Overall explanation
A distribution channel is the distribution route, from raw materials through consumption, along which products travel.
- Which of the following is a valuable forecast evaluation activity?
A. Tracking actual demand against projected demand
B. Balancing bias in a forecast with the opposite bias
C. Using standard hours to track variation
D. Involvement of users in the process of developing forecast tools
- If a company implements the time-phased order point (TPOP) technique rather than the order point technique, which of the following benefits is likely to be achieved?
A. Historical data to determine the optimum time to reorder
B. Availability of future planned orders for current capacity planning
C. Assistance in maintaining true dates of need for open orders
D. Planning of end items but not the capacity for future lumpy demand
Overall explanation
The TPOP technique allows planners to view supply and demand within a user-defined planning horizon. By simulating possible future supply and demand for an item, TPOP enables the planner to maintain the true dates of need for all orders, use future supply requirements to plan for future capacities, and see component demand requirements and capacity for future lumpy demand.
Overall explanation
Tracking actual demand against projected demand is the basic process of evaluating forecast performance. User involvement might ensure that they can effectively use the data from a forecasting system, but it is not an evaluation activity.
- What is one method for improving transportation responsiveness within the supply chain?
A. Minimize transportation costs by using common carriers.
B. Maintain a private fleet for all deliveries.
C. Create transportation partnerships with carriers.
D. Increase lead times so shipments will not be late.
Overall explanation
Creating transportation partnerships increases operational flexibility and
enables long-term contracts and closer control.
- When altering operations schedules to accommodate an exception, what is the scheduler’s priority?
A. Making decisions that help maintain valid plans
B. Assuming infinite capacity when rescheduling
C. Influencing decision-makers to stop allowing exceptions
D. Getting the expedited job done immediately regardless of the schedule impact
Overall explanation
An exception management process needs to prioritize making and implementing decisions that help maintain valid plans.
- What term is used for the supplier’s responsibility to dispose of packaging materials or environmentally sensitive materials?
A. Environmental stewardship
B. Green reverse logistics
C. Recycling
D. Sustainability
Overall explanation
Green reverse logistics places the responsibility on the supplier to dispose of packaging materials or environmentally sensitive materials such as heavy metals and other restricted materials.
- The forecast technique for a particular product has recently changed to second order smoothing. Which of the following product life cycle stages is the product most likely entering?
A. Growth
B. Maturity
C. Saturation
D. Introduction
Overall explanation
Second order smoothing accounts for trends, which would be applicable during a growth phase.
- Which option would be most likely to result in a realistic and achievable schedule while also taking advantage of excess capacity?
A. Infinite forward scheduling
B. Finite forward scheduling
C. Infinite backward scheduling
D. Finite backward scheduling
Overall explanation
Finite loading is used to generate a realistic and achievable schedule because it takes available capacity into account and forces scheduling of the promise date to reflect capacity constraints. Forward scheduling allows taking advantage of excess capacity and helps with load leveling.
- What is the distinction between the distribution channel and the transaction channel?
A. There is no distinction.
B. The distribution channel is concerned with the route of goods, the transaction channel is concerned with the transfer of ownership.
C. The distribution channel is concerned with warehouses, the transaction channel is concerned with transportation nodes.
D. The distribution channel is concerned with the route of goods; the transaction channel is concerned with the costs.
Overall explanation
The distribution channel is the distribution route, from raw materials through consumption, along which products travel. The transaction channel deals with the change of ownership of goods and services.
- Which of the following is a downside associated with linking corporate financial incentives to specific performance objectives?
A. While achieving their goals, executives may not communicate deep enough into the organization.
B. If the objectives are not long-term, executives may follow risky strategies, hoping to increase short-term earnings.
C. Executives always prioritize financial goal achievement over sustainability goals.
D. Since executives always focus on long-term strategies, there are typically few downsides.
Overall explanation
Compensation packages at many companies have increasingly rewarded executives for short-term performance improvements—most noticeably achieving quarterly and annual earnings targets and boosting stock prices by specified percentages. This can motivate the executives to take unwise business risks to boost short-term earnings. The focus on short-term performance has proved damaging to long-term company performance and shareholder interests.
- Which of the following warehouse activities involves bringing goods together and checking for omissions or errors in the order?
A. Picking goods
B. Dispatching the shipment
C. Dispatching goods to storage
D. Marshalling the shipment
Overall explanation
When marshaling a shipment, goods making up a single order are brought together and checked for omissions or errors, and order records are updated accordingly. Picking is the process of selecting items from storage and bringing them to a marshaling area. Dispatching goods to storage is the process of sorting goods upon receipt and placing them in a storage area. Dispatching the shipment is the process of order packing, preparing shipping documents, and loading items on the correct transport vehicles.
- Distribution requirements planning (DRP) provides transportation planners with:
A. locations for scheduling deliveries.
B. backhauling information.
C. load optimization information.
D. current and future shipping requirements.
Overall explanation
DRP can convert the schedule of planned orders into transportation data elements such as weight, volume, and number of pallets.
- Which factor favors air transport?
A. Dense goods
B. Highly perishable goods
C. Inexpensive goods
D. Normal operating conditions
Overall explanation
Highly perishable goods with a short shelf life are often shipped by air, for example, fresh seafood. Air is also best for light, non-bulky, valuable goods and for emergency shipments.
- If supply and demand are not in balance at the aggregate supply level, what should be the priority to resolve the issue?
A. Adjusting supply even if it is difficult
B. Adjusting how supply and demand are measured so imbalances are less frequent
C. Adjusting supply and demand at the strategic level so it is not needed at the aggregate supply level
D. Adjusting demand if it is less difficult than adjusting supply
Overall explanation
Supply and demand balancing both occur regularly at a well-functioning organization, but the more difficult and costly efforts that may be required are typically attempted on the supply side before resorting to greater efforts on the demand side. This is because supply adjustments require internal changes while demand adjustments involve influencing external customers to accept changes.
- A company monitors production by knowing what is in process and what the queue time is. Average run time is one hour, and queue times are kept fairly uniform by the planning and scheduling process. Jobs are produced in first in, first out sequence. Which of the following information is easiest for monitoring purposes in this scenario?
A. Number of jobs in queue, running and waiting
B. Number of days a job is in queue
C. Sequence of jobs based on input/output control
D. Priority of jobs based on required date
Overall explanation
Knowing the number of days a job is in queue is essentially the monitoring required by the company.
- A press is used to stamp left- and right-hand door panels simultaneously from a roll of sheet metal. What is the relationship between the two parts?
A. Co-stamped
B. Co-product
C. Co-produced
D. By-product
Overall explanation
According to the APICS Dictionary, co-products are those that are “usually manufactured together or sequentially because of product or process similarities.”
- Which of the following is an example of variable transportation costs?
A. Billing
B. Line haul
C. Pickup and delivery
D. Terminal handling
Overall explanation
Line haul costs are variable, depending on the distance traveled.
- The result of single exponential smoothing is most like which of the following?
A. Data decomposition
B. Moving average
C. Seasonal index technique
D. Linear programming
Overall explanation
Exponential smoothing is a type of weighted moving average forecasting. The heaviest weight is assigned to the most recent data. The technique makes use of a smoothing constant to apply to the difference between the most recent forecast and the critical sales data, thus avoiding the necessity of carrying historical sales data.
- A new work center crew is consistently getting work done faster than standards predict. In due time, what should be done for this work center?
A. Use the crew’s output rate increase to tighten the standards for all other work centers.
B. Conduct a new engineering study using time-study techniques.
C. Nothing needs to be done other than to praise the crew.
D. Adjust the standard hours to reflect the crew’s latest output results.
Overall explanation
Standard hours per unit are determined using engineering studies based on time-study techniques, so this would be the best way to adjust the standard among the options shown.
- Improvement programs at a manufacturing company have increased efficiency 10% and utilization 5%. What is the effect on the theoretical capacity?
A. It has decreased.
B. It varies with work in process.
C. It has increased.
D. It remains constant.
Overall explanation
Theoretical capacity is defined as “the maximum output capability, allowing no adjustments for preventive maintenance, unplanned downtime, shutdown, and so forth.” As such, efficiency and utilization have no impact on the capacity calculation.
- Before workers can begin operations, they are issued a shop order packet. What does this contain?
A. Inventory location
B. Manufacturing orders
C. Planned orders
D. Manufacturing calendar
Overall explanation
Manufacturing orders have already gone through the validation process in capacity requirements planning. The shop order packet is made up of all the manufacturing orders that are waiting to start operations or are works in progress.
- Which channel of distribution is concerned with the transfer of ownership, specifically negotiation, selling, and contracting?
A. Logistics
B. Transaction
C. Transportation
D. Distribution
Overall explanation
The transaction channel is concerned with the transfer of ownership including the activities of negotiation, selling, and contracting.
- What is the main difference between the logistics resource requirements plan (LRRP) and the logistics capacity plan?
A. The logistics capacity plan uses a monthly planning horizon.
B. The logistics capacity plan is concerned with labor force changes.
C. The logistics capacity plan is at the item level.
D. The logistics capacity plan addresses the number and size of distribution centers.
Overall explanation
Logistics capacity plans are more detailed and address a shorter planning horizon than the LRRP. The logistics capacity plan is at the item level while the LRRP is at the product-family level.
- Which type of capacity is the best indicator that the material plan is infeasible if it equals the required capacity at a particular work center?
A. Rated
B. Demonstrated
C. Theoretical
D. Bottleneck
Overall explanation
Theoretical capacity is an ideal and is usually not attainable. If it is equal to the required capacity, the work center is overloaded.
- The average of the absolute values of the deviations from some expected value best defines which of the following terms?
A. Standard deviation
B. Mean absolute deviation
C. Mean average deviation
D. Forecast error
Overall explanation
The MAD averages the absolute values of deviations from expected values. Standard deviation is incorrect because it is a statistical measure of difference between a measure and the mean or average of all deviations. Forecast error is incorrect because it is the difference between the actual demand and the forecast demand. Mean average deviation is incorrect, because it is an inaccurate use of the acronym MAD.
- Distribution requirements planning (DRP) is most beneficial in environments that possess which of the following product and distribution network characteristics?
A. Make-to-stock product, multilevel distribution network
B. Make-to-order product, single-level distribution network
C. Make-to-order product, multilevel distribution network
D. Make-to-stock product, single-level distribution network
Overall explanation
DRP is most beneficial in a make-to-stock environment and where the distribution network is more complex.
- Which of the following is information outside of the closed-loop process between production planning and capacity planning for determining work center loading?
A. Available work center capacity
B. Released order quantities
C. Available and allocated inventory
D. Planned order required dates
Overall explanation
An assumption that inventory is available is already made.
- What technique best determines production and inventory quantities for goods and services with independent demand?
A. Material requirements planning
B. Capacity requirements planning
C. Safety stock
D. Forecast
Overall explanation
Since demand for independent demand items is unknown, it will need to be forecasted.
- What is the minimum that should be done prior to there being an exception in production activity control (PAC)?
A. Identify responsible parties and communication paths.
B. Expedite faster-to-complete orders to get them out of the way.
C. Nothing can be done, as this is the nature of an exception.
D. De-expedite less-important orders to create available capacity.
Overall explanation
While expediting and de-expediting need to wait until after an exception occurs, the organization can do some contingency planning. The minimum amount of contingency planning is to identify responsible parties and communication paths.
- Which of the following forecasting techniques uses internal historical data?
A. Intrinsic
B. Extrinsic
C. Economic indicators
D. Qualitative
Overall explanation
Intrinsic data is accumulated from historical events occurring within a company. The other forecasting methods use non- historical or external data outside of the company’s control.
- A large multinational retailer allows suppliers to see point-of-sales data using proprietary software. What does this facilitate?
A. Complex shipment route planning
B. Wide variety of low-cost supplier-based IT systems being capable of capturing and using this point-of-sales data
C. Accurate forecasting for the suppliers’ products
D. Use of experienced consultants at each of the suppliers to help manage all the detail
Overall explanation
A secret to picking the right strategic framework is assessing how your resources relate to each other. For example, a U.S.- based market-dominating big-box retailer’s low-cost strategy in the U.S. depends heavily on its physical resources (often rural locations) and sophisticated IT, which helps them maximize selling space and quickly replenish inventories. They provide point-of-sale (POS) data to all of their suppliers at a very high frequency, thus allowing suppliers to have very accurate product demand history and facilitating the suppliers’ ability to “replenish today what was sold yesterday.”
- What term is used for a distribution network that deals with change of ownership of goods and services including the activities of negotiation, selling, and contracting?
A. Sales channel
B. Transaction channel
C. Marketing channel
D. Distribution channel
Overall explanation
A transaction channel is a distribution network that deals with change of ownership of goods and services including the activities of negotiation, selling, and contracting.
- Product A is made from components B and C. Component B is made from parts D and E. Which items should be forecasted?
A. Only B, C, D, and E
B. Only D and E
C. Only A
D. Only A, B, and C
Overall explanation
Product A should be forecasted because it is an independent demand item. As components of A or its subassemblies, the other components are dependent demand items and are planned by material requirements planning.
- A finance manager states that the objective of physical distribution is to supply products at the lowest total cost and that the cheapest mode and carrier should be selected to reduce the budget for this. Which is the best response?
A. Modes and carriers that cannot provide the highest level of customer service should never be used.
B. Modes and carriers that cannot provide the targeted level of customer service cannot be used even if they are cheaper.
C. The primary objective of physical distribution is to provide goods where they are needed, so the cheapest mode and carrier should be the policy going forward.
D. The primary objective of physical distribution is actually to exceed the competition’s level of service, and sometimes this can require budget increases.
Overall explanation
The objective of distribution management is to provide the required level of customer service at the least total cost of ownership.
- In a distribution environment, which of the following functions is generally considered a joint responsibility of the manufacturer and the distribution center?
A. Distribution center site selection analysis
B. Warehousing finished goods prior to shipment
C. Customer order servicing and administration
D. Determination of finished product packaging
Overall explanation
Customer order management is handled by both the manufacturer and the distribution center, especially where demand variability causes unexpected stockouts, expediting is required, etc. Site analysis would be an issue only for the distribution center
- A retail company has decided to focus on internet sales and open a few new stores rather than use an aggressive new store approach. All demand will be adequately served by the existing distribution centers. What is an important consideration in the development of the new strategy?
A. Finished goods inventory turns
B. Existing store growth rate
C. Geographic location of new stores
D. Capacity of current distribution centers
Overall explanation
Inventory turns affect finances, distribution center capacity, and operations.
- To “roll up” a forecast refers to the process of:
A. combining salespersons’ forecasts into a total forecast for an item.
B. generating detailed forecasts that aggregate to the total forecast.
C. combining the master production schedule quantities to meet the forecast demand.
D. making sure that the resource plan validates the sales and operations plan.
Overall explanation
In pyramid forecasting, detailed forecasts are aggregated to higher levels until a total number is generated.
- Establishing standards and performance measurements for warehousing is important in order to:
A. base compensation on achievement of standards.
B. benchmark daily activities and guide continuous improvement.
C. eliminate disagreements on what utilization and efficiency should be.
D. report performance to the central supply warehouse management.
Overall explanation
The objective of setting standards and measuring performance is to provide a baseline for performance and determine areas of improvement.
- Which of the following actions best reduces work-in-process (WIP) inventory on the shop floor?
A. Decide how to exploit the constraint to the system.
B. Elevate the constraint to the system.
C. Subordinate all else to the constraint to the system.
D. Identify the constraint to the system.
Overall explanation
Once a process constraint has been identified, WIP is reduced by making all loads equal to the allowable capacity found at the constrained process. Any load released to the manufacturing floor that is greater than the constrained process capacity will simply end up as excess load.
- Utilization of assets in distribution can be measured by the ratio of:
A. rack space used to rack space available.
B. vehicle space used to vehicle space available.
C. floor space used to floor space available.
D. cubic volume used to cubic volume available.
Overall explanation
The utilization of assets in distribution can be measured by the ratio of space used to space available.
- Which of the following approaches will facilitate the smooth integration of a new product to production?
A. Standardization of components
B. Prototyping
C. Quality function deployment
D. Statistical process control
Overall explanation
Standardization of components and processes shortens the prototyping time and learning curve, getting products to market faster.
- Which of the following roles of a finished goods warehouse deals with the grouping of different items into an order?
A. Service
B. Transportation consolidation
C. Product mixing
D. Kitting
Overall explanation
Product mixing deals with the grouping of different items into an order and the economies that warehouses can provide in doing this. Without a distribution center, customers would have to order and pay LTL transport from each source. Using a distribution center, orders can be placed and delivered from a central location.
- Which of the following qualitative methods of forecasting should a company consider for a product that is replacing another?
A. Panel consensus
B. Historical analogy
C. Expert opinion
D. Focus Groups
Overall explanation
Use the history from the older product Expert opinion, focus groups, and panel consensus are incorrect because none of these methods provides any greater knowledge of the future of a new product than any other method.
- Which routing data is used by both infinite capacity requirements planning and finite scheduling for planning and scheduling?
A. Sequencing rules
B. External setup hours
C. Direct labor hours
D. Theoretical capacity
Overall explanation
Both use internal setup and run time, which include direct labor hours.
- Workloads between work centers might be redistributed by:
A. an alternate routing.
B. a substitution.
C. subcontracting.
D. a temporary routing.
Overall explanation
An alternate routing is usually less preferred than the primary routing but results in an identical item.
- For the past six months, a manufacturer has experienced monthly forecast deviations of 15, -6,12, 8, -18, and -4 units. What is the mean absolute deviation for these months?
A. 10.5
B. 9.33
C. 1.16
D. 11.67
Overall explanation
To calculate the mean absolute deviation, first make each deviation positive and sum these absolute values: 15 + 6 + 12 + 8 + 18 + 4 = 63 units. Next, divide by the number of periods (6): 63/6 = 10.5.
- What is capacity requirements planning (CRP) primarily used for?
A. Validating the master production schedule
B. Prioritizing manufacturing orders
C. Calculating available capacity
D. Balancing work center capacity and load
Overall explanation
The purpose of CRP is to show any imbalances between capacity and load by work center. Available capacity is calculated outside of CRP but is used as an input.
- Which of the following inventory classifications most contributes to cycle time?
A. Excess
B. Obsolete
C. Active
D. Inactive
Overall explanation
Cycle time is the time from receipt to the time of shipping.
- The value that occurs most frequently in a group of values is known as the:
A. mean.
B. median.
C. muda.
D. mode.
Overall explanation
The mode is the value that occurs most frequently in a group of values.
- Which of the following is typically a significant benefit of using bar-coded labels to identify parts and storage locations?
A. Stockroom employee morale is improved.
B. Product identification errors are reduced.
C. The data entered is more complete.
D. The cost of labeling is transferred to the supplier.
Overall explanation
Bar codes are a series of alternating bars and spaces printed on parts, containers, and labels, representing encoded information that can be read by electronic readers. Bar coding facilitates timely and accurate input of data to a computer system, reducing errors.
- An electronic manufacturer is launching a new product line that is unlike anything else in the marketplace. Which of the following forecasting methods would the company most likely use?
A. Seasonality
B. Qualitative
C. Focus
D. Trend
Overall explanation
Qualitative forecasting is based on intuitive or judgmental evaluation. It is used generally when data are scarce, not available, or no longer relevant.
- What is a challenge associated with the process of implementing collaborative planning, forecasting, and replenishment (CPFR)?
A. Decreased sales revenue
B. Decreased levels of customer service
C. Supply chain fragmentation across organizational boundaries
D. Discontinuation of business practices that may be seen as successful
Overall explanation
One of the challenges is the discontinuation of businesses practices that may be seen as successful. CPFR typically results in increased sales revenue, supply chain integration across organizational boundaries, and improved customer service levels.
- Which of the following terms applies to a suggested order quantity, release date, and due date created by the planning system’s logic when it encounters net requirements in processing material requirements planning (MRP)?
A. Planned order release
B. Planned order receipt
C. Planned order
D. Reschedule recommendation
Overall explanation
A planned order includes a suggested order quantity, release date, and due date created by the planning system’s logic when it encounters net requirements in processing MRP.
- Which is the most practical way to reduce the bullwhip effect?
A. Apply disintermediation.
B. Improve forecasting.
C. Use forward integration.
D. Use point-of-sale information.
Overall explanation
Improving the forecast is not as effective as having real-time information. Forward integration and disintermediation will provide better visibility to downstream demand but are not everyday solutions to the bullwhip effect.
- Which efficiency measurement is applied to distribution for calculating capacity?
A. Number of order lines picked vs. standard for number of order lines to be picked
B. Number of trucks that have been loaded
C. Number of pallets received vs. number of pallets shipped
D. Number of trucks that have been unloaded
Overall explanation
In distribution, the standard measure of order lines picked would be compared to the actual order lines picked.
- Which of the following is a key principle of collaborative planning, forecasting, and replenishment (CPFR)?
A. Integrating enterprise resources planning systems
B. Joint meetings between customers and suppliers
C. Exchange of information between trading partners
D. Using the internet to exchange information
Overall explanation
CPFR is a process where supply chain trading partners jointly plan key supply chain activities, from production and delivery of raw materials to production and delivery of final products to end customers.
- The process of selecting and sequencing available Jobs to be run at individual workstations and the assignment of those jobs to workers is called
A. dispatching.
B. order release.
C. input/output control.
D. priority sequencing.
Overall explanation
Dispatching refers to the selecting and sequencing of available Jobs to be run at individual workstations and the assignment of those Jobs to workers.
- A work center actually produces 320, 325, 330, and 322 standard hours per week for 4 weeks. What is the demonstrated capacity?
A. 332 standard hours
B. 324 standard hours
C. 320 standard hours
D. 330 standard hours
Overall explanation
Demonstrated Capacity = Sum of Standard Hours per Time Bucket/Number of Time Buckets
(320 hours + 325 hours + 330 hours + 322 hours)/4 = 1,297 hours/4 = 324.25 standard hours, rounded to 324 standard hours
- What factors are evaluated by detailed capacity planning?
A. Budgeted and theoretical capacity
B. Load and capacity
C. Setup times and queue
D. Efficiency and utilization
Overall explanation
The purpose of detailed capacity planning is to use data regarding orders, efficiency, and utilization to create a comparison of load versus capacity.
- Which of the following would have the most impact on reducing manufacturing lead time?
A. Reducing setup times
B. Increasing work center capacity
C. Implementing input/output control
D. Increasing component availability
Overall explanation
Reducing the time required for setup reduces the total lead time.
- Why is it important for an organization to consider setting waste hierarchy policies for its suppliers?
A. It is worth the added expense.
B. Liability risk
C. Regulatory compliance risk
D. Reputation risk
Overall explanation
Setting policies for suppliers related to the waste hierarchy is important because the organization can be held responsible for its supply chain partners’ activities in terms of public opinion. Enforcement of efficiency-related policies can also help drive unnecessary costs out of the supply chain. Liability and regulatory compliance are risks for the supplier, not the buyer.
- A synchronous pull system controls the velocity of flow through processes by using takt time. What does this result in?
A. Volatile changes to lead time
B. Overall increase of lead time
C. Overall reduction of lead time
D. No change to lead time
Overall explanation
A synchronous pull system controls the velocity of flow through processes by using takt time, which results in an overall reduction of lead time.
- Forecasts are more accurate for:
A. new products.
B. the long term.
C. individual products.
D. families or groups.
Overall explanation
Forecasts are always more accurate for groups of products versus individual items. Forecasts tend to be more accurate when historical data is available (so forecasting for new products is difficult), and they are more accurate in the short term than in the long term.
- Which of the following costs will be influenced by the number of times a shipment must be loaded, handled, and unloaded?
A. Pickup and handling
B. Billing and collecting
C. Terminal handling
D. Line haul
Overall explanation
Terminal handling costs are charges based on the number of times a package is loaded or unloaded.
- Which of the following is a benefit of distribution requirements planning?
A. Decreased planning time fences
B. Increased customer service levels
C. Increased transportation costs
D. Decreased safety stock
Overall explanation
Distribution requirements planning allows for the stocking of inventory at multiple locations for servicing customers.
- In a linear sequence of operations A, B, C, D, and E, each operation receives one unit from raw materials or the prior operation 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, final assembly, produces 8 units a day. Operation E receives inputs from other parts of the process that do not pass through the constraint, and it sends its output to shipping. Demand is for 8 units a day. Where else might inventory be stored in this production system?
A. Before and after operation E only.
B. At the raw materials before operation A and after operation E only.
C. At the raw materials before operation A and before and after operation E.
D. At the raw materials before operation A and before operation E only.
Overall explanation
In addition to the constraint buffer before operation B, there will also be an assembly buffer before the final assembly point E because there are materials made in processes that do not pass through the constraint but are assembled here. There will also be a shipping buffer after operation E and prior to shipping. Finally, there will be stores of raw materials before operation A to ensure that this gateway operation is not starved for materials.
- Which is a function of physical distribution?
A. Protective packaging
B. Purchasing
C. Production control
D. Physical supply
Overall explanation
The activities of physical distribution include transportation, distribution inventory, warehousing, material handling, and protective packaging.
- The removal of outliers from demand data in order to provide a reasonable historical base from which to forecast is called:
A. smoothing.
B. demand filtering.
C. time series decomposition.
D. regression.
Overall explanation
Demand filtering is a method of controlling variations by providing a check that limits the amount of variation from one period to the next. A demand filter typically is a ratio of the new demand to the average of the old demand.
- Which technique facilitates scheduling equipment in economic run lengths and the use of low-cost production sequences?
A. Mixed-flow scheduling
B. Material-dominated scheduling
C. Processor-dominated scheduling
D. Mixed-model scheduling
Overall explanation
Processor-dominated scheduling is a technique that schedules equipment (processor) before materials.
- When updating the sales forecasting reports, what information must be used?
A. Changes to the manufacturing environment type
B. Actual sales data from the period that most recently ended
C. Updated gross domestic product (GDP) data for the country and region
D. Updated data on manufacturing defects per million opportunities
Overall explanation
The sales forecasting reports must be updated with data from the period that most recently ended. This data may include actual sales, production, inventory levels, and other information. The manufacturing environment type and manufacturing defects would not impact the sales plan unless they altered projected inventory levels substantially, and GDP data would be too broad to be applicable to sales forecasts.
- To detect when a work center’s output might vary from the plan, the planner should compare:
A. planned output to planned input.
B. actual input to planned input.
C. actual input to actual output.
D. actual output to planned output.
Overall explanation
Actual input is compared to planned input to identify when a work center’s output might vary from the plan.
