topic 3 Flashcards
The ABC classification categorises items in stock (SKUs) intro three groups according
to the number of units of those items that a company uses annually.
False
An ABC analysis is based on the assumption that carefully tracking all items is essential
to generate important savings in terms of inventory.
False
Every company has to define what percentage of all its items in stock (SKUs) it considers
to be “A”, “B” and “ type items.
True
Stock maintenance costs are included within the following costs: opportunity cost of
capital; stock taking and inventory count costs; facilities and equipment costs;
obsolescence costs; depreciation costs due to spoilage or expiration; insurance and
tax costs; handling and transportation costs (collection, packaging and shipment) and
fixed costs associated to production planners
False (“fixed costs associated to production planners”)
In the Economic Order Quantity (EOQ) Model, if annual demand doubles, the
economic order quantity will also double.
False
In the Economic Order Quantity (EOQ) Model, if annual demand doubles, the
economic order quantity will also double.
False
The Reorder Level is the inventory level that when reached, steps are taken to
replenish the stored item.
True
The only SKUs that can have independent demand are finished products.
False
The Master Production Schedule (MPS) is the part of the MRP that specifies when the
finished product component SKUs should be ordered or assembled.
False
Available to promise (ATP) inventory refers to the quantity of finished products that
Marketing can promise to clients by a certain date.
True
Available to promise (ATP) quantities are only shown during the first period (if the
forecast of “on hand” inventory is greater than zero) and in later periods if the MPS
quantity is greater than 0.
True
For an “A” product structure, the minimum planning horizon of “A” is equal to the sum
of the lead times of its components taking the longest route to that product structure
True
The method to calculate needs in MRP systems is based on historic consumption; in
reorder point systems, the method is based on future production plans.
False (other way around)
In MRP systems, the quantity of a purchase SKU is variable, while the quantity is fixed
in the reorder point system
True
ERP systems include MRP, Supply Chain Management and CRM (except the financial
area).
False
include MRP, Supply Chain Management, CRM, SCM, Sustainability, and finance
In the Industry 4.0 context, 3 D manufacturing is included within the “human machine
interaction” dimension
False
Advanced engineering
In the Industry 4.0 context, virtual and augmented reality are included within the
“advanced engineering” dimension.
False
Human-Machine interaction
What are the limitations of ABC classification
- Only takes into account financial aspects (ignores control system, forecasting, manufacturing, inventory)
- Based on accumulated annual consumption –> Doesn’t necessarily equal current inventory situation
Define reorder point system
System that orders an amount whenever the level of stock reaches reorder level
Define Economic Order Quantity
The order amount that minimizes total annual inventory holding and ordering cost
What does the MPS specify?
What is to be made and when