- Which result is indicated in the information provided below regarding customer service levels?
December January February March
Sales plan 40 50 50 60
Actual sales 38 51 47 64
Difference -2 1 -3
Cumulative difference -2 -1 -4
Production plan 50 50 60 60
Actual production 40 48 60 60
Difference -10 -2 0
Cumulative difference
-10 -12 -12
Backlog 40 30 30 20 20
Actual backlog 38 41 28
Difference
8 11
8
A. Production is back on schedule.
B. The backlog plan needs to be increased by eight in March.
C. New customer order delivery lead times have increased.
D. Extra backlog improves the ability to ship complete orders on time.
Overall explanation
Actual backlog is greater than plan, which will extend lead times.
- What is the best approach for managing planning vs. execution in capacity management?
A. Backlog monitoring
B. Input/output control
C. Critical ratio
D. Capacity requirements planning
Overall explanation
Input/output control is a technique for capacity control where planned and actual inputs and planned and actual outputs of a work center are monitored.
- Which of the following capacity management techniques calculates the capacity required at a work center in a time period without considering the capacity available?
A. Input/output control
B. Forward scheduling
C. Infinite loading
D. Finite loading
Overall explanation
Infinite loading is the calculation of the capacity required at work centers in the time periods required regardless of the capacity available to perform this work.
- The ratio of hours worked to the hours available is:
A. productivity.
B. efficiency.
C. standard hours.
D. utilization.
Overall explanation
Utilization compares actual time used to available time. Traditionally, utilization is the ratio of direct time charged (run time plus setup time) to the clock time available.
- A company has few products but highly variable order quantities, and it uses forward scheduling. Why is it beneficial to use standard run hours as a basis for calculating completion dates?
A. It provides start times knowing queue and setup times.
B. It automatically balances the load across operations.
C. It helps to prioritize orders in key work centers.
D. It provides a more realistic completion date than using fixed lead times.
Overall explanation
Run time can be used to load operations based on standard hours per part times order quantity.
- Distribution planning plans logistics capacity at the product family and end-item level at which of the following planning levels?
A. S&OP and master scheduling
B. Master scheduling and MRP
C. Business planning and MRP
D. Strategic planning and MRP
Overall explanation
Material requirements planning (MRP), strategic planning, business planning, and master scheduling are all incorrect because strategic planning and MRP are too early and too late, respectively, to plan distribution logistics at the product family or end-item level. Distribution logistics planning at the product family and end-item levels occurs during S&OP and master scheduling.
- Unlike the forward supply chain, a reverse supply chain typically has
A. fewer echelons.
B. little impact on costs.
C. simple planning requirements.
D. more warehouses.
Overall explanation
The products in the reverse supply chain won’t necessarily move through the same echelons as products in the forward supply chain because fewer, and different, warehouses may be required.
- In a job shop with intermittent production, which of the following elements of lead time usually consumes the most time?
A. Queue
B. Move
C. Run
D. Setup
Overall explanation
Queue time in job shops is frequently estimated at 90 percent or more of total job time. There can be exceptions
- What form of transportation is most useful for moving low-value, bulky cargo over long distances?
A. Pipelines
B. Water
C. Air
D. Truck
Overall explanation
The main advantage of water transport is cost. It is most useful for moving low-value bulky cargo over relatively long distances.
- The function of recognizing all demands for goods and services to support the marketplace is called:
A. demand chain management.
B. demand forecasting.
C. demand planning.
D. demand management.
Overall explanation
Demand management is the function of recognizing all demands for goods and services to support the marketplace.
- Corrective actions are defined as:
A. the implementation of solutions to reduce or eliminate problems.
B. the discipline of employees for nonconformance.
C. adjustments to inventory balances based on cycle counts.
D. changes to the general ledger to fix incorrect entries.
Overall explanation
Corrective action is the implementation of solutions resulting in the reduction or elimination of an identified problem.
- A company purchases almost 30% of its raw material directly from farmers, cutting out wholesalers and distributors. What does this allow the company to do?
A. See that the true suppliers of raw material realize a higher price for their efforts.
B. Reduce the costs associated with an entire echelon, thus driving its profit margins up.
C. Promote the farmers to tier one suppliers, facilitating tighter controls.
D. Increase its hold on the farmers by eliminating an echelon.
Overall explanation
A popular coffee roasting company purchases about 29% of its coffee directly from farmers, cutting out the intermediaries. This has allowed the company to see that farmers realize a higher price for their efforts.
- Analysis shows that the top 22 percent of an organization’s customers provide over 75 percent of the organization’s revenues. What should be the top priority?
A. Focusing marketing on top customers to cross-sell and up-sell to them
B. Continually trying to acquire new customers
C. Shedding approximately the bottom 20 percent of customers
D. Providing excellent service to top customers to increase their loyalty
Overall explanation
Customer value usually starts out as negative and then grows over time as customers make repeat purchases. Customer lifetime value analysis can help show that maintaining customer loyalty is far cheaper than continually trying to acquire new customers. Therefore, rather than just using the knowledge of which customers are more valuable to market more things to these segments, it is important to determine how to develop greater loyalty from these segments.
- Which of the following types of demand benefits from the aggregation process?
A. Distribution
B. Forecasted
C. Service parts
D. Customer
- Which of the following identifies all of the components of a physical distribution system?
A. Material handling, transportation, warehouses, protective packaging, order processing and communication, and services
B. Material handling, transportation, warehouses, distribution inventory, protective packaging, and order processing and communication
C. Material handling, transportation, warehouses, distribution inventory, order processing and communication, and reverse logistics
D. Material handling, transportation, warehouses, distribution inventory, protective packaging, and reverse logistics
Overall explanation
Reverse logistics and services are not considered to be parts of a physical distribution system.
- Using backward scheduling, when should the order arrive at work center A?
Backward scheduling work center A
Move time between operations = 1 day
Wait time after each operation = 1 day
Due date is day 100
Operation Work Center Operations (days) Queue time (days)
10 A 2 5
20 B 4 3
30 C 2 1
A. 79
B. 81
C. 8
D. 77
Overall explanation
* Due date = 100
* Move date after operation 30 = 99
* Wait date after operation 30 = 98
* Run time at operation 30 = 96
* Queue time at operation 30 = 95
* Move date after operation 20 = 94
* Wait date after operation 20 = 93
* Run time at operation 20 = 89
* Queue time at operation 20 = 86
* Move date after operation 10 = 85
* Wait date after operation 10 = 84
* Run time at operation 10 = 82
* Queue time at operation 10 = 77
- Under which of the following conditions is it most necessary to perform bottom-up replanning of an overloaded key work center?
A. When the overload exceeds standard hours
B. When the overload is due to utilization
C. When the overload exceeds rated capacity
D. When the overload is due to efficiency
Overall explanation
If load exceeds rated capacity, the work center cannot produce the desired load.
- What is one method for improving transportation responsiveness within the supply chain?
A. Increase lead times so shipments will not be late.
B. Create transportation partnerships with carriers.
C. Maintain a private fleet for all deliveries.
D. Minimize transportation costs by using common carriers.
Overall explanation
Creating transportation partnerships increases operational flexibility and enables long-term contracts and closer control.
- Which of the following approaches to forecasting is based on intuitive or judgmental evaluation?
A. Seasonality
B. Moving average
C. Qualitative
D. Trend
Overall explanation
Qualitative forecasting is based on intuitive or judgmental evaluation. It is generally used when data are scarce, not available, or no longer relevant.
- Which of the following may be used as a measure of flexibility?
A. Machine efficiency
B. Skills per employee
C. Reduction of burden rate
D. Output per employee
Overall explanation
The skills possessed by employees can be used to measure their flexibility to work on other tasks.
- A store orders and receives weekly shipments, made up of 20 line items, from a distributor. Which customer service measure is of most value to the store?
A. Correct items shipped
B. On-time shipment
C. Transportation costs
D. Line items shipped complete
Overall explanation
Because it is getting only one shipment each week, the store is concerned that all the items are included.
- What action by a company would indicate that it is conducting a green reverse logistics operation?
A. Purchasing carbon offsets to compensate for emissions produced by its manufacturing process
B. Accepting dead batteries and ensuring that they are properly disposed of at manufacturing facilities
C. Using vehicles and machinery with electric motors instead of combustion engines
D. Purchasing all electricity from green sources, such as solar or wind energy
Overall explanation
Accepting dead batteries and ensuring that they are properly disposed of at manufacturing facilities is the best example of a green reverse logistics operation. The other options include green initiatives but don’t feature reverse logistics.
- To deal with excess inventory in one period and shortages in another period in a multi-node supply chain, a company implements point-of-sale reporting. What has this solution helped to eliminate?
A. Stress of stockouts
B. Tendency to add bias to forecasts
C. Excessive costs of enterprise resources planning system changes
D. Bullwhip effect
Overall explanation
The bullwhip effect is an extreme change in the supply upstream generated by a small change in demand downstream. Inventory can quickly move from being backordered to being in excess. This is due to the serial nature of communicating orders up the chain with the inherent transportation delays of moving product down the chain.
- Which of the following benefits is the most likely reason for reducing internal setup time when implementing continuous improvement?
A. Shorter cycle times can be quoted to the end customer.
B. The number of kanbans in the process can be reduced.
C. The lot quantity per kanban can be reduced.
D. There are fewer activities where a mistake can be made
Overall explanation
The lot quantity can be reduced due to being able to perform more frequent setups.
- What is a company that uses the theory of constraints trying to achieve?
A. Resource leveling
B. Schedules that adapt to restrictions
C. Mixed-flow scheduling
D. Increased capacity utilization
Overall explanation
The theory of constraints manages the constraints, or restrictions, that exist in the process.
- What technique aims to increase employee engagement by varying a worker’s tasks and giving the worker more control over those tasks?
A. Job rotation
B. Job enlargement
C. Job commitment
D. Job enrichment
Overall explanation
Job enlargement provides challenge by assigning additional tasks. Job rotation periodically changes a worker’s assignment to expand the worker’s perspective of the work. Job commitment is the expected outcome of these employee management techniques.
- In which transportation methodology do suppliers pack products so they can be easily sorted at intermediate warehouses or for outgoing shipments?
A. Dock-to-stock
B. Cross-shipping
C. Cross-docking
D. Package-to-order
Overall explanation
Cross-docking is the concept of packing products on incoming shipments so they can be easily sorted at intermediate warehouses or for outgoing shipments.
- Assuming demand is stable and continuous, approximately what percentage of storage space will be occupied by goods in a distribution center at any given time if it uses a fixed-location system?
A. 90 percent
B. 80 percent
C. 100 percent
D. 50 percent
Overall explanation
If demand for items is stable and continuous, then stock level will draw down steadily and the average level will only be 50 percent. Because its space is reserved, other items cannot be stored there.
- Using the information provided below, which warehouses will be placing orders if the forecast is consumed by orders at the warehouses?
Warehouse X-Warehouse Y-Warehouse Z-Central Warehouse
Warehouse X Warehouse Y Warehouse Z Central Warehouse
On hand 110 90 160 525
Forecast per week 75 50 100
225
Order point 50 35 75 225
Order quantity 150 100 200 500
Lead times in days 5 4 6 15
A. X, Y, Z
B. X, Y, Z, Central
C. X, Z, Central
D. X, Z
Overall explanation
X and Z will have reached their reorder point, so orders will be placed on the central warehouse. This will cause the central warehouse to reach its reorder point.
- Considering the service desired and the relative cost of the items, which would most likely be shipped by road for a fairly long line haul portion of a trip?
A. Regular shipments of iron ore direct to a foundry.
B. Regular shipment of cut flowers direct to a florist shop.
C. Regular shipments of grain direct to a mill.
D. Emergency maintenance parts direct to an auto plant.
Overall explanation
Regularly shipments of cut flowers direct to a florist shop would be appropriate to ship by truck because road transportation offers door-to-door service and fast service. Regular shipments of iron or to a foundry and grain to a mill would be better shipped by rail due to their high weight and bulk. Emergency maintenance parts would be better shipped by air for a faster response, depending on distance.
- Which disposition process decision will promote policy, cost, sustainability, quality, and supply goals?
A. Adding reverse logistics to the existing forward supply chain without modifying either process
B. Empowering the echelon closest to the customer to do disposition
C. Centralizing returned products in a single location
D. Providing refunds to customers and having them dispose of the products themselves
Overall explanation
When handling returns, the organization must first assess and categorize returned items based on their condition and status. To do so, returned products are first centralized in a single location. This helps meet disposition goals because the items can be consolidated. For example, shipments for recycling could be consolidated into a full truckload to save money.
- First come, first served and shortest process time are examples of which of the following techniques?
A. Dispatching rules
B. Bottleneck management
C. Input/output rules
D. Operation splitting
Overall explanation
Both are methods of sequencing work within a work center.
- Which of the following is the best solution for coordinating the flow of goods through a network consisting of warehouses, distribution centers, and a production facility?
A. Transportation management systems
B. Distribution requirements planning
C. Advanced planning and scheduling
D. Material requirements planning
Overall explanation
Distribution requirements planning is the function of determining the need to replenish inventory at branch warehouses.
- Which of the following flows is most likely used in a flow environment that is supply-constrained by the availability of a seasonal vegetable?
A. Backward
B. Forward
C. Finite
D. Mixed
Overall explanation
Forward flow is used when there is a defined starting point or when work can only begin upon receipt of supply.
- A firm that produces a wide variety of goods to order for commercial and industrial customers is implementing customer relationship management (CRM). The most likely benefit the firm will realize from effective implementation is that it will be able to:
A. capture a great deal of information about competitors.
B. increase the markets it serves.
C. make more realistic delivery commitments.
D. recognize shifts in customer preferences.
Overall explanation
CRM is a marketing philosophy based on putting the customer first. Information is collected and analyzed to understand and support existing and potential customer needs. Collection of such information can provide early warnings of shifts in design and mix preferences.
- A make-to-stock company produces a standard product sold through its own warehouses. Which of the following capacity planning techniques would most likely be used to validate the material plan?
A. Load leveling
B. Infinite
C. Finite
D. Load balancing
Overall explanation
Infinite capacity planning is the most common technique. Finite capacity would not be required where capacity is very predictable.
- Which observation about forecasting is most accurate?
A. Product family forecasts are built up from individual product forecasts.
B. Bias is normal and expected in a forecast.
C. Forecasted historical data equals the actual units shipped in the period.
D. One should forecast only independent demand items.
Overall explanation
Only independent demand items are forecasted, not dependent demand items. In addition, a normal property of a good forecast is that it is not biased
- Reducing the number of times a package is handled in distribution can be achieved through:
A. aggregation.
B. unitization.
C. reverse logistics.
D. palletization.
Overall explanation
Unitization is the consolidation of several units into larger units for fewer handlings.
- Use the information on the planned order releases from distribution centers (DCs) A and B in the figure below to complete the abbreviated central supply planning distribution requirements planning grid.
What is Central Supply’s projected available balance for week 3?
Week 0 1 2 3
DC A planned order release 100 100 100
DC B planned order release 200 100
Central Supply
Lead time 2 weeks Order quantity: 500 units
Week 0 1 2 3
Gross requirements
Projected available 500
Planned order receipts
Planned order releases
A. 400 units
B. -100 units
C. 500 units
D. 100 units
Overall explanation
Week 0 1 2 3
DC A planned order release 100 100 100
DC B planned order release 200 100
Central Supply
Lead time 2 weeks Order quantity: 500 units
Week 0 1 2 3
Gross requirements 100 300 200
Projected available 500 400 100 400
Planned order receipts 500
Planned order releases 500
Since the DC information shows planned order releases already, the offsetting from the planned order receipts is not shown for these DCs and the orders can be directly summed as the gross requirements for each week for central supply. After that, calculate the projected available per week. Projected Available = Prior Period Projected Available + Planned Order Receipts - Gross Requirements. Week 1: 500 units + 0 units - 100 units = 400 units. Week 2: 400 units + 0 units - 300 units = 100 units. Week 3:100 units + 0 units - 200 units = -100 units. Whenever the projected available would go negative, schedule a planned order receipt in that week for the order quantity amount. Therefore add 500 units in the planned order receipt for week 3 and using offsetting of 2 weeks, also add a planned order release for 500 units in week 1. Finally recalculate the week 3 projected available: 100 units + 500 units - 200 units = 400 units.
- The day 56 log for a work center shows planned input of 14 hours, actual input of 16 hours, and a cumulative input variance of -2 hours. For the same day the planned output was 15 hours, the actual output was 14 hours, and the cumulative output variance was -5 hours. The day 55 log showed the planned backlog was 7 hours and the actual backlog was 6 hours. What is the planned backlog for day 56?
A. -7 hours
B. 8 hours
C. 6 hours
D. 0 hours
Overall explanation
Planned Backlog = Previous Planned Backlog + Planned Input - Planned Output = 7 hours + 14 hours -15 hours = 6 hours.
- The following information about jobs in a work center is available. It is now day 150. Using the priority rule of critical ratio, what is the desired job sequence?
Job Sequence Time (hours) Date Due workday Remaining
A 1 5 156
4
B 3 3 153 3
C 2 2 152 1
D 4 4 152
3
E 5 1 155 2
A. E, C, B, D, A
B. D, B, A, C, E
C. C, E, B, D, A
D. A, B, C, D, E
Overall explanation
The critical ratio is the time remaining divided by the work remaining; the time remaining is the date due minus the current day.
* Job A time remaining = 156 - 150 = 6 days; critical ratio = 6/4 = 1.5
* Job B time remaining = 153 - 150 = 3 days; critical ratio = 3/3 = 1
* Job C time remaining = 152 - 150 = 2 days; critical ratio = 2/1=2
* Job D time remaining = 152 - 150 = 2 days; critical ratio = 2/3 = 0.7 (rounded)
* Job E time remaining = 155 - 150 = 5 days; critical ratio = 5/2 = 2.5
Sorted in order from lowest to highest critical ratios: D (0.7), B (1), A (1.5), C (2), E (2.5)
- A highly engineered product was introduced a few years ago, with standards defined, bills of material and routings finalized, and work centers set up to minimize material handling. Major improvements in cycle time have been made. What information is most likely to need to be changed?
A. Routings and work center capacity
B. Engineering standards and work center output
C. Bills of material and routings
D. Cycle time and bills of material
Overall explanation
If cycle time has improved, lead times and output are most likely to have changed.
- When a service element is perceived as poor but also unimportant by customers, what is the most that should be done?
A. Changes that are inexpensive to make
B. Nothing
C. Whatever is required for the service element to be considered value-added
D. Whatever is required to raise the service element to the level of a “slight irritation”
Overall explanation
Per the service gap analysis matrix, a service that is perceived as low quality but is also relatively unimportant to customers falls into the “slight irritations” category. Slight irritations could be addressed, but only if the response is inexpensive to implement.
- What is the term for the volume/mix of throughput on which overhead absorption rates are established?
A. Budgeted capacity
B. Cost center
C. Overhead capacity
D. Cost pool
Overall explanation
Budgeted capacity is the volume/mix of throughput on which financial budgets were set and overhead/burden absorption rates established.
- Which of the following activities is part of the physical distribution system?
A. Ordering components for production
B. Handling material between work centers
C. Receiving goods from suppliers
D. Performing work at an alternate work center
Overall explanation
The activity that is part of the physical distribution system is: Receiving goods from suppliers.
- At one time, a high-end automobile subcomponent had 97 components. After an out-of-the-box evaluation, the number has been reduced to 30 parts. This part reduction is a key goal of:
A. supplier rationalization.
B. design for manufacturability.
C. concurrent engineering.
D. benchmarking.
Overall explanation
Simplification of parts, products, and processes to improve quality and reduce manufacturing costs is known as design for manufacturability.
- Distribution replenishment requirements enter a manufacturer’s planning hierarchy at which of the following levels?
A. Demand management
B. Distribution schedule
C. Production plan
D. Master production schedule
Overall explanation
Distribution orders have the same level of importance as a customer order.
- Once a returned item is received at the return’s facility, what is the first decision point?
A. Determine if it is a recall, a defective item, or is acceptable.
B. Determine returns processing cost versus disposal cost.
C. Determine whether to return to stock or to donate, liquidate, recycle, or dispose.
D. Determine whether to approve or reject the return authorization.
Overall explanation
Recall items, acceptable condition items, and defective items each have their own decision process after items are received. The decision to accept or reject a return authorization should have occurred before the return was initiated.
- The ability of manufacturing to respond quickly to external or internal changes is:
A. adaptability.
B. configurability.
C. agility.
D. flexibility.
Overall explanation
Agility is the ability of the manufacturing system to respond quickly, in terms of range and time, to external or internal changes.
- What term is used to show the result of calculating available time x utilization x efficiency?
A. Demonstrated capacity
B. Standard hours
C. Efficiency
D. Rated capacity
Overall explanation
Rated Capacity = Available Time x Utilization x Efficiency.
- Collaborating with customers to provide forecast information results in:
A. higher customer ratings.
B. elimination of safety stock.
C. improved forecast accuracy.
D. shorter lead times.
Overall explanation
Collaborating with customers to get their schedules eliminates the need for some of the forecast, which in turn improves accuracy.
- A logistics company surveying customers asks how well the company performs against a set of important/non-important attributes. Assuming that appropriate action is taken in response to the survey, this is an example of putting a system in place to:
A. identify poor-performing groups or services for discipline.
B. justify price adjustments for superior performance.
C. increase value in product delivery.
D. use in future marketing promotions.
Overall explanation
After plotting the results of a survey like this, a company would be able to see where their improvement emphasis should be applied.
- Which of the following is an indication that the current manufacturing lead time is longer than that used by rough-cut capacity planning to check the feasibility of the master schedule?
A. Resource planning determines that the production plan was infeasible to begin with.
B. A tour of the production area indicates that there is too much work in process.
C. Load attributed to past due orders is remaining stable from period to period.
D. Customer orders are being shipped, but a high percentage are late.
Overall explanation
Late customer orders are a potential indicator that there is sufficient capacity, so lead time may be the problem.
- What is the mean absolute deviation given the following sales performance data:
Month Forecast Actual
1 200 200
2 200 193
3 200 198
4 200 204
5 200 207
6 200 196
A. 6
B. 5
C. 7
D. 4
Overall explanation
The answer is solved using the following equation: MAD = Sum of Absolute Deviations/Number of Observations In this case, that is 24/6 = 4.
- Reducing lead time has which of the following results?
A. Increased responsiveness to customer demand
B. Shorter planning cycles
C. Increased fixed manufacturing costs
D. Decreased fixed manufacturing costs
Overall explanation
Reducing lead times, specifically setup times, allows for more frequent changes to adapt to changes in demand.
- When seeking long-term stability in market share, a company has many alternatives, such as deciding features and functions, keeping costs stable, or reducing costs and functionality. Each alternative has pros and cons. This type of company has likely:
A. increased product features with hopes of spreading higher costs over more products.
B. adopted overcoming tradeoffs as an operations strategy.
C. considered whether its products are candidates for outsourcing.
D. accepted a lower margin with hopes for a future price increase.
Overall explanation
A company seeking market stability would likely adopt overcoming tradeoffs as an operations strategy.
- Which of the following is the most necessary component of an efficient backflushing system?
A. Accurate forecasts
B. Accurate bill of material
C. Regular sales and operations planning meetings
D. Accurate inventory lead times
Overall explanation
Back-flushing requires very accurate bills of material because when work is completed, the system removes the number of parts that should have been used by the number of units produced. For example, say that a table requires one tabletop, four leg assemblies, and 28 hardware packets and 100 tables are produced in a batch. Upon completion of production, 100 tabletops, 400 hundred leg assemblies, and 2,800 hardware packets will be removed from inventory. Inaccurate bills of material will create inventory inaccuracies.
- Which of the following elements of lead time is ignored by capacity requirements planning?
A. External setup
B. Move
C. Wait
D. Internal setup
Overall explanation
External setup is performed while the previous job is being run.
- The simple average of a group of values is the:
A. middle.
B. mean.
C. mode.
D. median.
Overall explanation
The mean is the arithmetic average of a group of values.
- A company that manufactures roofing material uses housing start statistics to develop its sales forecast. Using this data is an example of what type of forecasting?
A. Adaptive
B. Intrinsic
C. Exponential
D. Extrinsic
Overall explanation
Extrinsic forecasting models use historical data occurring outside the organization to help determine the best forecast.
- Which component control strategy can help mitigate the bullwhip effect?
A. Imposing strict territorial boundaries between retailers
B. Using vendor-managed inventory processes
C. Using backward horizontal integration
D. Extending the forecast horizon
Overall explanation
A supply chain coordination activity that can help mitigate supply chain instability is to increase channel alignment via vendor-managed inventory (VMI) processes.
- Which of the following situations is indicated if efficiency is consistently above 110%?
A. The standard was set too high due to not using an “average” operator.
B. Setup improvements have reduced actual total setup times by approximately 80%.
C. The work center is further on the learning curve than it was when the standard was established.
D. The operators have become more efficient at setting up and running orders.
Overall explanation
Efficiency varies based on experience.
- In the theory of constraints (TOC), which of the following terms refers to materials awaiting further processing?
A. Move
B. Buffer
C. Queuing
D. Waiting
Overall explanation
A process buffer consists of raw materials, components, or subassemblies that are waiting to be used in production when the demand pull occurs. There are no queues in a TOC system
- A retail company has decided to focus on internet sales and open a few new stores rather than use an aggressive new store approach. All demand will be adequately served by the existing distribution centers. What is an important consideration in the development of the new strategy?
A. Finished goods inventory turns
B. Existing store growth rate
C. Capacity of current distribution centers
D. Geographic location of new stores
Overall explanation
Inventory turns affect finances, distribution center capacity, and operations.
- A work center has a utilization of 90% and an efficiency of 95%. Over the past months, it has produced quantities of 600, 610, 640, and 630 per week. What is the demonstrated capacity of the work center?
A. 620
B. 558
C. 589
D. 530
Overall explanation
Demonstrated capacity is based on number of units/hours that are being produced. Utilization and efficiency are not included in the calculation.
- What is the term for an extreme change in the supply position upstream in a supply chain generated by a small change in demand downstream?
A. Supply chain variation
B. Forecast disconnects
C. Market response effect
D. Bullwhip effect
Overall explanation
The bullwhip effect is a situation in which a small change in demand downstream in the supply chain - for example, by failing to communicate demand or promotion information - generates an extreme change in the supply position upstream.
- Managing consignment inventory is an essential function in which of the following processes?
A. Sales and operations planning (S&OP)
B. Forecasting
C. Demand management
D. Capacity management
Overall explanation
Demand management is the function of recognizing and managing all demands for products, including managing consigned inventory in customers’ locations.
- An assemble-to-order company produces subassemblies based on actual customer orders and stocks the most commonly sold configurations. Planning occurs on a weekly basis. What would safety capacity be used for?
A. To minimize the need to provide safety stock for late deliveries
B. To buffer against emergency replenishment subassemblies
C. To provide for orders received between material planning cycles that exceed current load
D. To provide an opportunity to replenish finished goods stock
Overall explanation
Safety capacity is used to provide extra capacity for unplanned activities.
- Which of the following is an input to capacity requirements planning (CRP)?
A. Material requirements plan
B. Sales and operations plan
C. Resource requirements plan
D. Master production schedule
Overall explanation
CRP uses planned and firm planned orders from the material requirements plan to calculate requirements.
- What can customers do to facilitate reducing the bullwhip effect?
A. Manipulate demand by managing promotions and discounts.
B. Share demand information using point-of-sale data.
C. Implement the drum-buffer-rope theory in manufacturing.
D. Lock retailers into long-term commitments.
Overall explanation
To assist in reducing dynamic instability in the supply chain, customers can share demand information using point-of-sale (POS) data.
- Rated capacity is more essential for which of the following techniques?
A. Rough-cut capacity planning (RCCP)
B. Capacity requirements planning (CRP)
C. Material requirements planning (MRP)
D. Master production scheduling (MPS)
Overall explanation
CRP uses rated capacity.
- Material produced as a residual of or incidental to the production process is a:
A. co-design.
B. by-product.
C. co-product.
D. residual item.
Overall explanation
A by-product is material of value produced as a residual of or incidental to the production process.
- Which of the following can be considered a customer service measurement?
A. Throughput percentage
B. Inventory turns
C. Order fill percentage
D. Percentage of orders completely satisfied
Overall explanation
Percent of orders completely satisfied is the. Throughput and order fill percentages are incorrect because they are warehouse operations measurements. Inventory turns is incorrect because they are an inventory management measurement.
- Which of the following best describes the participative design/engineering approach?
A. Development of products or services, productive processes, marketing plans, and packaging/shipping processes is simultaneous.
B. A team is formed to evaluate the impact of an engineering design on the plant’s capabilities.
C. Engineering initiates product design, operations initiate methods development, and logistics ships product.
D. Marketing, purchasing, operations, and customer service prepare for a new product by jointly establishing performance measures.
Overall explanation
The goal of participative design/engineering is to remove time and cost from the design process while ensuring higher quality levels by simultaneously performing all the steps for product design and rollout instead of doing them in a serial progression.
- An operator can assemble a product at a rate of 30 units per hour. What is the throughput time?
A. 0-5 minutes
B. 1 hour
C. 2 minutes
D. 1 minute
Overall explanation
60 minutes/30 units = 2 minutes per unit. Throughput time is also called cycle time.
- Customer relationship management supports total quality management because:
A. both philosophies are focused on customer satisfaction.
B. they are both part of the manufacturing/customer supply chain.
C. between the two, all external and internal customers are included.
D. each philosophy focuses on the strategic supply/demand relationship.
Overall explanation
Both customer relationship management and total quality management are customer-satisfaction-oriented.
- What is the key to reducing costs, improving quality, reducing delivery lead time, and improving due-date performance for organizations conducting business-to-business (B2B) commerce?
A. Vertical integration
B. Backward integration
C. Connectivity
D. Also engaging in B2C for the same products
Overall explanation
The APICS Dictionary, 16th edition, defines B2B as follows, “Business conducted over the internet between businesses. The implication is that this connectivity will cause businesses to transform themselves via supply chain management to become virtual organizations—reducing costs, improving quality, reducing delivery lead time, and improving due-date performance.”
- When multiple products are produced using the same resources over the same time horizon, what must an organization do prior to checking capacity?
A. Set up new resources so the production processes do not conflict.
B. Aggregate master schedules for all related items.
C. Prioritize production of one product over the others.
D. Remove the competing products from production.
Overall explanation
When multiple products use the same resources over the same time horizon, the organization must aggregate the schedules before performing capacity checks.
- Which of the following is a planning logic for independent demand items where the planned order releases are input to the master schedule?
A. Distribution resources planning
B. Distribution planning
C. Time-phased order point
D. Final assembly scheduling
- If safety stock is 1,000 units, the unit cost is $2, the lead time is 12 weeks, the service level is 90%, and the demand is 3,000 units per week, what is the reorder point?
A. 6,000 units
B. 73,000 units
C. 37,000 units
D. 36,000 units
Overall explanation
DDLT (demand during lead time) + SS (safety stock) = (3,000 units per week x 12 weeks) + 1,000 units = 37,000 units
- A shop order packet contains the authorization for a particular item or number of items to be made. Which of the following authorizations may also need to be issued as part of the order packet?
A. Maintenance schedule
B. Pick lists
C. Shop calendar
D. Inventory list
Overall explanation
The shop order packet will include what the shop floor needs to successfully produce the items.
- In which qualitative forecasting technique are the opinions of experts combined in a series of iterations?
A. Deming method
B. Taguchi method
C. Shewhart method
D. Delphi method
Overall explanation
The Delphi method is a qualitative forecasting technique where the opinions of experts are combined in a series of iterations.
- Based on the information below, what would the rated capacity available be closest to?
Available Time (Hours)- 40
-Utilization - 94.4%
-Efficiency - 90%
A. 34 hours
B. 38 hours
C. 36 hours
D. 40 hours
Overall explanation
Rated capacity is the expected output capability of a resource. It is equal to the hours available (40 hours) times efficiency (0.90) times utilization (0.944)
- Which of the following targets for effective scheduling does a dispatcher have the most control over with respect to improving performance?
A. Planned versus actual work in process
B. Planned versus actual completion date
C. Planned versus actual direct labor hours
D. Planned versus actual start date
Overall explanation
Start dates are based on priority and job sequence, which are the responsibility of the dispatcher.
- A warehouse works 5 days per week, with 8 hours available for order processing by 3 individuals.
If utilization last week was 85%, what was the amount of time spent processing orders?
A. 120 hours
B. 102 hours
C. 20 hours
D. 34 hours
Overall explanation
Available time = 8 hours per day x 5 days x 3 individuals = 120 hours.
Time spent processing = 120 hours x 0.85 utilization rate = 102 hours.
Note that information on efficiency (how much time should have been spent processing orders) was not provided so this is not a calculation of rated capacity.
- What change has resulted from the acceptance of computer systems in delivering products and services?
A. Pull systems are used, rather than push systems, in every aspect of the operation, both internally and externally.
B. Monolithic, one-size-fits-all enterprise resources planning (ERP) systems are used instead of multiple smaller ERP systems.
C. Computer-generated kanban reports are used rather than kanban cards.
D. Performance data is distributed to a much wider audience, not just to executives.
Overall explanation
In his discussion of systems, Tom Kotter contrasts 20th-century organizational characteristics with 21st-century characteristics. He finds the following changes: * Dependence on a few performance information systems has changed to dependence on multiple performance systems, especially those focused on customers. * Performance data is not only distributed to executives; it is now distributed widely. * Management training and support systems are offered to many people, not just to management.
- On average, 100 units of a product are sold per month. Last month’s sales exceeded 300 units. For purposes of forecasting, the excess amount would be considered:
A. a sales promotion.
B. an outlier.
C. a seasonal index.
D. an anomaly.
Overall explanation
An outlier is a data point that differs significantly from other data.
- An infinite capacity planning report would typically show what type of load profile?
A. Load based on planned and existing manufacturing orders
B. Load based on maximum available capacity
C. Load based on rated capacity
D. Load based on demonstrated available capacity
Overall explanation
Infinite capacity planning uses planned, and firm planned orders as well as the uncompleted operations of scheduled receipt to calculate load requirements, without regard to any kind of available capacity.
- Neither an organization nor its suppliers have much public awareness or exposure due to the nature of the industry. What is a reason this organization may want to set waste hierarchy policies for its suppliers?
A. To drive unnecessary costs out of the supply chain
B. To build public awareness for the industry and the organization
C. To avoid being held liable for suppliers’ waste hierarchy choices
D. To avoid being held responsible for suppliers’ sustainability choices
Overall explanation
Waste hierarchy policies help organizations and their suppliers be more efficient and drive unnecessary costs out of the supply chain. While avoiding being held responsible for a supplier’s sustainability choices is also a good answer, it is less important to this organization since it has no public awareness and likely does not need any to continue operating due to the nature of the industry. A buyer cannot be held legally liable for the actions of a separate legal entity.
- A company has limited resources in some work centers and bottlenecks that move around based on product mix. Salespeople must be notified of overloads so schedule changes can be made with customers. Which of the following scheduling techniques should management consider?
A. Resource requirements scheduling
B. Finite master production scheduling
C. Constraint-oriented finite loading
D. Rough-cut capacity scheduling
Overall explanation
Constraint-oriented finite loading is a technique that plans orders around bottleneck work centers. The objective is to maximize total production throughput.
- Which of the following is true if material and capacity resources are to be planned effectively?
A. Only interplant demand requires attention to detail.
B. Service parts do not need to be considered in the analysis.
C. All sources of demand must be identified.
D. All sources of demand must be identified with the exception of promotions.
E. Overall explanation
Demand management requires that all sources of demand be included to effectively plan materials and capacity.
- Which of the following may cause errors in a sales forecast based solely on shipment history?
A. Changes in customer demand
B. Exponential smoothing
C. Changes in the demand time fence
D. Machine downtime
Overall explanation
Machine downtime may cause shipments to be missed even though they were part of customer demand.
- Which of the following types of processes would be most appropriate to use in a production facility where the work centers are organized by the function they perform?
A. Intermittent
B. Repetitive
C. Continuous
D. Fixed position
Overall explanation
In intermittent manufacturing, products are made in batches using general-purpose work centers organized by function.
- What needs to be considered during new product introductions to ensure that the reverse supply chain is as cost-effective as possible?
A. How to ensure that the reverse product receiving area layout is compatible
B. Whether to consider designing packaging for returns
C. How to design the product for speed of returns
D. Whether returns will be processed internally or through a 3PL
Overall explanation
Packaging for returns may need to be considered along with packaging for forward shipping. This would best be done during product design. Speed of returns is not as important as lowering the cost of returns, such as by using design for sustainability
- A component stockout has occurred, and production has substituted a higher-priced alternate. What is the effect on cost variance?
A. The alternate is charged at standard cost, so there is a total cost variance.
B. The alternate is charged at standard cost, so there is no variance.
C. The alternate is charged at the original part’s standard cost, so there is no variance.
D. There is no cost variance due to the second part being a valid alternate.
Overall explanation
Expected cost is based on the original lower-cost component.
- Which of the following invalidates acceptance sampling for purchased items?
A. Receipts from multiple suppliers are included in the inspection lot to speed up the process.
B. The sample quantity is specified by the computer and randomly selected per the quality plan.
C. The sample quantity is selected based on the lot quantity indicated on the packing slip.
D. Multiple lots from the supplier are received together but inspected separately.
Overall explanation
Multiple suppliers have different processes, so materials from each must be inspected separately.
- The order point and periodic review techniques are used for which of the following?
A. Forecast demand
B. Fixed demand
C. Independent demand
D. Consolidated demand
Overall explanation
Both are ordering techniques for independent demand that must be determined based on information on the item itself rather than calculated based on a dependency.
- The voice of the customer refers to identifying customer wants through which two of the following mechanisms?
A. Producing reliable products consistently and conducting in-depth qualitative customer interviews
B. Listening to requests from potential customers and producing reliable products consist
C. Listening to requests from potential customers and conducting in-depth qualitative customer interviews
D. Working to resolve customer complaints and listening to requests from potential customers
Overall explanation
Listening to the voice of the customer refers to the information marketing and product design need when creating new products. The idea is to design new products that reflect what the customer actually wants versus what marketing thinks they should have.
- When a company embarks on a path of major or breakthrough improvement for a specific task, the best place to start is with:
A. suppliers who categorize the company as a major customer.
B. benchmarking best-in-world performers.
C. benchmarking best-in-class performers.
D. customers who categorize the company as a major supplier.
Overall explanation
One of the most widely used methods for gauging how well a company is executing its strategy entails benchmarking. Benchmarking involves contrasting the company’s performance of particular activities and business processes against best- in-class and best-in-world performers. Best-in-class benchmarking is best in this situation because it may show how to improve the specific task.
- 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?
A. United Nations Global Compact
B. United Nations Global Education First Initiative
C. United Nations Global Initiative to Fight Human Trafficking
D. United Nations Police
Overall explanation
The UN Global Compact is a strategic policy initiative for businesses that are committed to aligning their operations and strategies with ten universally accepted principles in the areas of human rights, labor, the environment, and anti-corruption.
- An organization implements a dock-to-stock program with a key supplier. How will this impact the total cost of ownership (TCO) if the program is implemented correctly?
A. TCO will be higher because the costs of supplier relationship management will more than offset shorter lead times from such a program.
B. TCO will initially be higher but will eventually be lower as the cost of poor quality goes down.
C. TCO will not be affected because passing costs on to the supplier cannot improve costs from a total supply chain perspective.
D. TCO will be lower due to no receiving and inspection without a higher average cost of poor quality.
Overall explanation
The total cost of ownership in supply chain management speaks to the sum of all the costs associated with every activity of the supply stream. In this case, dock-to-stock is a program through which specific quality and packaging requirements are met before the product is released. Prequalified product is shipped directly into the customer’s inventory. Dock-to-stock eliminates the costly handling of components, specifically in receiving and inspection, and enables product to move directly into production. If the program is implemented correctly, the costs of poor quality should not increase. Even from a total supply chain perspective, TCO will decrease because only one party is performing these quality steps rather than both parties doing the same task.
- Adding safety lead time when demand is relatively constant will have the same effect as
A. reducing the reorder point.
B. ordering from local suppliers.
C. increasing the level of inventory.
D. ordering in larger quantities.
Overall explanation
Safety lead time brings in material earlier than required. It has the effect of increasing the safety stock and the inventory level of an item.
- When a strategy for continuous improvement is initiated, policies on which of the following areas are usually established first?
A. Quality improvement
B. Cost reduction
C. Flexibility
D. Delivery dependability
Overall explanation
The first objective in a continuous improvement process is to improve quality. Once quality is improved, secondary projects for cost reduction, increased delivery dependability, and process flexibility can take place.
- In addition to customer orders, the master production schedule (MPS) might handle which of the following types of demand?
A. Bill-of-material items
B. Dependent demand
C. Parts list items
D. Interplant orders
Overall explanation
Interplant demand is usually handled by the master production scheduling system in a manner similar to customer orders.
- Which of the following is the most important consideration when implementing an information system to control shop floor operations?
A. Encouraging users to operate independently with a minimal amount of training
B. Providing staff specialists with the information needed to control production operations
C. Ensuring that shop personnel have input into the choice or the design of the new technology
D. Supporting differentiation between functional areas and production operations
Overall explanation
An effective information system should place as much responsibility for managing production operations as possible on factory personnel. This requires then that these personnel have input into designing the system that they will be required to use.
- What is the role of upper management in a quality organization?
A. To supervise the quality functions and activities
B. To facilitate the quality teams
C. To hire outside resources to provide quality oversight
D. To provide resources and training for quality activities
Overall explanation
The main role for upper management is to provide the resources for quality activities and provide training in quality methodologies.
- What is a key up-front question concerning the viability of a process technology investment?
A. What is the expected return on investment?
B. Is it cloud-based or client-server-based or both?
C. How will the new system improve profitability?
D. Will it shorten the time between when a customer makes a request and when the product is delivered?
Overall explanation
When evaluating the acceptability of a process technology investment, a key question is whether it will shorten the time between when a customer makes a request and when the order is confirmed, or the product is delivered.
- Aggregate inventory management establishes the overall level of inventory desired:
A. as a percentage of revenue.
B. in physical units.
C. in monetary units.
D. as a desired return on investment.
Overall explanation
Aggregate inventory management establishes the overall dollar value of inventory desired and implements controls to achieve this goal.
- Which of the following statements is true of inventory when the final product design is continuously influenced by the customer?
A. Customer influence on the product design should not affect inventory levels.
B. Large safety stocks must be maintained.
C. Buffer inventory should be held closer to the raw material stage.
D. Lot-size inventory increases to the finished goods level.
Overall explanation
Because the final configured item is often not determined until the actual customer order, leaving materials and components in an unfinished state significantly reduces stocked finished goods. The materials and components are then made- or assembled-to-order based on customer specifications. Increasing the lot-size inventory to the finished goods level will only build inventory as the company waits for a customer order with pre-designed configurations. Large safety stocks further increase the amount of finished goods maintained in inventory. Unless the customer requires only off-the-shelf products, the production and inventory functions must be flexible to build any customer configuration.
- 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?
A. Selling off the old product’s remaining finished goods inventory well before the new product will be released
B. Building enough finished goods inventory to satisfy lifetime buy quantities for the old product
C. Ensuring that the old product will still be available during a transition period
D. Ensuring that the new product doesn’t suffer the same decline as the product being ended
Overall explanation
The APICS Dictionary, 16th edition, defines end-of-life management as follows: “Planning for phase-out of one product and the phase-in of a new product to avoid both the excessive inventory of and an out-of-stock situation with the old product before the replacement product is available.” While building an inventory to satisfy lifetime demand could be a strategy (such as to accommodate customers who cannot easily incorporate a new model into their existing systems), having lifetime buy quantities is not the same thing.
- Sales and operations planning (S&OP) is typically performed at which of the following levels?
A. Raw material
B. End item (finished goods)
C. Product family
D. Semi-finished goods
Overall explanation
S&OP is typically performed at the product family level. End items are typically planned at the master schedule level, while raw material and semi-finished goods are typically planned at the MRP level.
- Which of the following objectives often conflicts with providing the best customer service?
A. Creating an extensive and costly distribution system
B. Building special customer order configurations
C. Interrupting production runs so a shortage can be manufactured
D. Reducing inventory to keep inventory carrying costs at a minimum
Overall explanation
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.
- What term is used for the set of marketing tools that direct the business offering to the customer?
A. Four Ps
B. Market share
C. Product strategies
D. Market strategies
Overall explanation
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.
- In a linear sequence of operations A, B, C, D, and E, each operation receives one unit from raw materials or the prior operation 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, final assembly, produces 8 units a day. Operation E receives inputs from other parts of the process that do not pass through the constraint and it sends its output to shipping. Demand is for 8 units a day. Where is the drum?
A. Before operation A
B. At operation B
C. Before operation B
D. At operation A
Overall explanation
The drum is at operation B because the pace of the operation is set to match this constraint rate.
- A company’s high-volume products are produced on an automated manufacturing line, and its low-volume products are produced using a labor-intensive method. The use of a cost accounting system in which overheads are allocated to product cost as a percentage of direct labor hours will have which of the following results?
A. Low-volume products will be under costed and cost reduction efforts will be biased in favor of labor cost reductions
B. High-volume products will be under costed and cost reduction efforts will be biased in favor of labor cost reductions
C. High-volume products will be under costed and cost reduction efforts will be biased in favor of material cost reductions
D. Low-volume products will be under costed and cost reduction efforts will be biased in favor of material cost reductions
Overall explanation
Because overhead costs are allocated by a percentage of labor hours, the actual usage of production by high-volume items will be understated. In a high-volume environment, the cost of labor is very small, perhaps as low as 5%, making overheads difficult to accurately calculate. Because labor is the only cost driver, cost reduction efforts will focus on reduction of labor costs, and, because the labor content will be higher in the low-volume products, they will be over costed.
- Referring to the cost in the table below, which is the best way to categorize this inventory cost?
Quarter 0 Quarter 1 Quarter 2 Quarter 3 Quarter 4 Sum
Forecast (units) 10,000 15,000 30,000 15,000 70,000
Production (units) 17,000 17,000 17,000 17,000 68,000
Ending inventory 5,000 12,000 14,000 1,000 3,000 30,000
Average inventory 8,500 13,000 7,500 2,000
Inventory cost ($) $531 $813 $469 $125 $1,938
A. Hedge inventory
B. Lot-size inventory
C. Safety stock
D. Anticipation inventory
Overall explanation
Anticipation inventory includes seasonal buildups of inventory. The inventory is accumulated in anticipation of the peak selling season.
- A retailer sells seasonal items in addition to its year-round product lines. Three distribution centers service the stores. Seasonal items are not ordered by the stores but are distributed based on the percentage of the business the store typically averages. Which of the following safety stock techniques is most appropriate for these items?
A. Percentage
B. Time period
C. Statistical
D. Fixed
Overall explanation
Safety stock should be fixed at zero, since these items are not regularly stocked.
- Which of the following types of causes of process variation indicates that the process is under control and subject only to uncontrollable everyday factors such as temperature and humidity?
A. Assignable cause
B. Nominal cause
C. Special cause
D. Common cause
Overall explanation
Small variations are likely to occur.
- A manufacturer places a replenishment order to replace sold or used items every two months. This is an example of what kind of inventory model?
A. Fixed reorder cycle
B. Two-bin inventory system
C. Perpetual inventory system
D. Min-max system
Overall explanation
A fixed reorder cycle inventory model is a form of independent demand management. An order is placed every n time units (e.g„ months, days). The quantity in each order is variable and reflects inventory used/sold. The aim is to replenish inventory to the maximum inventory desired.
- If a make-to-stock (MTS) company shifts its manufacturing operations to make-to-order (MTO), what will be the effect on annual setup costs and delivery lead time?
A. Annual setup costs will increase, and delivery lead time will decrease.
B. Annual setup costs will decrease, and delivery lead time will decrease.
C. Annual setup costs will increase and delivery lead time will increase.
D. Annual setup costs will decrease, and delivery lead time will increase.
Overall explanation
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.
- A standard cost accounting system is often tied directly to the routing and dispatching systems as well as the product structure. Which of the following cost measures are determined from this data?
A. Overhead costs, job costs, and standard variances
B. Job costs and standard variances
C. Overhead costs and standard variances
D. Overhead costs and job costs
Overall explanation
When a production order is created and produced, operators will report direct labor and materials for the order. Accounting is able to view all costs accumulated to the job and to contrast them with costing standards to determine variances. Overheads are normally reported indirectly as a percentage of labor reported and are not impacted by routing and dispatching systems.
- What information can the tracking signal provide that the mean absolute deviation (MAD) and the mean squared error (MSE) cannot?
A. Direction of any bias
B. Magnitude of the errors
C. Dispersion of data or of a variable
D. Full confidence in the forecast when the results are within tolerances
Overall explanation
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).
- What is the name for inventories that are purchased or manufactured in greater quantities than are immediately in demand?
A. Scheduled receipts
B. Lot-size inventory
C. Transportation inventory
D. Fluctuation inventory
Overall explanation
Lot-size inventory is defined as materials, either purchased or manufactured, ordered in quantities greater than needed for immediate purposes for economic or other reasons. Fluctuation inventories (safety stock) are carried to protect against forecast. Transportation inventory is in transit. Scheduled receipts are quantities of items expected to be received, or arrive, on scheduled due dates.
- Which term refers to the electronic exchange of trading documents?
A. Blockchain
B. Electronic data interchange
C. Master data
D. Data governance
Overall explanation
Electronic data interchange refers to the paperless (electronic) exchange of trading documents, such as purchase orders, shipment authorizations, advanced shipment notices, and invoices, using standard document formats.
- Which of the following shipments is most likely to be subject to governmental safety regulations related to shipping and handling through a supply chain?
A. Milk
B. Papayas
C. Flu vaccines
D. Acetylene
Overall explanation
Due to the flammable nature of acetylene, it may be considered a hazardous material that must comply with governmental safety regulations for shipping and handling. Perishables like milk and papayas or pharmaceuticals such as flu vaccines may require the use of cold chain shipping technology to maintain storage within an acceptable temperature range to avoid spoilage, but they are less likely to be subject to safety regulations because they do not pose similar risks during shipment.
- In a typical manufacturing company, production costs are allocated directly to the job or product. How are the costs of engineering/maintenance departments allocated?
A. The costs are divided proportionately between all major product groups.
B. The costs are not be allocated among the appropriate production departments as part of factory overhead.
C. The costs are allocated among the appropriate production departments as part of factory overhead.
D. All job activity is tracked daily, and costs are applied to those specific jobs.
Overall explanation
In a manufacturing company with production (assembly/machining) and indirect service (engineering/maintenance) departments, the costs of the service departments would normally be allocated among the appropriate production departments as part of factory overhead.
- Which of the following priority rules is used in a dedicated assembly line?
A. Critical ratio
B. First in, first out
C. Last in, first out
D. Required date
Overall explanation
Dedicated assembly lines are FIFO (first in, first out) by design.
- Which plan bridges strategic and business plans with the master production schedule and execution plans?
A. Sales and operations
B. Sourcing and purchasing
C. Expansion
D. Project
Overall explanation
Executed properly, the sales and operations planning process links the strategic plans for the business with its execution and reviews performance measurements for continuous improvement.
- Which financial document shows sources of revenue (sales in cash or as accounts receivable) followed by various types of expenses incurred throughout the period?
A. Income statement
B. Balance statement
C. General ledger
D. Cash flow statement
Overall explanation
An income statement is a summary of management’s performance as reflected in the profitability of an organization over a certain period. It itemizes the revenues and expenses that led to the current profit or loss and indicates what may be done to improve the results.
- Which would be likely to result in an inaccurate count of inventory?
A. Counting category C inventory more often than required
B. Moving inventory to a different work center without recording the movement
C. Undertaking rework to correct manufacturing defects in a product
D. Authorized overtime work at a workstation that is a bottleneck in the manufacturing process
Overall explanation
Inventory count inaccuracy can stem from several causes, including moving inventory and failing to record the movement. Over-counting inventory in an ABC classification may lead to wasted time but should not result in inaccurate inventory counts. As long as overtime work and rework are authorized and accounted for, they shouldn’t result in inventory inaccuracy.
- Which production environment is most likely to use actual cost?
A. Engineer-to-order
B. Mass customization
C. Make-to-order
D. Assemble-to-order
Overall explanation
Even though commonly used items may be valued at standard cost, many of the costs in an engineer-to-order environment are unique to the order and can be valued at actual cost.
- Finished goods being shipped from one facility to another is considered which type of inventory?
A. Hedge
B. Pipeline
C. In-transit
D. Anticipation
Overall explanation
In-transit inventory is material moving between two or more locations, usually separated geographically.
- What is the primary difference between enterprise resources planning (ERP) and manufacturing resource planning (MRP II)?
A. ERP includes manufacturing information only.
B. ERP provides a balance between production, marketing, and information technology.
C. ERP integrates additional business functions, including human resources, research and development, logistics, and others.
D. ERP is computer-based, but MRP II is not.
Overall explanation
ERP provides more than just manufacturing information
- How does sales differ from demand?
A. Sales often exceeds demand.
B. Sales implies what is actually sold, and demand shows the need for the item.
C. Demand often exceeds sales.
D. There is no difference between sales and demand.
Overall explanation
Demand shows the need for the product
- Which of the following tools is used to determine root causes of problems?
A. Brainstorming
B. Cause-and-effect diagrams
C. Run charts
D. Pareto charts
Overall explanation
Cause-and-effect diagrams illustrate the main causes and sub-causes leading to an effect (symptom).
- Which of these terms can be described as an estimate of future demand?
A. Sales quota
B. Sales promotion
C. Sales target
D. Sales forecast
Overall explanation
The sales forecast is a predicted estimate of future demand.
- An organization is designing a new product for manufacture and is prototyping different options to determine which design will function the best. Which technology would be most useful to them in this process?
A. 3D printing
B. Augmented reality
C. Artificial intelligence
D. Cloud computing
Overall explanation
3D printing can be used to rapidly prototype potential designs during the design process and would be the best option for the organization.
- Objectives of the detailed capacity requirements planning process include all of the following except:
A. determination of the materials needed to make the products in the master production schedule.
B. determination of the people and/or machines needed to make the products in the master production schedule.
C. alteration of the master production schedule for effective use of capacity.
D. adjustment of work plans for effective use of capacity.
Overall explanation
The role of planning the materials to build parents and subassemblies belongs to the material requirements planning process, not the capacity planning process
- 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?
A. On-hand inventory
B. Available-to-promise
C. Capable-to-promise
D. Safety stock
Overall explanation
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.
- Which managed inventory strategy would best suit a lean manufacturer that is unable to provide consistent order sizes due to fluctuations in demand for the various products it produces?
A. Continuous replenishment
B. Consignment
C. Lot for lot
D. Vendor-managed inventory
Overall explanation
Continuous replenishment uses actual sales or warehouse shipments without stockouts, resulting in lower associated costs and improved inventory turnover. It would be best suited for the manufacturer due to the manufacturer’s inability to provide consistent order information and its preference to reduce waste, which would include extra inventory storage in the form of consignment or VMI.
- Which of the following is the most likely reason for using safety lead time instead of safety stock?
A. Demand variability is too biased.
B. Carrying safety stock is too expensive.
C. The part stocks out too frequently.
D. Supply variability is the concern.
Overall explanation
Safety lead time is mostly used to deal with supplier variability.
- A company is presently ordering a stock-keeping unit four times per year. It decides to change this policy and establish an EOQ. What is the EOQ?
* Annual demand is 100,000 units
* Each unit costs $8.
* Ordering costs are $32 per order.
* Inventory carrying costs are 20 percent.
A. 2,000 units
B. 1,000 units
C. 1,789 units
D. 4,000 units
Overall explanation
To calculate EOQ:
Step 1: 2 x Annual Demand (100,000 units) x Order cost ($32 per order) = $6,400,000
Step 2: Cost per unit ($8 per unit) x Carrying cost rate (0.2) = 1.6
Step 3: $6,400,000 / 1.6 = $4,000,000
Step 4: (sqr rt of)/$4,000,000 = $2,000
- What is a significant difference between absorption costing and variable costing?
A. Variable costing assigns a portion of fixed factory overhead to the product.
B. Variable costing should not be used for make-or-buy decisions.
C. Variable costing captures all costs of production.
D. Variable costing does not assign fixed factory overhead to the product.
Overall explanation
Variable costing is an inventory valuation method in which only variable production costs are assigned to the product
- Which is a positive benefit that can be realized by implementing a new raw material ordering system that reduces the total lead time of in-transit inventory by a full day?
A. Anticipation inventory levels at the plant can be reduced.
B. Raw material inventory levels held at the plant for decoupling purposes can be reduced.
C. Fewer raw material transportation vehicles will need to be used.
D. The plant should experience lower overall setup costs and produce higher numbers of units overall.
Overall explanation
Inventory can decouple supply from demand at the supply chain level by, for example, allowing raw materials to be pulled from inventory rather than relying on order lead times or maintaining inventories of finished goods rather than producing based on actual orders. If the lead time for raw materials can be reduced by a full day, up to one day’s worth of raw materials inventory held for decoupling purposes can be eliminated with no impact on production.
- Storing fast-moving items together in a distribution center helps to:
A. reduce picking time.
B. minimize time to store received items.
C. increase total inventory velocity.
D. simplify cycle counting activities.
Overall explanation
Locating fast-moving items together reduces the travel distance and total picking time.
- It is highly likely that when diversifying into a different market space that has solid financial opportunities, a company will:
A. develop the business itself.
B. acquire an established company.
C. acquire a privately held firm.
D. acquire a start-up company.
Overall explanation
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.
- A properly implemented material requirements planning (MRP) system should result in a reduction of which of the following?
A. Inventory
B. Inventory, engineering changes, and expediting
C. Engineering changes and expediting
D. Inventory and expediting
Overall explanation
Inventory and expediting should be reduced as a result of implementation of an MRP system.
- What is production activity control responsible for?
A. Running capacity requirements planning
B. Purchasing components
C. Releasing work orders to manufacturing
D. Creating the material requirements plan
Overall explanation
Production activity control is the function of routing and dispatching the work to be accomplished through the production facility.
- If the order quantity is increased, which occurs?
A. The cost of carrying inventory increases and the cost of ordering decreases.
B. The cost of carrying inventory decreases and the cost of ordering increases.
C. The cost of carrying inventory increases and the cost of ordering increases.
D. The cost of carrying inventory decreases and the cost of ordering increases.
Overall explanation
If the order quantity is increased, inventory levels will increase and thus the cost of carrying inventory will increase. The number of times the orders are placed will decrease, resulting in decreased ordering cost.
- In order to inspire and motivate people, successful leaders will:
A. have their biography written.
B. use their political connections to further their goals.
C. have charisma that naturally inspires people to follow.
D. create the conditions that make goals achievable.
Overall explanation
Motivation is one thing, but competent strategic leadership is the necessary foundation for success. The job of the leader— the strategist—is to also create the conditions that will make the push possible, to ensure that the team has the resources they need.
- Which of these terms refers to activities that provide present benefit without compromising the needs of future generations?
A. Sustainability
B. Environmental consciousness
C. Foreign Corrupt Practices Act
D. Human activism
Overall explanation
Sustainability refers to activities that provide present benefit without compromising the needs of future generations.
- What type of demand inventory ordering model includes fixed reorder cycles, fixed reorder quantities, optional replenishment, and hybrid models?
A. Drum-buffer-rope
B. Material requirements planning
C. Kanban
D. Independent
Overall explanation
According to the APICS Dictionary, 16th edition, 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.
- Which accounting method assumes that the oldest inventory is the first to be used?
A. Specific identification
B. LIFO
C. FIFO
D. Absorption
Overall explanation
FIFO is a method of inventory valuation for accounting purposes that assumes that the oldest inventory (first in) is the first to be used (first out).
- How can a digital supply network help boost profitability?
A. By increasing top and bottom lines
B. By lowering security costs
C. By providing too much performance information
D. By enhancing risk
Overall explanation
Digital supply networks can boost profitability by increasing top and bottom lines. They tend to reduce, not enhance, risk, and too much performance information can lead to slowed decision making and missed opportunities. Security costs may increase due to the need to invest in technological security measures in addition to traditional physical security.
- A company that makes products with multiple options is experiencing a temporary increase in sales. Which of the following inventories should be increased?
A. Work in process
B. Raw materials
C. Finished goods
D. Subassemblies
Overall explanation
Increasing the subassemblies will allow flexibility to cover demand for various options and maintain lead times.
- Which of the following cost accounting methods identifies profitable products based on cost drivers?
A. Actual market
B. Value-added
C. Activity-based
D. Standard activity
Overall explanation
Activity-based costing is a cost accounting system that accumulates costs based on activities performed and then uses cost drivers to allocate these costs to products.
- According to the APICS Dictionary, which technique is most directly associated with single-minute exchange of die (SMED)?
A. Internal setups performed in one minute or less
B. Internal setup activities moved to external setup
C. Single-minute exchange of tooling in assembly
D. Scheduling the process to be down for less than ten minutes during setup
Overall explanation
The APICS Dictionary defines SMED as “the concept of setup times of less than 10 minutes, developed by Shigeo Shingo in 1970 at Toyota.” While moving internal setup activities to external setup activities is frequently associated with SMED, it is not directly in the dictionary definition.
- 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)?
A. The recorded COGS will be an average of historical and current prices, so inventory value will be close but not exact.
B. The recorded COGS will be less than the current COGS, so COGS will be undervalued.
C. The recorded COGS will be greater than the current COGS, so COGS will be overvalued.
D. The recorded COGS will match the current COGS, so inventory will be fairly stated.
Overall explanation
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.
- Which functional role is most likely to oppose increasing multiple work-in-process (WIP) buffer sizes after a series of missed customer orders?
A. Marketing
B. Finance
C. Operations
D. No one
Overall explanation
The goals of finance are to increase profit and cash flow and reduce investment. Increasing WIP buffer sizes will likely increase inventory investment.
- Which of the seven new tools of quality is important for scheduling complex projects because it can help map out dependencies as well as activities that can be done simultaneously?
A. Affinity diagram
B. Matrix data analysis chart
C. Process decision program chart
D. Activity network diagram
Overall explanation
An activity network diagram, also called an arrow diagram or critical path method chart, is a useful project management tool that can help map out activities that are dependent upon the completion of other activities or activities that can be done simultaneously.
- A management style of employee empowerment enables workers to:
A. perform management evaluations.
B. make improvements in their workplace.
C. hire and fire personnel.
D. authorize work orders.
Overall explanation
Employee empowerment is the practice of giving nonmanagerial employees the responsibility and the power to make decisions regarding their jobs or tasks
- Storage considerations related to inventory accuracy are most likely to include:
A. allowance for first in, first out usage.
B. use of a temperature-controlled environment.
C. use of bar codes for location identification.
D. locked storage for high-value pilferable items.
Overall explanation
Locked storage allows for limited access.
- Which quality tool is used to predict a variable based on a relationship with another variable?
A. Control chart
B. Cause-and-effect diagram
C. Scatter chart
D. Pareto chart
Overall explanation
In a scatter chart, two sets of data are plotted on a graph, with they axis used for the variable to be predicted and the x axis used for the variable to make the prediction. The graph will show possible relationships.
- Which of the following quality aspects is a function of incoming inspection?
A. Sampling a part’s dimensions and rejecting the lot
B. Comparing incoming receipts to previously received material
C. Performing 100% inspection to ensure outgoing quality
D. Confirming that the supplier’s process produces acceptable quality
Overall explanation
Sampling is a part of incoming inspection.
- What is an advantage of cycle counting over annual physical inventory?
A. Ensures that every item is counted at least once a year
B. Able to find mislocated material
C. Total value of inventory established
D. Timely detection of problems
Overall explanation
The objective of cycle counting is to determine the causes of errors so they can be corrected and prevented in the future.
- Senior management agrees to expedite a customer order. After being notified, what should operations managers do first?
A. Increase capacity to enable handling the normal schedule plus the increased load.
B. Ignore the expediting if it is within the demand time fence.
C. Add the expedited order to the top of the schedule and automatically reschedule everything else.
D. Evaluate lateral and downstream operations for impact on schedules and costs.
Overall explanation
After detecting exceptions to plans, operations managers need to follow an exception management process, which includes evaluating lateral and downstream operations for their impact on schedules and costs. Since senior management has approved this expediting, it is not possible to just ignore it. Adding the expedited order to the top of the queue might be done, but it would be a later step after evaluating impact and feasibility.
- Which of the following tools would be most appropriate to use to rank persistent quality problems?
A. Pareto chart
B. Process map
C. Tree diagram
D. Affinity diagram
Overall explanation
The Pareto chart is a graphical tool for ranking causes from most to least significant.
- A preventive maintenance program is being initiated at a company. The program should first be implemented for:
A. equipment that has the longest setup time.
B. the most expensive equipment.
C. a work enter that has only one machine.
D. equipment that gates work center capacity.
Overall explanation
It is critical that the gating work center capacity be available to feed downstream operations.
- What is a primary advantage of lift trucks over conveyors?
A. Lift trucks do not occupy space continuously.
B. Lift trucks move loads over long distances.
C. Lift trucks move heavier loads than conveyors.
D. Lift truck operators are indirect versus direct.
Overall explanation
Conveyors are fixed in place and are often installed overhead to be out of the way of lift trucks, pedestrians, and so on.
- Analyzing capital investments by estimating future cash flows and translating them into equivalent amounts in today’s terms is called:
A. average return on investment analysis.
B. discounted cash flow analysis.
C. internal rate of return analysis.
D. payback analysis.
Overall explanation
Discounted cash flow analysis is a method of investment analysis in which future cash flows are converted, or discounted, to their value at the present time. The net present value of an item is estimated to be the sum of all discounted future cash flows.
- Compared to infinite capacity planning, the advanced planning and scheduling technique:
A. limits the plan to critical resources only.
B. bases schedules on achievable operations within a set time period.
C. uses a longer planning horizon.
D. validates the master production schedule.
Overall explanation
An advanced planning and scheduling tool use priority rules to determine what orders will be produced in what time periods, and it takes capacity constraints into account.
- In the order point system graph below, the downward slope will differ when demand is higher or lower than expected. If demand were to suddenly increase, what would you expect to happen to the slope?
A. There would be a steeper drop.
B. There would be a shallower drop.
C. It would plateau.
D. It would remain the same.
Overall explanation
If demand is higher than the rate shown, the slope will fall more quickly, while demand that is slower will result in a slope falling more gradually. Safety stock is held in preparation for higher-than-average demand. If the inventory falls more quickly than the average, a stockout will not occur until the safety stock is depleted.
- In a culturally diverse problem-solving group with varying priorities, what is a common impediment to achieving the best solution?
A. Lack of technical knowledge
B. Collecting support data
C. Valuing expediency instead of discussion
D. Adapting team leadership styles
Overall explanation
The basis of group discussion focused on problem solving is to consider all possible opinions and judgments before a decision is made. Solving a problem by taking the most expedient path closes discussion and can lead to a suboptimal solution.
- Uncontrollable inventory inaccuracies are most likely to be introduced into inventory when:
A. storage is non-centralized.
B. the amount recorded as received is based on the packing slip.
C. incoming inspection is based on the quality plan.
D. material movement is based on manual means.
Overall explanation
Accepting the supplier’s quantity can introduce inventory inaccuracies. Inside the facility, every count discrepancy is controllable.
- In ABC classification, an item with the least complex controls and record keeping and high levels of safety stock would receive which classification?
A. A
B. B
C. D
D. C
Overall explanation
Category C items have the least complex controls and record keeping, for example, nuts and bolts. They will have a low inventory carrying cost, so plentiful days of supply make sense. They are ordered far less frequently but in much larger quantities.
- Using the information provided below, what is the product cost based on process costing?
Units per period 10,000 units
Direct labor actual $160,000
Direct material at standard $600,000
Overhead $400,000
Margin per unit $50
Scrap units per period 100 units
A. $77
B. $76
C. $116
D. $117
Overall explanation
($160,000 + $600,000 + $400,000)/10,000 units = $116 per unit
- What are the goals of a five Ss program?
A. Reduce waste and variation while improving productivity.
B. Keep things clean and organized for good worker morale.
C. Promote hard work and attention to detail while empowering worker variations.
D. Reduce or reuse before resorting to recycling, reclaiming, or disposal.
Overall explanation
A five Ss program of sort, simplify, scrub, standardize, and sustain has the goals of reducing waste and variation and improving productivity.
- A frozen foods manufacturer and distributor has a well-developed cold chain. If the organization is considering becoming a distributor for certain pharmaceuticals that are not considered controlled substances, what does it need to consider?
A. Ability to provide a temperature-controlled environment for source, make, and deliver
B. Ability to create chain-of-custody data that are difficult to counterfeit
C. Ability to trace to the class level rather than just the batch level
D. Ability to succeed in unrelated diversification in the manufacturing area
Overall explanation
Traceability requirements have become stricter in recent years, in part because of concerns about counterfeit and adulterated drugs in the pharmaceutical industry. Therefore, not only does the organization need a system that provides traceability, but that system needs to be secure.
- Warranty claims and repair costs fall into which of the following categories of quality costs?
A. Prevention
B. Appraisal
C. Internal failure
D. External failure
Overall explanation
External failure costs include such costs as warranty claims and returns.
- A prerequisite for effective self-directed teams typically is that the team members:
A. willingly report to a team supervisor.
B. have similar work experiences.
C. are empowered to take responsibility for understanding and performing work.
D. are at similar levels in the organization.
Overall explanation
A self-directed work team is an independent self-controlling group in which members plan, organize, determine, and manage their duties and actions. In self-directed teams, workers must have knowledge and responsibility for understanding and performing work.
- The target inventory level of a periodic review system is:
A. an average.
B. a minimum.
C. an economic order quantity.
D. a maximum.
Overall explanation
The order quantity may vary in the periodic review system, since it is the amount of inventory that is required to bring the total inventory to a maximum or target inventory level.
- Which is an example of a special cause as opposed to a common cause of a variation in a process?
A. Poor process design
B. Room temperature variations throughout the day
C. Use of expired materials
D. Poorly trained operators
Overall explanation
Special causes can be isolated and assigned to a particular source, and use of expired materials fits this description. Common causes are sources of variation that are inherent in a process such as poor process design, poor working conditions, poor operator training, or normal variations in room temperature. While both are subject to improvement, the special causes show up as spikes or dips on control charts and can be remedied quickly once the root cause is found, while common causes require more long-term process improvement activities.
- Which type of inventories are used in production but do not end up in the final product?
A. Work-in-process inventory.
B. Maintenance, repair, and operating supplies.
C. Raw materials.
D. Finished goods.
Overall explanation
By definition, MRO supplies (maintenance supplies, spare parts, lubricants, and so on) are used to support operations and maintenance, and they are generally not directly incorporated into the product.
- What is the most important objective of total quality management (TQM)?
A. Improved customer satisfaction
B. Product performance to specifications
C. Decreased internal failures
D. Product design quality
Overall explanation
TQM is a management approach to long-term success through customer satisfaction. It is based on the participation of all members of an organization in improving processes, goods, services, and the culture in which they work.
- Which of the following can be identified and adjusted at the rough-cut capacity planning level?
A. Overloads at all work center
B. Total hours of load in excess of plant capacity
C. Underloads at all work centers
D. Excessive queues at suppliers
Overall explanation
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.
- Which organizational objectives are often tradeoffs with one another?
A. Targeted level of customer service and low-cost plant operation
B. High inventory investment and targeted level of customer service
C. Low-cost plant operation and strong cash flows
D. Cash flow and profitability
Overall explanation
Meeting targeted levels of customer service and lowest-cost plant operations are in conflict. The latter requires long production runs to minimize the unit costs of production. While this will increase inventory levels and maximize customer service for some products, it also will make manufacturing less flexible and not able to meet the many product needs of different customers. Lean manufacturing techniques can diminish the conflict. The objectives paired in the other answers are complementary, and, therefore, these choices are incorrect.
- Which of the following tools is considered an important quality management tool?
A. Input/output chart
B. Gantt chart
C. Control chart
D. Capacity chart
Overall explanation
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.
- In the pursuit of continuous improvement, reducing the annual ordering cost will have which of the following effects on economic order quantity (EOQ)?
A. The EOQ amount will be unaffected.
B. It will lower the EOQ amount.
C. It will raise the EOQ amount.
D. Annual ordering costs have no relation to EOQ.
Overall explanation
Reducing annual ordering costs will lower the EOQ amount, because orders can be made more frequently and average inventory levels are reduced.
- A make-to-order company has typically employed the fixed-order-quantity approach for its commonly used components. This has resulted in excess inventory over time due to customer changes and new product configurations. The planner should consider which lot-sizing technique to get the problem under control?
A. Minimum
B. Economic order quantity
C. Lot-for-lot
D. Fixed period
Overall explanation
Lot-for-lot will minimize or eliminate any residual inventory.
- Cause-and-effect analyses are made with the help of which of the following?
A. Histogram
B. Fishbone chart
C. Pareto chart
D. Scatter chart
Overall explanation
The cause-and-effect diagram is a tool for analyzing the main causes and subcauses leading to an effect. It also is referred to as the Ishikawa diagram because Kaoru Ishikawa developed it. It also is called the fishbone diagram because the complete diagram resembles a fish skeleton. Histogram, scatter chart, and pareto chart are incorrect because, although they are ways of analyzing data, they are not considered cause-and-effect diagrams.
- Which of the following types of costs are related to problems found after the product reaches the customer?
A. Prevention costs
B. Internal failure costs
C. Overhead costs
D. External failure costs
Overall explanation
External failure costs are related to problems found after the product reaches the customer. This usually includes such costs as warranties and returns.
- Which technology can assist a company in detecting and identifying potential fraud across the supply chain?
A. Blockchain
B. Cloud computing
C. Internet of Things
D. Artificial intelligence and machine learning
Overall explanation
Artificial intelligence and machine learning are useful at detecting patterns that may indicate fraud and that may otherwise go unnoticed within a supply chain.
- Which is the best description of a stock keeping unit (SKU) if all examples are SKUs for a distribution system?
A. Wires of different gauge that are stocked on the same reels are the same SKU.
B. Sodas in a 6-pack and a 12-pack are the same SKU if the cans are the same SKU.
C. White shirts of the same style and in the same box but in different locations are the same SKU.
D. Televisions on display and identical boxed models at the same location are the same SKU.
Overall explanation
A stock keeping unit identifies the same size and type of item at a particular stock keeping location. The televisions unboxed for display and the same models still in boxes are the same units at the same location.
- A part has an effectivity date that goes into force tomorrow. What will change at that time?
A. Engineering drawings but not part ID number
B. Part ID numbers at the batch/lot and instance levels only
C. Part ID number at the instance level only
D. Part ID number at the class level
Overall explanation
At the class level, a product or part ID code identifies the unique product or part class. An effectivity date is the date when a new set of engineering drawings and documents come into effect. At that time, the new part will have a new part ID number at the class level. The instance level is a unique serialized ID to identify a unique instance of a product.
- Which of the following most likely indicates that there are two packing slip errors?
A. The unit price does not match the standard cost on file.
B. The part number does not match the actual material received.
C. The quantity does not match the actual quantity received.
D. The unit of measure does not match the inventory unit of measure.
Overall explanation
The incorrect part is received and the correct part is not received, constituting two errors.
- A make-to-stock organization sells premium clothing that comes in a wide variety of sizes. What sort of inventory policy would be best for this organization?
A. Postponement
B. Ordering far in advance
C. Risk pooling
D. Placement closest to point of customer demand
Overall explanation
Products that have many different SKUs, such as sizes of shirts, will generate large inventories unless inventory is centralized. Risk pooling describes a method of centralizing inventory.
- Which of the following is a planned series of actions or operations that advances a material or procedure from one stage of completion to another?
A. Work-in-process
B. Task
C. Project
D. Process
Overall explanation
A process is a planned series of actions or operations (e.g., mechanical, electrical, chemical, inspection, test) that advances a material or procedure from one stage of completion to another.
- Assuming that demand levels remain the same, what happens if the order quantity increases?
A. Ordering costs increase.
B. Carrying costs increase.
C. Economic order quantity shifts.
D. Average inventory levels decrease.
Overall explanation
When demand remains the same but order quantity increases, carrying costs will increase, average inventory levels will increase, and ordering costs will decrease.
- The number of exposures to stockouts is related to:
A. the reorder point.
B. the level of safety stock.
C. the number of replenishment orders.
D. the required customer service level.
Overall explanation
The chance of stocking out occurs when inventory is low, which occurs at the time an order is being placed.
- 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?
A. They are identified as such and returned to the lot.
B. They are removed from the lot and disposed of or scrapped.
C. They are removed and sent to the material review board.
D. They are removed from the lot and returned to the supplier.
Overall explanation
Inexpensive items are removed and scrapped through a formal process after being recorded against the lot.
- Preventive maintenance—comprising adjustments, replacements, and basic cleanliness—is used to forestall machine breakdowns. With regular preventive maintenance, what can be expected to happen to the cost of failure and poor quality?
A. It will be reduced in the short term.
B. It will be reduced in the long term.
C. It will increase in the long term.
D. It will increase in the short term.
Overall explanation
Preventive maintenance ensures that production quality is maintained and that delivery schedules are met. A well-cared-for machine is also more likely to last longer and suffer fewer problems. Increased investment in prevention will initially make costs rise, because failure costs will not immediately drop. Investing in quality has a long-term positive return on investment.
- Annual demand is 16,000 units. The economic order quantity (EOQ) is 800 units. The organization has decided it can tolerate 4 stockouts per year. The variability in demand for one standard deviation is 62 units. Using some preliminary calculations and the partial safety factor table below, what is the level of safety stock to hold for this item?
Percentile Customer Service Level Standard Deviation MAD (Units x Factor Below) (Units x Factor Below)
Percentile customer service level Standard deviation
75.00% 0.67 0.84
80.00% 0.84 1.05
84.13% 1.00 1.25
85.00% 1.04 1.30
89.44% 1.25 1.56
90.00% 1.28 1.60
A. 52 units
B. 41 units
C. 65 units
D. 62 units
Overall explanation
The information in the question related to service levels is based on the acceptable number of stockouts per year.
To convert this to a percentage service level, first calculate how many orders are made per year in total.
Orders per Period = Period Demand/Order Quantity
= 16,000 units/800 units
= 20 orders per year.
Next determine the customer service level.
Customer Service Level = (Orders per Period - Stockout Chances per Period)/Orders per Period
= (20 - 4)/20
= 16/20
= 0.8
= 80 percent.
Use the 80 percent row of the table and the standard deviation column and multiply the standard deviation in units times the appropriate factor:
62 units x 0.84 = 52.08 units, rounded to 52 units.
- With which of the following modes of transportation does the carrier typically have the highest fixed costs?
A. Water
B. Rail
C. Road
D. Air
Overall explanation 7
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.
- An organization’s sales, production, and inventory plans are provided below. What is the most likely reason for the organization to have any inventory in June?
Period Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Sales plan 50 50 60 60 80 90 70 50 40 40 40 40
Production plan 50 60 60 70 70 70 70 50 50 50 50 40
Inventory plan 20 30 30 40 30 10 10 10 20 30 40 40
A. Hedge inventory
B. Lot-size inventory
C. Safety stock
D. Emergencies
Overall explanation
Safety stock addresses demand uncertainty by providing an incremental quantity of finished goods or components, and it is the most likely reason for having any inventory in June (or July or August).
- In a process industry, which of the following elements decouples the scheduling of sequential stages?
A. Ropes
B. Inventory
C. Queues
D. Kanban’s
Overall explanation
Inventories decouple the scheduling of sequential stages within a process industry.
- Which is true of a cold chain?
A. All products in the cold chain are shipped at the same temperature and humidity.
B. Some products can be damaged when temperatures dip below the ideal transportation temperature.
C. They always use the fastest mode of transportation to minimize time in the cold chain.
D. Time spent above the ideal transportation temperature is unlikely to result in loss of value.
Overall explanation
Some products, such as tropical fruits, may be damaged by overly low temperatures. The cold chain often uses slower transportation modes for certain products like produce and may handle products at different shipping temperatures and humidity. Time spent above the ideal transportation temperature may cause rapid deterioration and loss of value.
- Implementation of electronic data interchange (EDI) will have the most impact on which of the following costs?
A. Packaging
B. Supplier development
C. Quality
D. Transactions
Overall explanation
EDI is the electronic exchange of trading documents, such as purchase orders, shipment authorizations, advanced shipment notices, and invoices.
- Which of the following activities in the physical distribution system creates time value by placing the product close to the customer?
A. Order processing and communication
B. Materials handling
C. Warehousing
D. Distribution inventories
Overall explanation
Distribution inventory includes all finished goods inventory at any point in the distribution system. Distribution inventories create time value by placing the product close to the customer.
- 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?
A. Balance sheet
B. Product positioning perspective
C. House of holistic perspectives
D. Balanced scorecard
Overall explanation
A balanced scorecard is a list of financial and operational 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.
- Which is an example of how a fixed order quantity (FOQ) inventory ordering technique could result in excess inventory?
A. Demand is high until the order point, but after that it drops to low levels.
B. Demand is very low, and the order point is not reached for many weeks.
C. The order lead time is longer than expected.
D. The organization holds no safety stock at the ordering location.
Overall explanation
Whenever the stock reaches a designated order point (a certain number of units left in inventory), an order is placed for a fixed quantity. If demand falls unexpectedly after this point (the demand during the lead time), the fixed order plus the units still in stock could be in excess of what is specified by policy.
- Trying to achieve the lowest production cost possible would likely conflict with which of the following scenarios?
A. Stopping production for a week to install new equipment that will increase production output
B. Initiating a new project that will enable setup to be offline, increasing production line uptime
C. Breaking into a production run to make product needed for a customer
D. Reducing setup time by holding a kaizen event
Overall explanation
Breaking into a production run typically requires an additional setup, which translates to lost production time, thereby increasing expenses.
- Which quality tool can help focus improvement efforts to resolve the most common customer complaints with the least investment of time and money?
A. Control chart
B. Pareto chart
C. Check sheet
D. Cause-and-effect chart
Overall explanation
A Pareto chart ranks the frequency of issues or problems from most frequent to least frequent so that improvement efforts can be focused to get the most impact from time and money spent on continuous improvements.
- Which of the following are benefits of statistical process control (SPC)?
A. Fewer inspection steps, quick recognition of problems, and quick recognition of the effects of correction
B. Fewer inspection steps and quick recognition of the effects of correction
C. Fewer inspection steps, less preventive maintenance, quick recognition of problems, and quick recognition of the effects of correction
D. Less preventive maintenance and quick recognition of problems
Overall explanation
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.
- An engineer-to-order environment produces large cabinets. One of the bulk items is used in all end items and has a limited point-of-use storage area. Which of the following ordering techniques is most likely to be used?
A. Fixed
B. Period
C. Reorder point
D. Economic
Overall explanation
Since the item is used in all end items, the fixed order quantity would be used.
- A company is performing a quality audit on a supplier that is process-oriented and has an excellent reputation. The company should audit which of the following?
A. Flexibility
B. Repeatability
C. Maintainability
D. Capability
Overall explanation
Even if the supplier is known for quality, the customer may not know if the quality is in the process or a result of inspection.
- In developing the standard economic order quantity formula, which assumption is made?
A. Demand for the item is subject to only random variation.
B. Replenishment is in split lots.
C. Ordering and carrying costs are subject to normal market variation.
D. Replacement occurs all at once.
Overall explanation
Replenishment occurs all at once, meaning that the full reorder is available at receipt. The other answers are incorrect and the actual assumptions are as follows: Demand is known and relatively constant
- Which of the following scenarios warrants the use of economic order quantity (EOQ)?
A. Finished goods with a component that limits run length
B. Finished goods with demand that is independent and fairly uniform
C. Finished goods with a short shelf life
D. Finished goods that are made to order
Overall explanation
One of the assumptions for using EOQ is that demand is independent and fairly uniform. Other EOQ assumptions are that items are purchased or made in batches or lots, ordering costs and carrying costs are known and the curves are stable, and replacement occurs all at once.
- The economic order quantity (EOQ) for a manufactured part is the quantity at which:
A. the ordering costs are lowest.
B. the costs of changing capacity are lowest.
C. the replenishment lead time is shortest.
D. the ordering and carrying costs are equal.
Overall explanation
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.
- Certain corporations, such as Amazon and Apple, have excellent customer service operations. Which of the following is the term for an organization looking to such exemplars for inspiration on how best to improve their own operations?
A. Root cause analysis
B. Benchmarking
C. Market research
D. Corporate espionage
Overall explanation
Benchmarking is the process of comparing products and/or services to those of another organization thought to provide superior performance. The benchmark target does not have to be a competitor or operate in the same industry.
- Design of experiments (DOE) is used to plan a test to determine clothes whitening by three laundry detergents on three types of washing machines. Which of the following is the dependent variable in the experiment?
A. Whiteness factor
B. Laundry detergent
C. Person conducting the experiments
D. Washing time
Overall explanation
Whiteness is the output or effect and is therefore the dependent variable.
- How does advanced planning and scheduling (APS) software differ from other planning systems?
A. APS runs in real time in parallel to other system processes.
B. APS combines enterprise resources planning with complex spreadsheet workbooks.
C. APS includes the planning processes of production planning, master production scheduling, and capacity requirements planning.
D. APS simultaneously plans and schedules production based on available materials, labor, and plant capacity.
Overall explanation
APS simultaneously plans and schedules production based on available materials, labor, and plant capacity.
- As part of a contract-buying improvement initiative, approved suppliers are integrated so they can use supplier scheduling. Which of the following should be implemented with these suppliers?
A. Frequent price reviews of supplier materials
B. Audits of individual transactions with these suppliers
C. Significant reduction of purchasing fraud-related checks and balances
D. Issuing of purchase orders
Overall explanation
An organization that is using contract buying with a supplier can use supplier scheduling. For MRP (material requirements planning) planned orders, often the supplier is given a copy or view of the material requirements plan so they can produce the units that will be needed. This is called supplier scheduling when the supplier uses the planned orders directly in its own MRP process. In this arrangement, no purchase orders are issued. However, both the purchasing process itself and the performance of individual suppliers still needs to be monitored and controlled in this situation. Since purchasing involves large amounts of money, the organization needs checks and balances and audits to safeguard against fraud. Prices will be regulated by the blanket purchase order or other long-term contract, so price reviews should not need to be more frequent in this scenario.
- When using an order point system for inventory that is planned to have a 95 percent customer service level, what will happen first if demand during the lead time is higher than average?
A. Safety stock will be sold.
B. There will be a stockout.
C. The order point will be reached sooner.
D. There will be an overstock.
Overall explanation
Since the inventory has a high customer service level, this is likely supplied by holding safety stock. When demand during the lead time is higher than average, this means that cycle stock will be depleted and the first thing that will happen is that safety stock will be accessed. If sales are high enough (a 5 percent chance), the safety stock will then be depleted and a stockout will occur.
- A supplier produces for countries around the globe. If only domestic customers are considered in demand management, what will the resulting outcome likely be?
A. Demand will be unaffected.
B. Not enough information exists to comment.
C. Demand will be overstated.
D. Demand will be understated.
Overall explanation
When both domestic and international demand are present, ignoring international demand will result in understated requirements.
- Annual demand for an item that costs $9 is 14,000 units, and it has a lot size of 800 units. If the cost per order is $30 and the carrying cost is 20 percent, what is the annual ordering cost?
A. $525
B. $225
C. $375
D. $105
Overall explanation
Annual Ordering Cost = Number of Orders x Cost per Order.
Number of Orders = Annual Demand/Lot Size
= A/Q
= 14,000 units/800 units
= 17.5 orders per year.
Annual Ordering Cost = 17.5 x $30 = $525.
- Annual demand for an item that costs $9 is 14,000 units, and it has a lot size of 800 units. If the cost per order is $30 and the carrying cost is 20 percent, what is the annual inventory carrying cost?
A. $525
B. $225
C. $375
D. $720
Overall explanation
Annual Inventory Carrying Cost = Quantity/2 × Carrying Cost Rate × Unit Cost
Number of Orders = Annual Demand/Lot Size
= 800 units / 2 X .02 X $9 = $720
- Which is the best way listed for an organization to encourage suppliers to avoid use of hazardous materials when feasible?
A. Pricing incentives
B. Supplier co-location
C. Education
D. Zero tolerance policy
Overall explanation
Pricing incentives help promote voluntary compliance. Education would also be helpful but may not be as effective without the pricing incentives. A zero tolerance policy may result in losing suppliers who are valuable in many other ways. Working with the supplier in a more flexible way could lead to buy-in and eventual compliance.
- An organization is forming a strategic partnership with three other organizations in its supply chain. They all use different enterprise resources planning (ERP) systems, some of which are overdue for upgrade or replacement. What solution could help them get real-time visibility into demand or supply issues very quickly?
A. Agreement to adopt the partner ERP system that is most in need of an upgrade
B. Data analytics
C. Cloud computing
D. Agreement to adopt the partner ERP system that is most up to date
Overall explanation
Cloud computing is the only option that could be completed very quickly. With cloud computing, supply chain partners could easily sign up for the same service and participate to gain real-time visibility into demand or supply issues.
- Which of the following activities represents reverse logistics?
A. Moving incomplete material back to an earlier work center
B. Returning goods to the seller due to repair, re manufacture, or recycling activity
C. Rescheduling a future order to an earlier date
D. Reinspecting outdated inventories to determine whether they can still be used or sold
Overall explanation
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.
- Information for production and purchasing primarily comes from which of the following planning cycles?
A. Rough-cut capacity planning
B. Capacity requirements planning
C. Material requirements planning
D. Manufacturing resource planning
Overall explanation
Information for production and purchasing is predominantly derived from the MRP cycle.
- Which category of expenses on an income statement includes the costs of general managers, computer systems, research and development, and others?
A. Prepaid expenses
B. General and administrative expenses
C. Accrued expenses
D. Operating expenses
Overall explanation
General and administrative expenses are the expenses required to administer a business. They are not related to the construction or sale of goods or services.
- What is a potential risk associated with using GPS systems to track a shipment as it moves through the supply chain?
A. Reader malfunction during the scanning process
B. Increased risk of theft
C. Incorrect data stored in the blocks
D. Loss of power due to reliance on a battery
Overall explanation
GPS systems typically use battery power, so power loss is a potential risk. Data being stored incorrectly on blocks would apply to blockchain technology, and reader malfunction would apply to radio frequency identification (RFID) technology instead of GPS systems. GPS systems add an extra layer of security by allowing location records to be created and associated with incidents like container doors opening, thereby lowering theft risks instead of increasing them.
- Which term refers to the securing of sensitive data and ensuring that access is restricted to role-appropriate views?
A. EDI
B. Master data
C. ERP
D. Data governance
Overall explanation
Data governance refers to the overall management of data’s accessibility, usability, reliability, and security, which also includes securing sensitive data and ensuring that access is restricted to role-appropriate views.
- If 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?
A. The planning horizon of the FAS should be shorter than that of the master production schedule.
B. Commitment to FAS should be made as early as possible.
C. Order promising should not be tied to the FAS.
D. The shipping schedule should correspond to the FAS with the required offset.
Overall explanation
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.
- A manufacturer is experiencing a delay in raw materials delivery; the materials will arrive a week later than expected. As a result, the manufacturer must adjust its level of safety stock. The company needs 85 units of safety stock to meet its customer service level. If the original lead time was six weeks, what is the new level of safety stock required?
A. 98 units
B. 92 units
C. 99 units
D. 85 units
Overall explanation
The new level of safety stock is equal to the old level of safety stock multiplied by the square root of the new lead time divided by the old lead time—in this case, 85 units times the square root of 7 weeks/6 weeks = 85 units x 1.08 = 92 units (rounded).
- An organization is trying to forecast how many units of replacement part XYZ to produce in the upcoming period. The part is in fairly high demand and requires a long lead time to produce. What information could help the most with this forecast?
A. Mean time between failures (MTBF)
B. Mean absolute deviation (MAD)
C. Mean time to repair (MTTR)
D. Mean time to failure (MTTF)
Overall explanation
The APICS Dictionary, 16th edition, defines MTBF as “the average time interval between failures for repairable product for a defined unit of measure (e.g., operating hours, cycles, miles).” MTBF can be used to generate repair part forecasts for items with sufficient demand and long lead times.
- The benefits of cross-training will not be realized unless it is supported by
A. process improvement.
B. self-directed work teams.
C. job rotation.
D. employee empowerment.
Overall explanation
Job rotation is the best answer because the primary benefit of cross-training is wasted unless employees have the opportunity to apply the skills they have learned. This opportunity is provided by job rotation. Employee empowerment may be augmented by cross-training but is not the primary benefit. Process improvement and self-directed work teams are very indirect beneficiaries of cross-training.
- What is the definition of data governance?
A. Overall management of the accessibility, usability, reliability, and security of data used to ensure data record accuracy
B. Science of examining raw data with the purpose of drawing conclusions about that information
C. Process of ensuring that a database remains an accurate reflection of the universe of discourse it is modeling or representing
D. Practice of examining large databases in order to generate new information
Overall explanation
Data governance is a set of processes that ensures that important data assets are formally managed throughout the enterprise.
- What is the term for the processes of creating, producing, and delivering a good or service to the market?
A. Logistics
B. Business-to-business commerce
C. Cumulative lead time
D. Value stream
Overall explanation
The APICS Dictionary defines the value stream as “the processes of creating, producing, and delivering a good or service to the market.”
- 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?
A. The company has too few skilled technicians and experienced implementers of this type of new technology.
B. The proposed changes will cause a mismatch between products and processes.
C. The necessary support and maintenance systems do not currently exist and must be developed.
D. The technology conflicts with the company’s capabilities and culture.
Overall explanation
All four of the possible answers may hinder the speedy implementation of a complex technology. Maintenance systems, products and processes, and new people skills will all be needed to implement the new technology, and the less the company has of each, the longer it will take to fully implement the new technology. However, 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.
- Why have standard manufacturing cost accounting methods become less applicable today?
A. Material costs are a higher proportion of total costs, and indirect labor costs are a higher proportion of total costs.
B. Material costs are a higher proportion of total costs.
C. Material costs are a higher proportion of total costs, direct labor costs are a higher proportion of total costs, and indirect labor costs are a higher proportion of total costs.
D. Direct labor costs are a higher proportion of total costs.
Overall explanation
The cost of materials and components has risen over time. With the rise in automation and lean manufacturing, the tracking of indirect labor costs has risen in importance, and these costs have a direct impact on total cost.
- What are the typical effects if a quantity discount is taken on a purchase order?
A. Carrying cost increases and total cost decreases.
B. Carrying cost decreases and total cost increases.
C. Both carrying cost and total cost decrease.
D. Both carrying cost and total cost increase.
Overall explanation
The two key costs of inventory are carrying costs and order costs. A larger purchase order receipt will increase carrying costs but decrease ordering costs and, therefore, decrease total cost.
- 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?
A. Simplify the product structure.
B. Document part and assembly flows.
C. Reduce work in process.
D. Implement pull system logic.
Overall explanation
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.
- The following information about a part is provided before and after a cycle count. Which of the following statements is true of inventory accuracy for the part from a financial perspective?
Location Inventory before cycle count Inventory after cycle count % difference Allowed % tolerance
L01 50 80 +60% 2.0%
L02 50 20 -60% 2.0%
A. The monetary value is inaccurate.
B. The inventory count is inaccurate.
C. The inventory count is accurate.
D. The monetary value is accurate.
Overall explanation
The monetary value for the part is accurate, even though the inventory is off at each location. The question asks specifically about the financial perspective.
- A shipment of remote-control components is delivered to a factory and immediately taken to a workstation ready to begin assembly. What is the name of this inventory management technique?
A. Lot control
B. Lot-for-lot
C. Efficient
D. Wall-to-wall inventory
Overall explanation
In wall-to-wall inventory management, materials enter a plant and are processed right away, as opposed to being logged in an inventory store until a later date.
- Which correctly identifies the following examples of costs as internal failure (I), external failure (E), appraisal costs (A), and prevention costs (P)?
A. Operator training= I; product recalls and loss of customers = E; scrap and machine maintenance= A; in-line inspection = P
B. Scrap = I; product recalls and loss of customers = E; in-line inspections = A; machine maintenance and operator training = P
C. Product recalls = I; scrap and in-line inspections = E; loss of customers = A; machine maintenance and operator training = P
D. Machine maintenance and in-line inspections = I; scrap and loss of customers = E; product recalls = A; operator training = P
Overall explanation
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.
- Ensuring that all customer needs are identified in an effort to solidify the product design is an example of the:
A. process flow analysis methodology.
B. quality function deployment (QFD) process.
C. qualitative forecast technique.
D. Delphi method.
Overall explanation
QFD is a methodology designed to ensure that all the major requirements of the customer are identified and subsequently met or exceeded through the product design process.
- What is the term for the necessary activities and techniques used by a corporation to ensure that they always have the desired levels of raw materials to meet demand?
A. Inventory control
B. ABC classification
C. Wall-to-wall inventory
D. Safety stock
Overall explanation
Inventory control includes the activities and techniques used to maintain the desired levels of items in inventory. These items can be raw materials, work-in-progress, components, or finished products.
- A manufacturer of consumer electronics offers customers after-sale installation and maintenance. This is a way to avoid or reduce external failure costs—that is, problems found after the purchase of the product. This is known as:
A. total quality management.
B. customer service.
C. field service.
D. preventive maintenance.
Overall explanation
Field service may also include training and implementation assistance for larger and more complex items. Customer service involves addressing the needs, injuries, and requests of customers as they arise.
- On the balance sheet, if owners’ equity is $5,000 and liabilities are $3,000, what are the assets?
A. $2,000
B. $3,000
C. $8,000
D. $5,000
Overall explanation
Assets = Liabilities + Owners’ Equity
- Which is an accurate statement about ABC classification?
A. A items should have the most safety stock.
B. About 20 percent of the items will account for about 80 percent of the total value.
C. A general rule for using ABC classification is to have plenty of everything in inventory.
D. C items account for about 80 percent of the total value.
Overall explanation
The general rule of thumb is that about 20 percent of the items will account for about 80 percent of the total value. A items should have the tightest control over safety stock levels, not the largest amount of safety stock. Good inventory management would not have plenty of everything in stock. Also, C items account for about 5 percent, not 80 percent, of the total value.
- Under the group technology concept, which of the following is true?
A. Labor is highly specialized.
B. Manufacturing departments should be laid out according to function.
C. Like machines should be grouped in clusters.
D. Machines should be grouped to produce parts of similar form.
Overall explanation
Group technologies seek to group machines to facilitate the production of like products.
- Which is a good description of the purpose of a fishbone diagram?
A. Method to determine the root cause of a symptom.
B. Capability analysis
C. Cost buildup method
D. Synonym for a Pareto analysis
Overall explanation
A fishbone diagram is another name for a cause-and-effect diagram, which is used as an aid in brainstorming ideas to identify root causes of a problem and to solve the problem.
- Which of the following issues would be of greatest concern for a company choosing to reduce its finished goods inventory?
A. Product shelf life constraints
B. Customer service expectations
C. Product quality requirements
D. Long production changeover time
Overall explanation
Reducing finished goods inventories increases the probability of order stockout and disappointed customer expectations. Long changeover times, quality, and shelf life constraints could also be affected by inventory reductions but not as greatly as the blow to customer expectations.
- Accurate inventory levels are most influenced by which of the following?
A. Longer forecast horizons
B. Cycle counts
C. Bill of material maintenance
D. Annual physical inventory
Overall explanation
Counting inventory item balances on a regular basis enables control personnel to keep balances correct and enables them to search for the root causes of errors.
- A company is determining how much floor space will be required for a new distribution warehouse. The plan is to store 15,000 cartons stacked on pallets three high. Each pallet will contain approximately 40 cartons. How many pallet positions will be required for the warehouse?
A. 120 positions
B. 375 positions
C. 5,000 positions
D. 125 positions
Overall explanation
15,000 cartons divided by 40 per pallet divided by 3 high equals 125 positions.
- In a min-max inventory system, inventory equal to the order point plus a variable order quantity is the:
A. hybrid inventory level.
B. part period inventory level.
C. periodic inventory level.
D. target inventory level.
Overall explanation
In a min-max inventory system, a target inventory level is the equivalent of the maximum. The target inventory is equal to the order point plus a variable order quantity.
- A work center needs to process units more quickly in order to get up to takt time. What tool can be used to specify work elements, their sequence, and how long each step should take, including walking to get parts and so on?
A. Production capacity chart
B. Standardized work combination table
C. Standardized work analysis chart
D. Job element sheets
Overall explanation
A standardized work combination table is used to identify work elements and their required sequence. It can show walking, automatic, and manual steps. It considers takt time.
- What is a good method for mitigating an out-of-control internal manufacturing process?
A. Fact finding, educating, empowering, observing, adjusting, and repeating
B. Hiring more quality personnel
C. Using the supplier of the raw materials as the temporary scapegoat
D. Hiring a public relations consultant
Overall explanation
This method is illustrated in the example of a paper supplier. A major multinational customer reported to the paper supplier that their ink-jet paper product was curling (failing) under conditions of low humidity. A year later the plant was supplying acceptable paper, but plant productivity, scrap, and rework levels were poor. Then the major customer produced statistical proof that the supplier’s process was out of control. This is a variation on the theme of plan, do, check, action.
- Which of the following is more characteristic of a general business contract than a customer-supplier partnership?
A. Customer and supplier perform concurrent engineering on the design of a new product.
B. Supplier dedicates a portion of its capacity over a long-term basis to the customer.
C. Customer establishes a single-source relationship with the supplier for certain products.
D. Distributor provides all of the company’s hardware and standard electrical components.
Overall explanation
This would be a contractual purchase agreement that does not involve the mutual commitment of a partnership.
- To be successful, both six sigma and total quality management (TQM) must:
A. involve years of training and indoctrination.
B. recognize and severely deal with naysayers and non-supporters early on.
C. obtain managerial commitment, establish a quality culture, and fully involve all employees.
D. above all have a recognizable executive champion.
Overall explanation
As in the case with TQM, six sigma requires managerial commitment, the establishment of a quality culture, and fully involved employees.
- An organization’s average inventory in the aggregate is $3 million. Capital costs are 7 percent per year, storage costs are 8 percent per year, and risk costs are 11 percent per year. What is the annual carrying cost?
A. $570,000
B. $1,848
C. $450,000
D. $780,000
Overall explanation
Carrying Cost = Average Annual Inventory x Carrying Cost Rate. To determine the carrying cost rate, sum the capital cost, storage cost, and risk cost percentages: 7% + 8% + 11% = 26%. Carrying Cost = $3,000,000 x 0.26 = $780,000.
- Cost reduction objectives with suppliers can best be achieved by:
A. cost-volume-profit analysis.
B. reengineering designs.
C. continuous improvement.
D. volume purchasing.
Overall explanation
Continuous improvement activities will highlight areas on both sides of the partnership that can be beneficial in reducing costs.
- What is the best reason for closing the loop between master scheduling and sales and operations planning (S&OP)?
A. One is the plan, and one shows where the plan is valid.
B. One is the plan, and one confirms resource availability.
C. One is the plan, and one confirms execution of the plan,
D. One is the plan, and one is the execution of the plan.
Overall explanation
S&OP is the plan, and master scheduling identifies how the plan will be executed.
- Which of the following techniques should be introduced to reduce the cost of processing transactions?
A. Larger order quantities, backflushing, and kanbans
B. Backflushing, supplier certification, and kanban
C. Larger order quantities, backflushing, and supplier certification
D. Larger order quantities, supplier certifications, and kanbans
Overall explanation
Although larger order quantities reduce the number of batches, they increase lead time, inventory, and costs.
- Which of the following may be used as a measure of manufacturing process flexibility?
A. Low overhead costs
B. Work center efficiency
C. Output per employee
D. Skills per employee
Overall explanation
A key component in manufacturing process flexibility is the ability of operators to perform multiple processing tasks.Multiple skilled employees can be moved around in the plant to tackle bottlenecks.
- Engineering has suggested that a company’s products would provide more value to customers if the products were capable of identifying and automatically reporting problems to service and repair associates. What would be the most likely effect of this strategy?
A. Enhancing the product’s order-qualifying features
B. Facilitating a move to higher selling prices
C. More frequent on-site service, thus increasing costs overall
D. Increasing customer uptime, reducing customer repair costs
Overall explanation
An elevator company has diagnostic capabilities built into each system so that a worldwide 24-hour remote electronic monitoring system can detect any one of 325 problems with an elevator or escalator installed at a customer’s site. After notification, the system can analyze and diagnose the problem. It then may make the call to a company service person at the nearest location and assists the mechanic in identification of the part(s) in question. This system helps keep outage times to less than three hours. Design is in the loop too, so that they can assess and update as necessary for recurring problems (continuous improvement). Customers also have access to the performance history of each of their elevators and escalators.
- Which is recorded in control charts?
A. Average of specification limits over time.
B. Mean of the results from product inspection.
C. Range of each set of samples taken over time.
D. Root causes of process variation.
Overall explanation
Control charts provide information on the average and range of each set of samples taken over time. However, they do not record the results of inspections, as inspections occur on the final product, while statistical process control occurs at the work center level.
- Which metric measures the amount of inventory on hand?
A. Obsolescence list
B. Days of supply
C. ABC classification
D. Inventory velocity
Overall explanation
Days of supply is an inventory-on-hand metric converted from units to how long the units will last.
- What would a job shop organization located in the U.S. need to get to put “Made in the U.S.A.” on their products intended for export?
A. Shipper’s export declaration
B. A lot traceability system
C. Unique IDs at the instance level
D. Certificate of manufacture
Overall explanation
The APICS Dictionary, 16th edition, defines a certificate of manufacture as a document that “attests that the goods were manufactured in the exporter’s country. It is provided and signed by the exporter’s chamber of commerce.”
- A supplier indicates that the ideal temperature for a raw material being considered as a possible ingredient in a food product is 0 degrees Celsius. What is an important follow-up question?
A. Is air transport acceptable?
B. For what duration of time can the product be above freezing?
C. Is there a need for a safety data sheet?
D. What is the acceptable temperature range?
Overall explanation
Temperature requirements are usually specified in a range. Items could get too cold or too warm. How long a product can stay above freezing would be highly dependent on the ambient air temperature and would not be very accurate information. If the range is known and the product temperature can be monitored, however, the temperature reading will indicate when the product is being stored outside of the acceptable range (too warm or too cold).
- Which of the following benefits of setup reduction is most immediate?
A. Improved quality
B. Reduced work in process
C. Reduced queue time
D. Reduced product cost
Overall explanation
The time to set up a product has a direct cost that is a component of the overall cost of producing the item. When the setup time is reduced, not only is the cost of setup reduced
- Companies typically make final purchasing decisions based on which of the following supplier characteristics?
A. Product advertising
B. Free-on-board shipping
C. Supplier fixed cost
D. Delivery reliability
Overall explanation
Besides perfect quality, a key final purchasing decision point is delivery reliability. Ensuring that purchase deliveries arrive on time is an essential feature of supplier partnerships.
- A strategy to attain technology superiority in product development may lead to:
A. market domination during the early stages of a product’s life cycle.
B. copycat manufacturers who have no regard for intellectual property rights.
C. unnecessary complexity in the manufacturing process.
D. overly complex products containing unnecessary features.
Overall explanation
A principal offensive competitive strategy includes leapfrogging competitors by being the first to market with next¬generation products. For example, with its Xbox, Microsoft led the market by 12 months, until Sony’s PlayStation was released.
- Distribution requirements planning (DRP) should directly interface with:
A. purchasing planning.
B. material requirements planning.
C. master scheduling.
D. capacity requirements planning.
Overall explanation
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.
- Which function of inventory involves the purchase of additional inventory by buyers who expect prices to rise?
A. Transportation
B. Fluctuation
C. Hedge
D. Anticipation
Overall explanation
Purchasing additional inventory is a hedge against future price increases, leading to reduced overall costs if an increase does occur.
- Reducing setup time to enable quick changeovers of products on a manufacturing line is an example of:
A. continuous exchange of products.
B. continuous process improvement.
C. continuous replenishment.
D. continuous production.
Overall explanation
Continuous process improvement is a never-ending effort to expose and eliminate the root causes of problems, focusing on small-step improvement as opposed to big-step improvement.
- A company ships production to its distribution centers (DCs) weekly. When reporting inventory levels at the end of the month for the sales and operations planning process, under which of the following categories should the inventory at the production facility be reported?
A. Finished goods
B. Pipeline
C. Distribution
D. In-transit
Overall explanation
Inventory that has not yet shipped to a DC would be reported as finished goods.
- Which of the following is true of product costs?
A. They are non-manufacturing costs.
B. They are allocated to the product.
C. They are period costs.
D. They vary with production.
Overall explanation
Product costs are allocated by some method to the products being produced.
- Direct delivery of material to a specified location on a plant floor near the production line is called:
A. point-of-purchase.
B. point-of-need.
C. point-of-use.
D. point-of-sale.
Overall explanation
Point-of-use delivery is the direct delivery of material to a specified location on a plant floor near the operation where it is to be used.
- Which technology would best assist an organization that needed to inspect pipelines to monitor for leakage?
A. Autonomous vehicles
B. Drones
C. Blockchain
D. Robotic process automation
Overall explanation
Drones can be used to inspect pipelines and other difficult-to-access areas.
- Which of the following applies to the number of levels in a cause-and-effect diagram?
A. Limited by the number of causes and sub-causes
B. Limited by the length of the brainstorming session
C. Limited to two to three based on a significant few principle
D. Limited by the physical dimensions of the paper
Overall explanation
The only limit is the number of reasons for the problem.
- Today’s information systems deliver operation-specific performance data concerning machine, people, and product detail within the time frame required directly to managers. What is this an example of?
A. Nice-to-have feature of a fully implemented enterprise resources planning system
B. Invasive big-brother-type monitoring
C. IT systems delivering production value
D. Fully functioning numerically controlled computer system
Overall explanation
Tracking key performance indicators, gathering information from operating personnel, quickly identifying and diagnosing problems, and taking corrective actions are all integral pieces of the process of managing strategy execution.
- An operation’s actual run time is 300 minutes, and its planned run time is 400 minutes. The operation’s actual quantity produced is 900 units but its target quantity produced is 1,000 units. Of the 900 units produced, 810 were produced right the first time and 90 required rework. What is the overall equipment effectiveness (OEE)?
A. 6.75%
B. 60.75%
C. 76.67%
D. 54.68%
Overall explanation
The OEE is the availability times the performance times the quality.
Availability is actual run time divided by planned run time, or 300 minutes/400 minutes = 0.75
Performance is actual quantity produced divided by target quantity produced, or 900 units/1,000 units = 0.9
Quality is the quantity produced right the first time divided by the total quantity produced, or 810 units/900 units = 0.9
OEE = 0.75 x 0.9 x 0.9 = 0.6075, or 60.75%.
- Which of the following improvements is most difficult to achieve with a well-implemented continuous improvement program?
A. Safety stock reduction
B. Lot size reduction
C. Workplace organization
D. Run time reduction
Overall explanation
Run time reduction may require new equipment, part design, new methodologies, etc.
- Which of the following types of quality costs includes inspecting materials?
A. Appraisal
B. Prevention
C. External failure
D. Internal failure
Overall explanation
Typical appraisal costs include inspection, quality audits, testing, calibration, and checking time.
- Incoterms define which of the following in regard to shipping?
A. Identity of the freight forwarder and/or broker
B. When ownership passes from the seller to the buyer
C. Point at which risk for shipped goods transfers between parties
D. When the sender needs to post an advance ship notice (ASN)
Overall explanation
When goods are moved between two entities, it is imperative that clarity exists as to who is responsible for what. Incoterms, developed by the International Chamber of Commerce, are specifically designed to address this need. Incoterms are contracts for carriage. A contract for sale determines when ownership is transferred.
- Which statement about information and process technology is true?
A. Technology should be selected on the basis of the competitive advantage it conveys.
B. Information infrastructure requirements in push and pull systems are the same.
C. The learning curve should not affect investment decisions.
D. ERP systems are more important to pull systems than push systems.
Overall explanation
One of the selection criteria for technology should be whether it conveys an advantage that is significant and hard to copy. An ERP provides organizational benefit by providing access to accurate and current data. The learning curve should be a consideration since it will affect the payback analysis. Push and pull systems do require different types of technology.
- The actual cost of an order can be different from the standard cost because of which of the following factors?
A. Tooling and queue
B. Efficiency, tooling, and scrap
C. Tooling, scrap, and queue
D. Efficiency and scrap
Overall explanation
Efficiency can affect actual cost because the actual production time will be impacted by how much time is actually spent producing a product. Scrap creates excess material, labor, and overhead costs.
- Which of the following best represents evidence of upper management leadership at the strategic level?
A. Attending quality meetings
B. Inspecting and checking outgoing products
C. Creating a vision of a total quality culture
D. Conducting quality system audits
Overall explanation
Creating a vision of quality is evidence of upper management leadership at the strategic level. All of the other options are at a tactical level.
- Which of the following is an example of an internal failure cost of quality?
A. Scrapping products that do not meet specifications
B. Providing warranty field repair
C. Processing customer complaints
D. Testing products before shipment to customers
Overall explanation
Scrapping products that do not meet specifications represents an internal failure cost of quality.
- What type of inventory is held due to the unpredictable nature of supply, demand, or lead time?
A. Demand inventory
B. Hedge inventory
C. Fluctuation inventory
D. Anticipation inventory
Overall explanation
Fluctuation inventory, also known as inventory buffer, is carried as a cushion to protect against forecast error.
- Which of the following are training subject areas for managers who will use a new enterprise resources planning (ERP) system?
A. Workarounds to enable established processes to still be used
B. APS principles and techniques
C. Application of the system to business problems
D. Minimizing the need for change in the behavior of the organization
Overall explanation
ERP project leaders must be fully conversant in ERP principles and techniques, be effective as change managers to overcome personnel and corporate culture issues, and be able to apply the ERP functionality to solve business
- Which of the following is an example of using the poka-yoke technique in process design?
A. A rack system is designed to go in only one direction.
B. The number of types of fasteners is reduced from 20 to 5.
C. Setup time is reduced by standardizing tooling.
D. A coupling is designed to eliminate incorrect insertion.
Overall explanation
Poka-yoke tries to eliminate the occurrence of errors in a process by making the steps as foolproof as possible.
- What is an advantage of pre-assigning storage locations upon receipt?
A. Working stock and reserve stock can be separated.
B. The material handler can select the location of his or her choice.
C. Zoning rules can be automatically applied by the computer.
D. No empty locations will go unused.
Overall explanation
Zoning rules can be applied with the pre-assignment.
- Inventory that has been superseded by a new model and will never be used or sold at full value is defined as:
A. inactive.
B. distressed
C. surplus.
D. obsolete.
Overall explanation
Obsolete inventory includes items that have met the obsolescence criteria established by the organization.
- Which of the following is a framework for organizing, defining, and standardizing the business processes necessary to effectively plan and control an organization?
A. Enterprise resources planning
B. Advanced planning and scheduling
C. Collaborative planning, forecasting, and replenishment
D. Manufacturing resource planning
Overall explanation
Enterprise resources planning (ERP) delivers an integrated suite of business applications.Manufacturing resource planning is a method for the effective planning of all resources of a manufacturing company. Advanced planning and scheduling is a manufacturing management process that ensures raw materials and production capacity are optimally allocated to meet demand. Collaborative planning is related to the handling of complex, multi-stakeholder projects and planning scenarios.
- Point-of-use storage has which of the following advantages as compared to warehousing?
A. Improves accessibility and productivity
B. Random storage
C. Better use of the space
D. Computer-controlled
Overall explanation
Point-of-use storage (on the production floor, near work centers) improves accessibility, productivity, and customer service. In this type of system, frequently used and lower-valued items may be issued in batches to the production floor and will be managed by the workers themselves. The items are removed from the inventory record when they are issued (front flushing) rather than when they are used (backflushing).
- Large-scale productivity software often experiences implementation delays or initially performs below expectations. What mitigation strategy could be used in this situation?
A. Budget for additional time and reduced performance after implementation.
B. Keep the old system running in parallel until there is 100% functionality and user acceptance.
C. Hire a third party to implement it.
D. Implement it in small pieces while keeping existing systems in place.
Overall explanation
With productivity software implementations, it is often the case that performance drops below existing and projected levels until the application “works as expected.”
- A company has a standard product line that is regularly reengineered to reduce cost and improve quality. What must the buyer be most aware of when communicating new replenishment requirements to the supplier?
A. Drawing revision
B. Due date
C. Order quantity
D. Part cost
Overall explanation
The buyer needs to make sure that the supplier is providing parts for the latest engineering revision.
- Inventory located in warehouses or in transit between warehouses and the consumer is called:
A. work-in-process inventory.
B. in-transit inventory.
C. distribution inventory.
D. finished goods inventory.
Overall explanation
Distribution inventory typically includes spare parts and finished goods, located in the distribution system (e.g., in warehouses or in transit between warehouses and the consumer).
- Conducting business via electronic transfer of data and documents is considered:
A. e-commerce.
B. e-marketing.
C. e-partnering.
D. e-transacting.
Overall explanation
Electronic commerce (e-commerce) is the use of computer and telecommunication technologies to conduct business via electronic transfer of data and documents.
- The following information exists for a part. A cycle count has been done, and a negative adjustment of two units was identified. What is the new balance of the item?
* Quantity in location A200:100 units
* Allocated quantity: 10 units
* Reserved quantity: 4 units
* Cycle count tolerance+/5 units
A. 100 units
B. 98 units
C. 84 units
D. 88 units
Overall explanation
The quantity is adjusted from 100 units to 98 units.
- An organization is looking to meet its sustainability goals but has budget constraints. Which is the best sustainability option for this organization?
A. Match inventory turnover with the product life cycle.
B. Minimize total inventory investment by ordering efficiently.
C. Install solar panels on the roofs of all facility buildings.
D. Change products to use only recyclable plastics.
Overall explanation
A lower inventory investment aligns with organizational sustainability objectives by avoiding excess inventory that may otherwise enter the waste stream if it becomes obsolete.
- A company is required to provide lot traceability for all of its products. This means that the company must be able to:
A. provide a listing of all raw materials used in the product
B. track every step of the process from supplier to customer.
C. track every step of the process through the manufacturing facility,
D. show exactly where each lot is stored in the warehouse.
Overall explanation
Lot traceability is the ability to identify the lot or batch number of products in terms of one or all of the following: its composition, purchased parts, manufacturing date, shipped items.
- With respect to production, which of the following occurs when actual inventory of a part is greater than that shown by the computer?
A. Assembly orders can be increased up to the additional quantity.
B. The effect is to adjust inventory and keep production the same.
C. Orders held due to a shortage can be released to production.
D. Orders scheduled in a later period by material requirements planning can be safely expedited.
Overall explanation
No change should occur in production, which has been validated with capacity requirements planning. Material requirements planning will automatically revise planned dates if necessary.
- A major airline has achieved considerable cost savings with its mastery of fast turnarounds of planes at the gate. This is an example of improvements from:
A. vertical integration.
B. improved efficiencies.
C. improved labor conditions for gate personnel.
D. supply chain redesign.
Overall explanation
Southwest Airlines, RyanAir, and EasyJet have all achieved considerable cost savings by reconfiguring the traditional value chain of commercial airlines, thereby permitting them to offer travelers dramatically lower fares.
- A company is determining how much floor space to reserve in the layout for point-of-use storage in order to eliminate centralized storage. Which inventory classifications would be the most useful for initial planning purposes?
A. Surplus and inactive
B. Inactive and obsolete
C. Excess and surplus
D. Active and excess
Overall explanation
The layout should provide room for active inventory and possibly some quantity of excess, due to purchasing lot sizes.
- Which of the following environments is most unlike the others from an operational perspective?
A. Repetitive manufacturing
B. Synchronized production
C. Discrete manufacturing
D. Batch processing
Overall explanation
Synchronized production is a philosophy that can be implemented in a number of ways. The others are all production processes.
- Which technology would be best used to automatically update machinery use in order to better plan maintenance routines before breakdowns can occur?
A. Blockchain
B. Internet of Things
C. Robotic process automation
D. Artificial intelligence
Overall explanation
The Internet of Things enables equipment and other devices to update their status and location, which can be helpful for automatically tracking machine use and status in order to plan and execute maintenance routines.
- Rework, scrap, spoilage, and downgrades are examples of:
A. the product development cycle.
B. a design process.
C. external failure costs.
D. internal failure costs.
Overall explanation
Internal failure costs are accrued when things go wrong before the product reaches the customer. They usually include the costs of rework, scrap, downgrades, reinspection, retesting, and process losses. They can have the added impediment of extending lead times or resulting in incomplete shipments.
- A dispute arises over damage to goods shipped between two entities in different countries. Which international standards, if applied at the time of the shipment, would clearly resolve the dispute?
A. Omnibus Foreign Trade and Competitiveness Act
B. UN Global Compact
C. Incoterms
D. Export Trading Company Act
Overall explanation
When goods are moved between two entities, it is imperative that clarity exists as to who is responsible for what. Incoterms, developed by the International Chamber of Commerce, are specifically designed to address this need.
- Pareto analysis can be used to identify which of the following?
A. Out-of-control operations
B. Most frequently occurring defects
C. Customer base for marketing
D. Volume of work throughout the plant
Overall explanation
The Pareto principle is used in prioritizing or ranking a range of items to separate the vital few from the trivial many. Identifying the most frequently occurring defects in a process is an excellent example of the use of Pareto analysis.
- Which of the following actions is most likely to produce a high degree of sustained inventory data integrity?
A. Resolving problems exposed by cycle counting
B. Performing periodic physical inventories
C. Increasing the frequency of cycle counts
D. Changing cycle counting methods periodically
Overall explanation
Operations can count inventory as many times as they want, but variances will never disappear until the root causes of variances are fully investigated and the process changed to eliminate the variances from occurring again.
- Which example of a key control to prevent inventory loss would be most prudent at a manufacturing location that uses precious metals in the manufacturing process?
A. Annual physical inventory
B. Blockchain
C. Monitoring employee financials
D. Segregation of duties
Overall explanation
Segregation of duties, in which the same personnel who authorize material moves cannot execute them, may be best suited to help prevent theft from a specific location. Annual physical inventory may not be sufficient
- Which level of technology systems requirements stem from choices made for the production process?
A. Strategic
B. Analytical
C. Operational
D. Tactical
- An organization produces industrial-capacity printer systems. It sells relatively few units a year at a high margin. If this product’s technology clock speed is low, what would be the best design and manufacturing philosophies?
A. Integral design and push-pull manufacturing
B. Integral design and make-to-stock manufacturing
C. Modular design and push manufacturing
D. Modular design and pull manufacturing
Overall explanation
The question describes a product that has low technology clock speed, which is a product with a long-life cycle. Since it has few buyers, its demand will by nature be unstable compared to a product with a much larger customer base. The combination of high demand uncertainty plus low new product introduction frequency enables an integral design to be the most efficient design choice. Push-pull manufacturing is called for to enable the organization to be make-to-order but have reasonable lead times. The long lead time sourcing and component manufacture requirements can be push, while the products themselves can be make-to-order and pull.
- Which method of sourcing refers to an organization that is the only supplier capable of meeting (usually technical) requirements for an item?
A. Unisourcing
B. Sole-source supplier
C. Multi-sourcing
D. Single-source supplier
Overall explanation
A sole-source supplier is the only supplier capable of meeting (usually technical) requirements for an item.
- A parent item has a net demand of 100 units in period 6. Its lead time is two periods. One of the components is used in quantities of 4 per unit, and it has 0 in inventory and a lead time of 1 week. It is purchased in 1,000-unit order quantities. Which of the following planned order receipts would be the result of the explosion process for the component?
A. Quantity of 1,000 units in period 4
B. Quantity of 1,000 units in period 3
C. Quantity of 400 units in period 4
D. Quantity of 400 units in period 3
Overall explanation
100 units x 4 = 400 units; period 6-2 periods = period 4; order quantity = 1,000 units
- Which of the following data is not considered in the available-to-promise (ATP) calculation?
A. On-hand inventory
B. Master production schedule orders
C. Customer orders
D. Safety stock quantity
Overall explanation
The ATP calculation does not include safety stock, meaning that the safety stock can be promised to customers if needed (it is uncommitted inventory).
- Processes for identifying, assessing, and managing the environmental, social, and ethical risk in the supply chain are elements of:
A. fitness for use.
B. responsible procurement.
C. green reverse logistics.
D. risk response planning.
Overall explanation
Responsible procurement is ensuring the use of ethical sources of goods and services to bring about a positive impact and minimize the negative impact on society and the environment.
- Which is true of part numbers and their relationship on bills of material?
A. A part at a particular processing stage has one and only one part number.
B. A part can be either a parent or a child but never both.
C. The same part number can be used to identify the same product at different stages of production before and after value has been added to it.
D. The same part used on different bills of material will need different part numbers.
Overall explanation
Part numbers must be unique for control purposes, and a part that receives further processing during production will have a new part number when it exits the work center doing the processing.
- A company that has a supply chain partner provide warehouse and delivery services is using a:
A. extended enterprise partner.
B. nominal trading partner.
C. virtual warehouse provider.
D. third-party logistics (3PL) provider.
Overall explanation
Third-party logistics (3PL) provides product delivery services. This third party may provide added supply chain expertise.
- When an organization fails to follow up on supplier performance issues, how does that do the supplier a disservice?
A. It does not allow them to correct problems that may result in the failure to secure another contract.
B. It prevents the supplier from increasing brand value based on their performance on current contracts.
C. It can lead to loss of morale among the suppliers workforce.
D. It increases the likelihood of future orders that outstrip the suppliers’ ability to meet demand.
Overall explanation
If an organization identifies issues with a supplier’s performance and fails to communicate those issues back to the supplier, it does not allow the supplier the opportunity to correct the identified issues, which may result in the supplier being unable to secure a contract in the future.
- A company is implementing lean principles, including reducing its supplier base. What is a key element for the supplier rating system?
A. Delivery lead time
B. Kanban cycle time
C. Lowest cost
D. On-time delivery
Overall explanation
On-time delivery reliability will be a key performance measure.
- Which factor contributes most to the success of a change initiative?
A. Communicating to employees the reason for the change
B. Education and training at the top of the organization
C. Day-to-day involvement of top management in implementation and control
D. Using supervisors as coaches
Overall explanation
The most critical step listed is to communicate the purpose and objectives behind the initiative to employees. This creates a sense of urgency and involvement and reduces resistance.
- Which of the following documents or verbiage must accompany a purchase order to confirm how the contract is to be executed?
A. Supply agreement
B. Terms and conditions
C. Purchase requisition
D. Quality agreement
Overall explanation
The terms and conditions specify all the provisions and agreements of a contract.
- A blanket order can be defined as:
A. 3 contract with the global headquarters of a supplier.
B. a long-term commitment to a supplier for the purchase of a quantity of goods.
C. a purchase order that includes multiple items.
D. a purchase order that includes all the items necessary for a new project.
Overall explanation
A blanket purchase order is a long-term commitment to a supplier for material against which short-term releases will be generated to satisfy requirements.
- A time fence policy does which of the following?
A. Controls supply planning information for production
B. Avoids excess inventory through a dynamic process
C. Controls the amount of change that can occur during predefined areas of the planning horizon
D. Monitors changes in supply and demand conditions
Overall explanation
The time fence policy controls the amount of change that can occur within a predefined area of the planning horizon. The other answers are incorrect because the time fence policy is designed to control the demand side of the MPS; time fence policies control the amount of change permitted to a MPS, and are not maintained; and time fence policies control the amount of change permitted within predetermined zones of the MPS, not changes in supply and demand conditions.
- A typical supplier performance evaluation would rate suppliers on their ability to meet delivery dates and:
A. quote promises.
B. hidden renewal requirements.
C. quality specifications.
D. transportation needs.
Overall explanation
The supplier must be capable of producing items that meet quality specifications. Suppliers should be aware of the metrics that will be used to measure their performance.
- In a planning bill for an updated configuration of a cellphone, the total percentages for the amounts required for the three possible memory chips used equal 115. What does this indicate?
A. The manufacturer is making up for missed orders.
B. The manufacturer is making a hedge against higher demand.
C. The manufacturer has received more orders for blue than other colors.
D. There has been an error in the calculations.
Overall explanation
When a planning bill’s percentage is higher than 100, it is a form of hedge against volatility in demand. It serves roughly the same purpose as safety stock. Because this is a planning bill, no orders have yet been received, and therefore it does not refer to received orders.
- What is pegging used for?
A. Displaying the quantity of a component in the bill of material
B. Determining the source of gross requirements
C. Linking subassemblies with parent items
D. Determining priorities for manufacturing
Overall explanation
Pegging is the ability to identify the sources of a given item’s gross requirements and/or allocations.
- Which of the following is the process of identifying a company that provides a needed good or service?
A. Purchasing
B. Buying
C. Sourcing
D. Surveying
Overall explanation
Sourcing is the process of identifying a company that provides a needed good or service.
- A company produces lawn mowers that have many options to choose: three horsepower choices, three cut widths, manual versus self-propelled options, and four color choices. Product is produced in lot quantities for retail sales and assembled-to- order for direct sales. Which of the following types of bills of material is most likely used for the two-level master scheduling?
A. Multilevel
B. Modular
C. Common parts
D. Single-level
Overall explanation
Modular bills (also called planning bills) would allow a percentage to be applied to each of the various options.
- A company is expecting a one-year downturn in the economy that is likely to reduce customer demand as compared to past annual sales levels. Which of the following responses would be best in this situation?
A. Increase inventory levels to reduce lead times.
B. Reduce production output and inventory levels.
C. Increase order demand satisfied from production.
D. Match competitors’ responses to price and lead time.
Overall explanation
Reducing output and inventory sustains the business strategy while addressing the effect of the economy. Increasing inventory ties up more capital in a bad economy. Matching prices may become necessary but is not implied in the question, and order demand is already being satisfied from production.
- Which two of the following actions within a change program will lead to improved organizational performance?
A. Strengthening commitment through joint diagnosis of business problems, and using measures that support continuous learning and change.
B. Using measures that support continuous learning and change, and using a functional team management approach to reorganize operating units.
C. Strengthening commitment through joint diagnosis of business problems, and institutionalizing systems and procedures early in the change process.
D. Institutionalizing systems and procedures early in the change process, and using measures that support continuous learning and change.
Overall explanation
To be successful, a change management program requires strong commitment, participation, freedom of discussion, and a collaborative approach among team members.
- Which of the following statements best applies to the master production schedule (MPS)?
A. The MPS is represented as a single aggregate line for all of a company’s products.
B. The MPS defines the daily quantities for production execution and control.
C. Each MPS is directly translated into the product quantity and time period from the production plan.
D. Each product is represented as a quantity per time period and is consistent with the production plan.
Overall explanation
Each product is a quantity within the MPS time period.
- Using the information provided, which periods would have a master production schedule quantity? Note: The safety stock level is 10 units, and the lot size is 30 units.
A. 1,2,3
B. 1, 3, 4, 7
C. 1, 2, 4, 5, 6, 8
D. 1, 2, 3, 4, 6, 7
Overall explanation
OH Demand Time Fence Planning Time Fence
Period 1 2 3 4 5 6 7 8
Forecast 20 20 20 20 20 20 20
Customer Orders 19 20 21 21 25 20 18
PAB 15 26 36 15 24 29 35 15 25
ATP
MPS 30 30 30 30 30 30 - Which of the following is the least likely to result from using certified suppliers?
A. Reduced supplier risk
B. Reduced cost of quality
C. Increased cost of managing supplier quality
D. Delivery of quality products and services
Overall explanation
Reduced supplier risk, reduced cost of quality, and delivery of quality products and services are benefits of supplier certification. Increased cost of managing supplier quality is incorrect because costs of managing supplier quality decrease when using certified suppliers.
- A company makes four product lines, each with a variety of features and options. Which of the following tools would be most appropriate for the company to use to document the product configurations to be built over the next two weeks?
A. Final assembly schedule
B. Detailed material plan
C. Planning bill of material
D. Master production schedule
Overall explanation
The final assembly schedule (FAS) is prepared after receipt of a customer order, as constrained by the availability of material and capacity (based on the features and options ordered). It schedules the operations necessary to complete the product assembly and states the exact set of end products to be built over the time periods.
- What is the portion of inventory or production that has yet to be assigned to specific customer orders?
A. Capable-to-promise
B. Anticipation inventory
C. Available-to-promise
D. Excess production
Overall explanation
Available-to-promise (ATP) inventory has not yet been committed to customer orders. “Excess production” and “capable-to- promise” are not appropriate descriptions for inventory that might still have a chance of being sold. “Anticipation inventory” is not a term commonly used to describe ATP inventory.
- RCCP takes place at which of the following planning levels?
A. Master scheduling
B. Business planning
C. MRP
D. Strategic planning
Overall explanation
RCCP is used to determine if sufficient capacity is available for the MPS.Strategic and business planning are incorrect because resource planning is used for strategic and business planning. MRP is incorrect because CRP is used for material requirements planning.
- Having suppliers that are certified via ISO 9000, or some other quality standard means that:
A. processes are defined and followed.
B. single-source relationships can be established.
C. product quality is assured.
D. suppliers fully understand customer needs.
Overall explanation
Under ISO 9000, processes are defined and followed.
- Which of the following statements about capacity is true?
A. Common units such as quantities or hours are used at all levels for consistency.
B. The master scheduler can schedule load above that indicated by rough-cut capacity planning.
C. Resource planning capacity is more accurate than rough-cut capacity planning due to aggregation.
D. The number of machines in a machine shop is the primary determinant of capacity.
Overall explanation
Rough-cut capacity planning is a check of only critical resources.
- Rough-cut capacity planning (RCCP) checks which of the following data?
A. Resources for a family of products
B. Materials and labor
C. Critical resources
D. Inventory
Overall explanation
In order to validate the feasibility of the master production schedule, RCCP uses a bill of resources to check critical resources.
- Which of the following is the most appropriate first step in a significant organizational change?
A. Consolidating previous improvements
B. Setting breakthrough objectives for the effort
C. Developing the vision of the future state for the organization
D. Establishing a sense of urgency that change is needed
Overall explanation
An important first step in organizational change is to motivate people to change by creating a sense of urgency. This may be due to a change in the organization’s competitive situation, market position, technological trends, financial performance, and so on.
- When a supplier is selected for a partnership, the most important selection criterion is the supplier’s:
A. quality practices.
B. prices.
C. location.
D. return policy.
Overall explanation
An essential element in a supplier relationship is the elimination of quality inspection by the buyer. Even if the supplier delivers the right items in the right quantities and on time, if the items lack perfect quality, the entire delivery is faulty.
- For this question, use the following example for an MTS environment.
Note that ATP is discrete and the MPS receipt scheduled in period 1 was carried over from a previous plan.
* On hand: 15
* Planning time fence: 7
* Lot size: 40
* Safety stock: 8
* Demand time fence: 2
A. 15 in period 5
B. 50 in period 5
C. 29 in period 7
D. 18 in period 4
Overall explanation
Period 1 2 3 4 5 6 7 8
Forecast 20 20 20 20 20 20 20 20
Actual Orders 18 15 27 10 10 8 6 5
PAB 15 37 22 5 15 35 15 35 15
MPS Receipts 40 40 40 40
ATP 22 3 22 29
- Which originates with the department or person who will be the ultimate user?
A. Purchase requisition
B. Purchase order
C. Vendor selection
D. Request for quotation (RFQ)
Overall explanation
A purchase requisition is prepared by the person or department who will be the ultimate user. Because a purchase order originates from the company’s purchasing department and is sent to the vendor or supplier, it is not the. Vendor or supplier selection and requests for quotation (to obtain the price information before an order is placed) are the responsibilities of the purchasing department.
- Which of the following is a potential process transition point that a business with declining production volume may face?
A. Project to jobbing
B. Line to project
C. Batch to line
D. Continuous to batch
Overall explanation
With declining production volume, the appropriate choice would be to move from high-volume continuous production to building products in intermittent batches.
- A supplier produces for countries around the globe. If only domestic customers are considered in demand management, what will the resulting outcome likely be?
A. Demand will be overstated.
B. Demand will be understated.
C. Not enough information exists to comment.
D. Demand will be unaffected.
Overall explanation
When both domestic and international demand are present, ignoring international demand will result in understated requirements.
- Which of the following statements about the bill of material (BOM) used in material requirements planning (MRP) is true?
A. It lists one and only one unit of each type of component that will be needed.
B. It lists only components that are held in inventory; the rest are purchased.
C. It plays no role in computing requirements.
D. It should be structured to reflect how a product is built.
Overall explanation
The BOM is a listing of all the subassemblies, intermediates, parts, and raw materials that go into a parent assembly, showing the required quantity of each. When the MRP BOM explosion occurs, the BOM enables the identification of all items and quantities that need to be replenished. The BOM is structured to reflect how the product is produced; this guides the operators in the process.
- A company receives a new order for 25 units, shippable immediately. If it is assumed that previous customer orders have higher priority and that no rescheduling is possible within the first three periods, the new order should be scheduled in which of the following ways?
Item: X – Lead Time: 2 – On-Hand: 4
Period 1 2 3 4 5
Forecast 10 5 20 12 12
Customer Orders 5 2 1
Projected Available Balance 9 2 1 9 17
Master Prod. Sch. 20 20 20 20
A. 19, 0, 6
B. 17, 0, 8
C. 5, 3,17
D. 20, 0, 5
Overall explanation
This question uses discrete available-to-promise (ATP).
Period 1: ATP for period 1 is calculated as on-hand (or projected available balance [PAB]) plus supply minus demand (customer orders) up to the next MPS receipt.
(Note: ATP ignores the forecast and focuses on customer orders only.)
The PBA is calculated only in those periods with as MPS receipt.
Starting numbers: on-hand = 4;
MPS receipt = 20.
demand (customer orders) = 7 (5 in period 1, 2 in period 2); 4 + 20 - 7 = 17
Therefore, 17 can be promised in period 1. Period 2: Since there is no ATP in period 2, ATP is 0. Period 3: The remaining 8 are then promised from period 3.
- A new product is being introduced to the company’s product mix, which will have an effect on the current period material plan due to the cumulative lead time of the purchased parts. Which of the following actions would be of immediate value to the material planner?
A. Modeling the key work center capacities
B. Simulating the revised material plan
C. Analyzing orders that are likely to be late
D. Analyzing the product’s cumulative lead time
Overall explanation
Simulating the new material plan will identify those items that will be out of balance, without disrupting the already balanced plan.
- Expediting can be a positive response to business growth and:
A. a good way to augment ever-changing schedules that the enterprise resources planning system may have difficulty managing.
B. a solid replacement for a push shop floor control system.
C. a source of operational risk when operations is constantly stressed to meet ever-growing demand.
D. a function that manufacturing companies should make permanent.
Overall explanation
Business growth, although seemingly positive, becomes a risk when operations has to stretch or be reconfigured to deal with larger volumes, often leading to a loss of focus.
- Which of the following actions is taken first to ensure the validity of the material plan in a make-to-stock company?
A. Development of the operations plan
B. Development of the material requirements plan
C. Development of the master production schedule
D. Development of the capacity requirements plan
Overall explanation
The master production schedule is the first time in the planning hierarchy that individual products are defined by date and quantity.
- If an annual contract is in place, the supplier is notified of the delivery amount required by means of:
A. an advance shipment notification.
B. a blanket order.
C. a release.
D. a purchase order.
Overall explanation
Monthly, weekly, or daily quantities needed are communicated via releases, which may be in the form of a kanban.
- Material requirements planning (MRP) may recalculate planned orders as a direct result of changes in:
A. the planning horizon.
B. customer order dates.
C. work order receipt dates.
D. capacity.
Overall explanation
A change in a scheduled receipt may cause the replanning of a planned order.
- A company produces make-to-order product families that use common work centers configured in a functional layout. It is a stable product line in the maturity stage, but demand is erratic. Ship dates are specified by the customer. The master scheduler has ongoing problems maintaining a balanced schedule due to randomly appearing overload conditions among the various work centers. What is a likely cause of the overload condition?
A. Late supplier shipments
B. Changes in customer orders
C. Missed schedules in production
D. Inaccurate capacity records
Overall explanation
Missed schedules are likely due to having a mix of products using the same work centers.
- Because bills of material (BOMs) identify the exact materials used in production and can include component and subcomponent cost information, they are also useful for which department?
A. Marketing
B. Returns
C. Finance
D. Sales
Overall explanation
Bills of material are useful for finance because they help determine the direct materials used in the product. BOMs can summarize cost information for all components and subcomponents. The bill may also be helpful in calculating direct labor and provide a means of allocating overhead.
- Using the information provided below, when must a planned order be released to meet a new requirement in period 5? * Order quantity: 40 units * Safety stock: 10 units * Lead time: 3 periods
A. Period 2
B. Period 3
C. Period 1
D. Period 4
Overall explanation
Period 1 2 3 4 5 6 7 8
Gross Requirements 40 10 30 50 50 20 30 40
Sched. Receipts
Projected Avail. Bal. 130 90 80 50 40 30 10 20 20
Net Requirements 0 0 0 10 20 0 30 30
Planned Order Rec. 40 40 0 40 40
Planned Order Release 40 40 0 40 40
- Which of the following is the best use of a material requirements planning (MRP) simulation capability?
A. Evaluating the number of standard deviations to protect via safety stock
B. Determining the optimal order quantity required to maximize inventory turns
C. Rescheduling orders to resolve a key work center overload problem
D. Determining the effect of the master production schedule on a bottleneck
Overall explanation
MRP modeling is for the purpose of establishing the best schedule possible within the given constraints of demand and supply.
- The final assembly schedule designates:
A. the specific goods to build in an assemble-to-order environment.
B. the list of products to be used in the planning cycle.
C. the last master production schedule to provide manufacturing.
D. the items to be shipped to the distribution warehouses.
Overall explanation
The final assembly schedule is a schedule of end items to finish the product for specific customers’ orders in a make- or assemble-to-order environment.
- In which of the following zones can changes be made with relative ease?
A. Frozen
B. Liquid
C. Danger
D. Slushy
Overall explanation
In the liquid zone, extensive changes can be made without causing much disruption to the MPS. The other answers are incorrect because there is no zone called the danger zone; the frozen zone should be the most protected in terms of the amount of change permitted; and changes in the slushy zone must be reviewed for potential impact on existing supply and demand
- Referring to the figure below and using exploding, how many Gs are needed in total to make one A? (Image)
A. 30 Gs
B. 6 Gs
C. 18 Gs
D. 36 Gs
Overall explanation
One A requires 3 Ds, and one D requires 4 Gs directly: 3 x 4 = 12 Gs. One D also requires 3 Fs and one F requires 2 more Gs: 3 x 3 x 2 = 18 Gs. the total is 12 + 18 = 30 Gs
- What is necessary in a new product introduction schedule?
A. Time for the concept to be developed without needing to have multiple iterations
B. Time for the customer to review engineering drawings and documents for manufacturability
C. Time for the customer to review the prototype and give detailed feedback
D. Time for the manufacturing capacity to be at full scale before launch
Overall explanation
During prototyping, a working model of the product and related services is developed. A prototype’s purposes include to prove feasibility and to elicit feedback. Sufficient time needs to be given to customers and to supply to give this feedback. Supply should make suggestions, such as for manufacturability, at this stage, not the customer.
- The basic requirement of the design of a manufacturing process is to meet:
A. line balancing standards.
B. production schedules.
C. management cost objectives.
D. product specifications.
Overall explanation
Producing the product or service to the specifications is the goal of the process design.
- A medium-sized make-to-order manufacturing company has three operating divisions and four locations, with three plants in one country and one plant in another country. The second largest division is a recent acquisition. There are three different software packages in use at the plants, and each plant has its own way of operating its business. The overall costs per transaction for the company are the highest in its industry. Senior management has decided that the plants should standardize on one software package and one approach to all major business processes to achieve some economies of scale. A new software package is selected and a project leader is named. The new project leader has assembled a team to perform the implementation. For the change to be effective, what should senior management do first?
A. Send out a memo to the plant managers explaining the decision.
B. Create a vision statement about this new strategy.
C. Create a sense of urgency among the company’s leaders.
D. Build the project team from key members of each division.
Overall explanation
Senior managers should start the project by communicating a sense of urgency and the importance of the new implementation project to the project team and the company as a whole.
- Which of the following engineering groups is most involved with a process design quality initiative?
A. Manufacturing
B. Quality
C. Industrial
D. Design
Overall explanation
Manufacturing engineers can apply the proper lean principles, quality systems, and use of technology for the process.
- An engineer-to-order environment with fairly long lead times has a severely overloaded work center in the middle of the production process. Assuming that deadlines cannot be changed, a simulation of the situation is most likely to:
A. project new end-item dates.
B. identify changes to specific work orders required.
C. identify the magnitude of the overload.
D. resolve the overload for each period.
Overall explanation
Load is tied to specific orders in this situation.
- Which of the following is true of the ultimate effect of a change in strategy?
A. It is rarely known for sure.
B. It must be highly predictable.
C. It is typically instantaneous.
D. It is relatively straightforward.
Overall explanation
The ultimate effect of a change in strategy is rarely known for sure.
- A company produces a line of configurable desks, which are shipped from retailers. Orders are taken at the store and transmitted to the factory daily, with delivery promised within five to ten workdays, depending on the options. This is achieved by stocking drawers, desk subassemblies, and hardware. Which of the following master schedule formats is best for this product family?
A. Two-level
B. Multilevel
C. One-level
D. Single-level
Overall explanation
The two-level format would allow the use of a super bill to master schedule an end product family, and also selected key features and options.
- The purpose of first-article inspection is to verify the product’s:
A. process variability.
B. sustainability.
C. functionality.
D. manufacturability.
Overall explanation
Auditing the first lot of products manufactured is the first time the quality of the design and process can be reviewed to ensure that the product meets the requirements.
- What two areas of an end-of-life plan should be planned separately with their own time lines?
A. Insourced and outsourced manufacture end
B. Minimum order quantity and lifetime buy quantity
C. Reverse logistics and final disposition
D. End of sales and end of service
Overall explanation
End of sales needs to be separated from end of service, because a product may need to be supported for a long time after new unit production has ceased.
- What is the difference between an FAS and a MPS?
A. The FAS addresses a shorter-term planning period than the MPS and looks at customer orders rather than forecasted demand.
B. The FAS addresses a longer-term planning period than the MPS and looks at forecasted orders rather than customer orders.
C. The FAS addresses a shorter-term planning period than the MPS and looks at forecasted demand rather than customer orders.
D. The FAS addresses a longer-term planning period than the MPS and looks at customer orders rather than forecasted demand.
Overall explanation
The FAS addresses a shorter-term planning period than the MPS and looks at customer orders rather than forecasted demand.
- What is a key benefit of using certified suppliers?
A. The firm will receive the best possible price for the goods.
B. The need for incoming inspection is eliminated.
C. The need for price negotiation is eliminated.
D. Purchasing lead times are reduced.
Overall explanation
Parts coming from certified suppliers do not require incoming inspection.
- Which activity is a key interface with MRP?
A. Customer service
B. Calculating cost of goods sold
C. Capacity requirements planning
D. Sales and operation planning
Overall explanation
Capacity requirements planning checks to see if the necessary capacity is available to produce the MRP output as planned. Sales and operations planning indirectly influences MRP, but does not directly interact with MRP. Customer service levels are important in measuring customer satisfaction, but only indirectly interface with MRP. Cost of goods sold is the result of accumulating inventory costs
- A company uses material requirements planning (MRP) and reorder point. Which of the following most relates to the planner’s ability to determine the source of gross requirements for a part having both dependent and independent demand?
A. Planners do not normally use or understand time-phased order point.
B. There is no easy way to separate independent from dependent demand.
C. Independent demand cannot be imploded to identify the parent.
D. Independent demand has no source and no gross requirements.
Overall explanation
There is no parent for an item subject to independent demand. The demand source of the requirement on the item will be the demand order.
- Using the information provided below, when must a planned order be released to meet a new requirement in period 7?
Period 1 2 3 4 5 6 7 8
Gross requirements 40 10 30 50 50 20 30 40
Scheduled receipts PAB -130 -90 80 50 40 30 10 20 20
Net requirements 0 0 0 10 20 0 30 30
Planned requirements
Planned order release 40
- Order quantity: 40 units
- Safety stock: 10 units
- Lead time: 3 periods
Scheduled Receipts Projected Available Balance-130 Net Requirements Planned Order Receipt Planned Order Release
A. Period 3
B. Period 5
C. Period 4
D. Period 2
Overall explanation
Period 1 2 3 4 5 6 7 8 Gross Requirements 40 10 30 50 50 20 30 40 Scheduled Receipts Projected Available Balance-130-90 80 50 40 30 10 20 20 Net Requirements 0 0 0 10 20 0 30 30 Planned Order Receipt 40 40 0 40 40 Planned Order Release 40 40 0 40 40
- What type of material requirements planning (MRP) system lists the actual date for actions/events and omits periods of inactivity?
A. Perpetual flow
B. Two-bin
C. Bucketed
D. Bucket-less
Overall explanation
Bucket-less MRP systems are far more common than bucketed systems. Rather than showing buckets, these systems list the actual date for actions or other events and omit periods in which there is no activity.
- What needs to be part of a new product introduction strategy when the product is a replacement for a product in decline?
A. Capital equipment changes need to be planned and executed.
B. Plans must find a way to sell both the old and new products for a period of time.
C. The new product strategy needs to coordinate most closely with the material requirements planning process.
D. The old product’s production equipment needs to be moved out of the prime shop floor locations while keeping its capacity available.
Overall explanation
If the new product introduction is a replacement for a product in the decline phase, there needs to be a transition strategy that provides enough time to build or acquire the production capacity. While some organizations will sell the old and new units at the same time, other organizations will have a cutoff from one to the other to reduce market confusion.
- Which is true about time fences in a master schedule system?
A. Changes in the frozen zone entail scheduling difficulty but no added production cost.
B. The master planner can authorize changes in the frozen zone.
C. Changes in the liquid zone can be made with little or no cost to production.
D. In the slushy zone, capacity and materials can easily be committed to new orders.
Overall explanation
Changes in the liquid zone can be routine and entail no cost to production. The other answers are incorrect because it is still relatively difficult to change production priorities in the slushy zone; and because the cost of changes in the frozen zone is such that authorization should come from the management level above the master planner.
- A change from reporting operations to reporting only parts completed requires all of the following systems to be changed except:
A. production activity control.
B. cost accounting.
C. inventory accounting.
D. master scheduling.
Overall explanation
The master schedule is concerned with the planning and scheduling of the firm’s finished goods. The change from reporting operations to reporting only parts has no direct impact on the master schedule. Since the change will impact materials and operations reporting below the master production schedule level, it will impact inventory accounting, cost accounting, and production activity control.
- What is the term for a schedule of end items to finish the product for specific customers’ orders in a make-to-order or assemble- to-order environment?
A. Build sequence
B. Final assembly schedule
C. Dispatch list
D. Shop floor schedule
Overall explanation
The final assembly schedule identifies the end items necessary to complete a specific customer’s order. A dispatch list is used to identify the priority and sequence of manufacturing orders at a workstation. The build sequence lists the order of jobs to be worked on at a workstation. The shop floor schedule is the actual assignment of starting or completion dates to operations or groups of operations to show when these must be done if the manufacturing order is to be completed on time.
- Which is set up when a product is available from several sources but only one source gets all of the business?
A. Multi-sourcing
B. Sole-source supplier
C. Single-source supplier
D. Purchase requisition
Overall explanation
This question describes a situation in which only one supplier is used even though multiple suppliers exist, which conforms to the definition of single-source supplier.
- Due to a quality problem, only 85% of the master schedule for a finished good has been produced. If the decision in this scenario is to service all customers who have submitted orders according to their percentage of total orders, what is this called?
A. Assigned material
B. Allocation
C. Allowance
D. Reserve stock
Overall explanation
Available inventory is allocated among all customers, so each gets part of their order.
- Which of the following statements about the final assembly schedule (FAS) is true?
A. The FAS is the same as the production plan.
B. The FAS includes only final operations.
C. The FAS is separate from the master production schedule and serves a completely different purpose.
D. The FAS is the same as the master production schedule.
Overall explanation
e FAS plans and controls final assembly, which is different from the master production schedule. It is typically driven by customer demand, not the forecast, and is for end items.
- Within a given period:
* Opening balance = 350
* Gross requirements = 50
* Scheduled receipts = 75
* Gross requirements in the next period = 500
What quantity should the planned order release be in this period?
A. 275
B. 25
C. 175
D. 125
Overall explanation
Net Requirements = Gross Requirements - Scheduled Receipts - Available Inventory
- Which of the following steps completes the purchasing cycle?
A. Receiving and accepting goods
B. Closing the purchase order
C. Approving supplier’s invoice for payment
D. Filing the purchase order
Overall explanation
The purchasing cycle consists of the following steps: 1. Generate Requisition 2. Issue Purchase Order 3. Follow Up 4. Receive Goods 5. Approve Payment
- Which of the following drives the material requirements planning (MRP) system and is the statement of which end items are to be produced?
A. Master production schedule
B. Inventory replenishment orders
C. Demand forecasts
D. Preproduction plan
Overall explanation
The master production schedule states which end items are to be produced, in what quantities, and when, and it provides input of the items needed to the MRP system.
- A set of techniques that uses bill-of-material data, inventory data, and the master production schedule to calculate requirements for materials is known as:
A. kanban.
B. a pull system.
C. material requirements planning.
D. the theory of constraints.
Overall explanation
The key input to material requirements planning (MRP) is the master production schedule (MPS), which provides due dates and quantities for end items. MRP systems combine bills of material with planning data on lead times to determine when to make or buy components.
- Based on the information below, what would the cumulative available-to-promise quantity be in the first period?
Week 1 2 3 4
Forecast 100 100 100 100
Customer Orders 80 20 10 40
Projected Avail. Bal 225 125 25 25 25
Avail. To Promise
Master Production Sched 0 0 100 100
A. 145 units
B. 75 units
C. 125 units
D. 0 units
Overall explanation
The cumulative available-to-promise quantity in the first period is equal to the on-hand inventory (which is 225) plus the master production schedule (MPS, which is 0) minus the sum of orders until the next MPS (80 + 20)
- Which of the following is defined as the process of converting the MPS into the load for critical resources?
A. Resource capacity planning
B. Multilevel master scheduling
C. RCCP
D. ATP
Overall explanation
Rough-cut capacity planning (RCCP) is defined as the process of converting the MPS into capacity needs for critical resources: workforce, machinery, warehouse space, vendors’ capabilities, and, in some cases, money. Essentially, it is a validity check for the MPS. ATP is incorrect, because it is the uncommitted portion of a company’s inventory and planned production, maintained in the MPS to support customer order promising. Resource capacity planning is incorrect, because it is used to determine the load placed on resources by product families in the production plan. Multilevel master scheduling is incorrect, because it is a master scheduling technique that enables any level in an end item’s BOM to be master-scheduled.
- Using the information provided below, what is the available-to-promise quantity in period 2?
A. 31
B. 9
C. -19
D. 50
Overall explanation
Period 1 2 3 4 5 6 7 8
Forecast 20 21 20 22 24 26 28 28
Customer Orders 19 20 21 21 25 24 20 18
Projected Avail. Bal 20 1 31 10 38 13 37 9 31
Avail. To Promise 1 9 4 6 16
Master Production Sched 50 50 50 50
- Which two of the following action messages may be generated by material requirements planning (MRP)?
A. Cancel the order and change the lot size
B. Cancel the order and release the order
C. Cancel the order and generate the overload
D. Change the lot size and release the order
Overall explanation
Cancel the order and “Release the order” are valid MRP action messages because they refer to order scheduling and management.
- Which of the following statements about material requirements planning (MRP) and scheduled receipts is true?
A. MRP will neither reschedule nor explode scheduled receipts.
B. MRP will not reschedule but will explode scheduled receipts.
C. MRP will reschedule but not explode scheduled receipts.
D. MRP will reschedule and explode scheduled receipts.
Overall explanation
MRP may recommend the rescheduling of a scheduled receipt but will not automatically reschedule
- A production plan has established 1,000 units in a period for a stocked product family. Specific percentages for end items are not known with certainty. Which of the following alternatives should the master schedule ignore when translating the product family into specific master production schedule quantities?
A. Use a super bill of material to over plan the percentages in a two-level master production schedule.
B. Make an estimate of the number of actual end items to produce based on history.
C. Use a modular bill of material and over plan the options to provide for some uncertainty.
D. Overplan the end items based on historical deviations to provide for some uncertainty.
Overall explanation
The end item quantities should not be over planned, as they must equal the quantity in the production plan.
- Measuring the order fill rate enables a company to determine:
A. customer service levels.
B. throughput time.
C. backorder allocations.
D. forecast accuracy.
Overall explanation
The fill rate measures delivery performance of finished goods.
- When are final assembly schedules typically used?
A. When all assemblies are the same with no variation in product structure
B. When there are many options and it is difficult to forecast which combination the customer will want
C. When production is a continuous flow process
D. When products come from an engineer-to-order production strategy
Overall explanation
When there are many possible combinations of options, it can be impractical to store every possible configuration. Using a final assembly schedule, combinations are assembled based on customer order input.
- Generating and rewarding short-term performance improvements within organizational change:
A. proves that the project champion was right.
B. should strike fear into the hearts of the naysayers.
C. sidelines cynics and selfish resisters.
D. may be the only success within the entire project.
Overall explanation
Short-term performance improvements help transformations.
- An item is being replaced on a BOM. The effectivity of the original item ends when the new item’s effectivity date begins. What does this action illustrate?
A. Engineering change process
B. Horizontal dependence
C. Parent-child relationship
D. Phantom bill of material
Overall explanation
A parent-child relationship exists between items at different levels on the BOM, making this answer incorrect. Horizontal dependency exists between two items on the same level in the BOM; thus, this answer is incorrect. A phantom BOM rarely is stocked and has a lead time of zero; its parent consumes it during manufacture, and is therefore also an in.
- The final assembly schedule (FAS) takes place when:
A. the customer’s order is received.
B. the component level is fixed.
C. the forecast is fixed.
D. there are few options.
Overall explanation
The FAS is a schedule of end items to finish the product for specific customers’ orders in a make- or assemble-to-order environment.
- Using simulation in manufacturing is most beneficial for:
A. improving data collection.
B. prototyping new technology.
C. training new employees.
D. identifying potential continuous improvement areas.
Overall explanation
Simulating alternate processes can identify areas where improvements can be made.
- An executive discussion centers on offshoring and outsourcing. Which of the following should participate in the outsourcing discussion?
A. Director of strategic sourcing
B. Director of facility development
C. Director of warehousing and transportation
D. Director of logistics
Overall explanation
Outsourcing is the process of having suppliers provide goods and services that were previously provided internally. It involves substitution—the replacement of internal capacity and production by that of the supplier.
- Which of the following is a performance measure for material requirements planning (MRP)?
A. Percent reduction in purchase orders
B. Percent reduction in lead time
C. Percent of orders released on time
D. Percent utilization of a work center
Overall explanation
How well the MRP is being handled, as well as the accuracy of the input data, can be determined by whether manufacturing orders and purchase orders are released on time based on the lead time.
- Which of the following types of demand should be input to the master schedule?
A. Forecast for end items
B. Forecast for service parts
C. All of the above
D. Orders for end items
Overall explanation
All sources of demand, including service parts, forecasts, and actual customer orders, constitute demand in the master schedule.
- Which of the following is true of using planning bills to forecast options for an assemble-to-order product?
A. Each planning bill option is forecast separately and is not combined with other options.
B. Overplanning of an option would mean that the percentages equal more than 100%.
C. The product mix cannot equal more than 100%.
D. The product mix can equal less than 100%.
Overall explanation
The mix for a planning bill must add up to a minimum of 100% but may be greater in order to gain flexibility.
- For this question, use the following example for an MTS environment. Note that the MPS receipt scheduled in period 1 was carried over from a previous plan.
Period 1 2 3 4 5 6 7 8
Forecast 20 20 20 20 20 20 20 20
Actual Orders 18 15 27 10 10 8 6 5
PAB 20
MPS Receipts 40
Given the above information, in which period will the first MPS receipt occur after the demand time fence?
A. Can’t tell
B. Period 2
C. Period 3
D. Period 1
Overall explanation
The previous MPS plan included a receipt in period 1. It has been carried over and is shown in the grid.PAB for periods 1 and 2 will use actual orders for the calculation, as they are before the demand time fence. In period 3, the actual orders are equal to the period 2 PAB, with a resulting PAB of zero in period 3. This is less than safety stock and requires an MPS receipt to be scheduled in period 3.
- A supplier has placed goods at a customer location but does not receive payment until after the goods are consumed. What is this an example of?
A. Point-of-use inventory
B. Leasing
C. Floor stock
D. Consignment
Overall explanation
Consignment is the process of a supplier placing goods at a customer location without receiving payment until after the goods are used or sold.
- Which best describes a summarized parts list?
A. The relationships among all components
B. All of the parents for which there is an existing requirement
C. All of the parts required to produce one item
D. All of the parents in which a component is used
Overall explanation
The summarized parts list, or summarized BOM, is a list of all the parts and their quantities required in a given product structure to produce one unit. All of the parents in which a component is used, and for which there is an existing requirement describe the where-used list and pegging report. The summarized parts list does not show the relationships among components.
- An authorization to the purchasing department to purchase specified materials in specified quantities within a specified time is a:
A. request for quote.
B. planned order.
C. requisition.
D. purchase order.
Overall explanation
A purchase requisition is an authorization to the purchasing department to purchase specified materials in specified quantities within a specified time.
- Which is a major input to a material requirement planning system?
A. Production activity control schedule.
B. Capacity requirements plan.
C. Production plan.
D. Master production schedule.
Overall explanation
Although the production plan is an input to the MPS and therefore indirectly an input to MRP, it is more accurate to identify the master production schedule as a major input to a material requirements planning system. Capacity requirements plans and production activity control schedules validate and implement the priority plan produced by the MRP system.
- The production forecast
A. is based on production lead times.
B. represents the product family forecast in two-level master scheduling.
C. forecasts the family ATP multiplied by option percentages.
D. is primarily used with master production scheduled items.
Overall explanation
The production forecast is used with two-level master scheduling and represents the ATP (MPS minus customer orders) at the family level multiplied by the option percentage. The other answers are incorrect because the production forecast is used with a subset of master-scheduled items only; the production forecast does not represent the product family forecast; and the production forecast is not based on production lead times.
- Risk assessment prior to offshoring or outsourcing should analyze at a minimum which of the following attributes?
A. Quality, data security, loss of control, employee turnover, cultural differences
B. Quality, data security, loss of control, financial exchange rates, delivery lead times
C. Quality, intellectual property, infrastructure, employee attitudes, cultural differences
D. Quality, data security, loss of control, employee attitudes, cultural differences
Overall explanation
In a survey, it was revealed that these attributes, in order, were of concern when offshoring: * Quality * Data security * Loss of control * High turnover * Cultural differences
- A company has not been able to provide customers with information when a make-to-stock item is out of stock. Which of the following actions would be beneficial in this situation?
A. Provide available-to-promise information to customer service.
B. Increase safety stock levels to reduce stockouts.
C. Increase sales and operations planning frequency.
D. Implement forecast accuracy measures.
Overall explanation
Available-to-promise is the uncommitted portion of a company’s inventory and planned production maintained in the master schedule to support customer order promising.
- An artificial grouping of items or events in a bill-of-material format used to facilitate production planning is known as:
A. a routing.
B. a pick list.
C. a planning bill of material.
D. an item master.
Overall explanation
A planning bill of material is an artificial grouping of items or events used to facilitate production planning. Routing describes the method for manufacturing an item. Item master refers to the database repository where information about an item is kept. A pick list references finished goods, materials, and components to be withdrawn from stock for shipment or production purposes.
- Who is responsible for disaggregating the production plan into the master production schedule?
A. Materials manager
B. Master scheduler
C. Production manager
D. Sales manager
Overall explanation
The master scheduler is responsible for disaggregating the production plan into the master production schedule.
- An assemble-to-order environment using a mixed-model production schedule has a bottleneck work center. What is the best rough-cut capacity planning approach for determining the feasibility of the master production schedule?
A. Define capacity as 85% of rated capacity to provide 15% to accept additional customer orders.
B. Define capacity as rated capacity times utilization times efficiency to factor the engineering standard.
C. Define capacity as some percentage less than 100% of rated capacity by management policy.
D. Define capacity at 100% of rated capacity and utilization when the mix of demand justifies it.
Overall explanation
Bottlenecks should be scheduled at the rated capacity if there is sufficient business volume to justify it.
- The standard hours of load placed on a resource within a time period is the:
A. resource driver.
B. resource profile.
C. resource calendar.
D. bill of resources.
Overall explanation
The resource profile is the standard hours of load placed on a resource by time period.
- Orders for a specific assembly have been released over the last two weeks. Stockroom personnel have reported unplanned issues for one component and returns of another component. Which of the following is the most likely cause of this situation?
A. There are errors in the inventory records for the two components.
B. Material availability checking is not being performed before release of the orders.
C. An engineering change for the assembly is not in the bill of material.
D. The master scheduling horizon is not long enough.
Overall explanation
Product design engineers may have changed the components used in the product without updating the bill of material, resulting in the unplanned issue for one component and the return of the other component.
- What is an appropriate objective for a buyer in paying a visit to a potential supplier?
A. To obtain information about the supplier’s financial stability
B. To determine the supplier’s capability for vendor-managed inventory
C. To verify the production and quality capabilities of the supplier
D. To assess the compatibility of the supplier’s enterprise resources planning system
Overall explanation
It is important to ensure that the supplier is capable of producing to the required specifications. An on-site visit to ensure that the capability exists and see the quality measures in place is often the last step in the supplier selection process.
- The gateway work center performs the operation that:
A. is first in a routing.
B. is just prior to final assembly.
C. consumes the most capacity.
D. feeds a bottleneck.
Overall explanation
A gateway work center performs the first operation of a particular routing sequence.
- What determines the frequency with which material requirements should be replanned?
A. Frequency with which requirements and/or priorities change
B. Amount of forecast error
C. Total manufacturing lead time
D. Frequency of bill of material changes
Overall explanation
Material requirements planning (MRP) is used to maintain the priorities of manufacturing and purchase orders. As demand changes, so do the priorities, so MRP should be run to rebalance supply and demand.
- A representative of a supplier has called a buyer to tell her that the minimum order quantity for a raw material is being increased to 1,000 pieces immediately. Which of the following would be the most appropriate action for the buyer to take next?
A. Use a pegging report to identify all affected customer orders.
B. Change the quantity for all scheduled receipts.
C. Firm all planned orders for the item at 1,000 pieces.
D. Change the lot sizing parameters for the item.
Overall explanation
The revised minimum order quantity should result in a change to the lot size for the item.
- A company purchases a high-volume commodity part from three suppliers. Which performance measure is most likely compared by the supplier rating system?
A. Quoted lead time
B. Price-to-cost ratio
C. On-time delivery
D. Incoming quality
Overall explanation
On-time delivery is probably the only variable.
- Which of the following is an advantage of over-forecasting a new assemble-to-order product during the growth phase as it relates to raw material inventory?
A. The planner is assured that any raw material excess will be used eventually.
B. There is no relationship between forecasting at the sales and operations level and raw materials.
C. Raw materials are purchased only when actual customer orders offset forecasts.
D. Over forecasting improves customer service by increasing part availability.
Overall explanation
The growth phase may result in levels that are too low, so excess raw material buffers against that.
- The relationship for all components at the same level in the bill of material to be available at the same time is:
A. a parent-child relationship.
B. component availability.
C. a horizontal dependency.
D. a vertical dependency.
Overall explanation
Horizontal dependency is the relationship between components at the same level in the bill of material.
- Increased output is best achieved by doing which of the following?
A. Implementing flexible manufacturing systems
B. Simplifying design
C. Using computer-aided design
D. Using expert systems
Overall explanation
Making the production process easier, more visible, and foolproof enables operators and production equipment to effectively increase output and quality and reduce wastes.
- On-time supplier deliveries can be impacted most by:
A. supplier capacity.
B. long lead times.
C. purchase order quantities.
D. dedicated transportation carriers.
Overall explanation
Supplier capacity that is adequate for meeting the dates has the most impact on on-time deliveries.
- Which of the following choices will improve a company’s responsiveness to customer demand?
A. Increased productivity
B. Drum-buffer-rope
C. Large lot sizes
D. Two-level master schedule
Overall explanation
A company using a two-level master schedule would have flexibility in operations based on actual demand.
- In relation to time fences, in which of the following zones can scheduling software make automatic adjustments without the input of the master scheduler?
A. Frozen zone
B. Liquid zone
C. Forecast zone
D. slushy zone
Overall explanation
In the liquid zone, scheduling software may automatically make adjustments without input from the master scheduler.Manual changes can also be made in this zone. The only constraint will be the limits set in the production plan. This zone is usually the extra time added beyond the cumulative lead time of the product.
- A company that uses a functional layout produces several product families that use the same work centers, with some units being a standard design and others having custom design. Which of the following management decisions is most applicable as it relates to master scheduling?
A. Use of a final assembly schedule
B. Level and type of inventory to stock
C. Relevance of a demand time fence
D. Use of a quantity/period or flow rate
Overall explanation
Decisions would be required on which products to keep in stock as finished goods versus assemblies.
- Using a planning horizon shorter than the longest cumulative lead time may result in:
A. replenishment orders released with short lead times.
B. a decrease in inventory turns.
C. increased throughput.
D. a reduction of work in process.
Overall explanation
If the planning horizon does not extend far enough out for items with long lead times, the planned order release will fall in the current period, with a message that the release is past due.
- Using the information provided below, what are the available-to-promise quantities for periods one through five?
Period 1 2 3 4 5 6 7 8
Forecast 10 10 10 10 10 10 10 10
Customer orders 10 11 9 11 8 11 9 8
PAB -15 5 34 24 13 33 22 12 32
ATP MPS 40 30 30
A. 5, 34, 24,13, 33
B. 5, 9, 0, 0, 2
C. 0,31, 22,10, 22
D. 5, 24,14, 4, 24
Overall explanation
Period 1 2 3 4 5 6 7 8 Forecast 10 10 10 10 10 10 10 10 Customer Orders 10 11 9 11 8 11 9 8 Projected Available Balance-15 5 34 24 13 33 22 12 32 Available-to-Promise 5 9 2 22 Master Production Schedule 40 30 30
- What is the primary reason for using an alternative means of transportation when a part is late?
A. To meet the promised date
B. To ensure part delivery
C. To save shipping expense
D. To meet the due date
Overall explanation
The promise date may or may not be the actual due date, but it is the one that was communicated.
- Which of the following contributes the most to a purchasing department’s ability to improve supplier delivery reliability?
A. Use of electronic data interchange (EDI)
B. Long-term contracts with suppliers
C. Improved relations between expediters and suppliers
D. Computerized purchase requisition system
Overall explanation
Detailing delivery reliability is part of an effective long-term contract negotiated with the supplier.
- Which of the following terms is associated with the systematic use of techniques that identify a required function, establish a value for that function, and finally provide that function at the lowest overall cost?
A. Value stream
B. Value-added
C. Value analysis
D. Value chain analysis
Overall explanation
A value analysis focuses on the functions of an item rather than the methods of producing the present product design.
- The table below is an example of what type of material requirements planning (MRP) record? Part Number Lead Time Date 1/8/2018 1/16/2018 1/29/2018 Gross Requirements 4 4 Scheduled Receipts 5 C Projected Available 2 7 3 4 Net Requirements 1 Planned Order Receipt 5 2 Planned Order Release 5
A. Kanban
B. Bucket-less
C. Bucketed
D. Lead-time offset
Overall explanation
Bucket-less MRP records show the exact date on which a specific action is required.
- Rough-cut capacity planning performs a:
A. scheduling routine and then checks capacity availability.
B. detailed capacity analysis.
C. comparison to available or demonstrated capacity.
D. material requirements explosion.
Overall explanation
Rough-cut capacity planning is compared to available or demonstrated capacity and is usually done for each key resource.
- In master scheduling, hedging refers to a practice that
A. provides safety lead time, and provides safety capacity to protect against work center overload only
B. provides safety capacity to protect against work center overload only
C. provides safety inventory in case option mixes are different from those forecasts, and provides safety inventory in case volume is greater than forecast only
D. provides safety lead time, provides safety inventory in case option mixes are different from those forecasts, and provides safety inventory in case volume is greater than forecast only
Overall explanation
Hedging is a quantity of stock to protect against uncertainty of demand; it has the dimensions of timing and amount. The hedge may be either a mix hedge or a volume hedge. The other answers are incorrect because hedging is not related to safety capacity; hedging does use safety lead times to protect against late deliveries but does not use safety capacity; and hedging does provide safety inventory in case volume or option mixes are greater than forecast, but it also provides safety lead times to protect against late deliveries.
- What is a principal function of MRP?
A. Provide accurate planned order loading for use by RCCP
B. Provide engineering change notice information to engineering
C. Provide safety lead time to ensure supplier delivery dates are met
D. Plan and control orders released to the factory to ensure valid due dates are met
Overall explanation
- The other answers are incorrect because MRP provides accurate planned order loading for capacity requirements planning, not RCCP
Reducing the levels on the bill of material reduces:
A. schedule flexibility.
B. material costs.
C. production reporting activities.
D. work in process.
Overall explanation
Reducing the number of subassemblies within the bill of material reduces the times reporting has to be done.
- Last year a company had average inventory of $24,000,000, and the cost of sales for the year was $48,000,000. The budget for the year shows the cost of sales increasing by 25%, with no increase in the average inventory. What inventory turns did the company have, and what will they need to have this year to meet the budget?
A. 2,2.5
B. 2,3
C. 0.5,2.5
D. 0.5,0.4
Overall explanation
$48,000,000/$24,000,000 = 2
- Which investment analysis tool accounts for the time value of money?
A. Net present value
B. Residual income
C. Payback period
D. Return on investment
Overall explanation
Of the choices, only net present value uses the discounted rate of the original investment. Return on investment does not reflect the time value of money. Payback period shows how long it will take for the initial investment to be recouped. Residual income uses a minimum required rate of return in its analysis of gain from capital investment.
- What are three of the broad areas necessary to address how well the strategy execution process is performing?
A. Customer, backorder/backlog, critical ratio
B. Quality, financial, employee turnover
C. Financial, customer, employees
D. Operations, financial, schedule
Overall explanation
Accurate and timely information about daily operations is essential if managers are to gauge how well the strategy execution process is proceeding. Information systems need to cover five broad areas: * Customer data * Operations data * Employee data * Supplier/strategic partner data * Financial performance data
- U-shaped cells that group dissimilar machines to perform various operations on a part result in reduction of all of the following except:
A. machine downtime.
B. travel distances.
C. lead times.
D. in-process inventory.
Overall explanation
Regardless of how machines are arranged in a work center, machine downtime can occur. The way to prevent machine downtime is an effective preventive maintenance program.
- Which of the following maybe necessary to prove feasibility when seeking capital investment approvals?
A. Leveraging the existing overhead rates prior to completion
B. Outsourcing production until the project is complete or the machine comes up to speed
C. Investigating interest rates from various lending institutions
D. Calculating the payback period or internal rate of return
Overall explanation
To finance a large, expensive project or capital investment, it is often necessary to calculate the payback period or internal rate of return.
- If a customer or service provider is given less leeway to customize a service, what is one trade off?
A. The sales opportunity is lower.
B. Production efficiency is lower.
C. The perceived value of the service must be higher.
D. The degree of contact between the customer and the service provider must be higher.
Overall explanation
Per the service design matrix, reducing opportunities for customization will reduce the likelihood of making a sale. However, production efficiency will be higher.
- The internal rate of return (IRR):
A. equals the net present value.
B. is used when considering investing in projects.
C. is used to calculate the profitability index.
D. is the interest rate that makes the net present value of the investment equal to 1.
Overall explanation
The I RR is the rate of compound interest at which the company’s outstanding investment is repaid by proceeds from a project.
- When following the UN Global Compact Management Model, what must an organization do once it has assessed its current state of risks and opportunities related to human rights, labor, the environment, and anti-corruption?
A. Adjust metrics to ensure that there is a way to determine if new policies and procedures are being followed.
B. Create or refine the organization’s strategy and related policies, goals, and metrics.
C. Transform organizational strategy into tactics, such as capital improvement projects.
D. Commit in a transparent way to incorporate the principles into formal governance structures.
Overall explanation
The “Assess” step, described in the question, is the second step in the model. The next step is the “Define” step, which consists of creating or refining the organizational strategy and related polices, goals, and metrics based on the results of the assessment step.
- What is a good policy concerning a company’s internal rate of return (IRR)?
A. Approve the project if the IRR exceeds the cost of capital.
B. Set margins based on competitive analysis.
C. Reverse-engineer competing products whenever possible.
D. Exceed the costs of material, labor, and overhead prior to approval.
Overall explanation
The IRR is the rate of compound interest at which the company’s outstanding investment is repaid by the proceeds from a project.
- A group of products with similar characteristics, often used in production planning, is known as a:
A. phantom bill of material.
B. product family.
C. product portfolio.
D. planning bill of material.
Overall explanation
A product family is a group of products with similar characteristics, often used in production planning (or sales and operations planning).
- Which of the following terms refers to a systematic approach to identifying, analyzing, and addressing an organization’s exposure to uncertainty within the supply chain?
A. Producer’s risk
B. Buffer management
C. Risk management
D. Safety factor calculation
Overall explanation
Risk management is a systematic approach to identifying, analyzing, and addressing an organization’s exposure to uncertainty within the supply chain.
- Analysts must be aware of which of the following when assessing potential points of weakness in a risk assessment for a technology-based business?
A. A solidly composed patent will give the business many years of competitive protection.
B. Colleges and universities are often available for cutting-edge research and development.
C. Outsourcing is a viable alternative to increase capacity and provide flexibility to customers.
D. At any moment, a competitor may experience a breakthrough and take market share.
Overall explanation
A technology-based supplier of high-tech coatings was caught by surprise when its competitor introduced a new coating technology, enabling it to produce product at significantly better levels of cleanliness.
- How does demand-driven material requirements planning (DDMRP) avoid system nervousness?
A. The system uses a red, yellow, and green zone system to show when changes would be too frequent.
B. Late changes in requirements are prevented because it is driven by demand pull.
C. The system uses daily buckets and daily reviews so system-wide changes are minor.
D. A change only affects the subsystem related to the strategic buffer.
Overall explanation
While the nature of conventional material requirements planning (MRP) is to make everything dependent so it can all be fully automated, this means that late changes can have a systemic effect called system nervousness. Strategic buffers in DDMRP prevent system nervousness by preventing a change from affecting the entire system. Instead, a change an only affect the subsystem created by the placement of the strategic buffers at decoupling points. This is called a DDMRP decoupled explosion.
- A product has moved from regular production to spare parts supply. Which of the following factors is likely to become least important?
A. Price
B. Customer service
C. Delivery reliability
D. Quality
Overall explanation
Once a product has moved from regular production to intermittent spare parts supply, customer service, delivery reliability, and quality must remain high. Service parts are usually critical to the customer and must be available at all times with perfect quality. Since the product is no longer considered “product,” its price can become elastic and based on what the market will bear. Price, therefore, declines as an important factor, as customers will pay a premium when equipment goes down.
- Which is the biggest tradeoff that needs to be accepted when an industry with strong seasonality chooses a level production strategy?
A. Increased overtime costs.
B. Lower production efficiency.
C. Skilled workers unavailable for rehire.
D. Increased inventory carrying cost.
Overall explanation
A level strategy for a seasonal product requires building extra inventory in times of low demand to enable satisfying demand at the seasonal peak. This is called anticipation inventory. It results in higher average inventory levels and therefore higher inventory carrying costs. The other answers are tradeoffs of other methods such as the chase strategy.
- What is an advantage of small-scale operations and facilities?
A. Good fit for high-volume, low-variety operations
B. Higher average production cost per unit
C. Less overcapacity during scale-up
D. Good fit for high-volume, low-variety operations
Overall explanation
The smaller facility better matches demand during the scale-up period
- All of the following are sources of demand that should be considered in sales and operations planning (S&OP) except:
A. service part requirements family.
B. interplant demands family.
C. firm planned orders family.
D. customer order backlog family.
Overall explanation
Firm planned orders are a planning convention used in master scheduling. They are not used in the calculation of S&OP.
- A B2B organization makes replaceable belts for newspaper printing press maintenance. When identifying their customer segments, who would be the economic buyer?
A. The Associated Press
B. Printing press manufacturers
C. Newspaper companies
D. Newspaper readers
Overall explanation
The economic buyer is the organization whose budget funds the purchase. Since these are maintenance items for products out in the field, the newspaper companies would be the primary buyers. The printing press manufacturers would also be buyers but would buy in lower volume.
- Which of the following programs asks businesses to 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?
A. Universal Declaration of Human Rights
B. United Nations Children’s Fund
C. United Nations Global Compact
D. ADB/OECD Anti-Corruption Initiative
Overall explanation
The inCorrect Answers all represent global initiatives to increase human rights and well-being, but they do not have the focus of the United Nations Global Compact on supply chain management.
- Capacity requirements planning (CRP) directly interfaces with:
A. work center finite scheduling.
B. master production scheduling (MPS).
C. material requirements planning (MRP).
D. rough-cut capacity planning (RCCP).
Overall explanation
CRP directly interfaces with MRP.
- When a company is pursuing a capacity-lagging strategy, which of the following will likely be true?
A. The plants will be more expensive from a machine and labor perspective than for a capacity-leading strategy.
B. The plants should always be working at full capacity.
C. Operations will typically find that achieving 90% to 100% capacity utilization is very difficult.
D. The organization will be more capable of protecting its market share than if it had used a capacity-leading strategy.
Overall explanation
A capacity-lagging strategy should always find plants working at full capacity.
- Prior to constructing industrial power lines in a wilderness area, a company seeks input from various public groups. This company is exhibiting its:
A. pro forma fiduciary responsibility.
B. product positioning.
C. public relations.
D. social responsibility.
Overall explanation
Social responsibility is a commitment by management to behave ethically and to contribute to community development.
- A company with a product differentiation strategy is focused on:
A. high productivity.
B. customer-valued product features.
C. mass customization.
D. low cost of quality.
Overall explanation
Product differentiation is a strategy of making a product distinct from the competition on a non-price basis such as availability, durability, quality, or reliability.
- Why does the UN Global Compact single out supply chain partners as an important factor in a firm’s ability to comply with its 10 principles?
A. If the organization uses unionized labor, all of its suppliers should, too.
B. It motivates suppliers in countries with low labor costs toward compliance.
C. It spreads the Compact’s reach, even though partner actions can’t impact the firm.
D. Customers define which of the principles have the highest priority.
Overall explanation
In an extended supply chain, the actions of an organization’s suppliers may reflect positively or negatively on the organization, especially if they are the channel master or most visible partner in the network. Therefore, the Global Compact stresses the need to ensure that suppliers are compliant with the principles (or are making reasonable progress in that direction). When located in countries with lower labor costs, it is both more important to ensure compliance, while also harder to do so.
- Which is a key reason to use the SCOR-DS model?
A. Determining order winners, order qualifiers, and the location of the push-pull frontier
B. Ensuring the targets for all metrics seek superior performance relative to competitors
C. Maximizing the number of metrics available to decision makers
D. Measuring performance improvement success against benchmarked competitive priorities
Overall explanation
Part of the definition of the SCOR-DS model is as follows: “Use of the model includes analyzing the current state of a company’s processes and goals, quantifying operational performance, and comparing company performance to benchmark data.” Once an organization’s metrics have been calculated, they are compared against internal standards and possibly industry or best-in-class benchmark data. An organization uses the results to drive performance improvements. However, an organization needs to determine its competitive priorities and work toward superior performance relative to competitors in those areas. Since trying to prioritize all areas at once would dilute any strategy due to the inherent tradeoffs, they seek only parity in other benchmarked areas.