topic 3

Question 1

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.

Answer 1

False

Question 2

An ABC analysis is based on the assumption that carefully tracking all items is essential
to generate important savings in terms of inventory.

Answer 2

False

Question 3

Every company has to define what percentage of all its items in stock (SKUs) it considers
to be “A”, “B” and “ type items.

Answer 3

True

Question 4

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

Answer 4

False (“fixed costs associated to production planners”)

Question 5

In the Economic Order Quantity (EOQ) Model, if annual demand doubles, the
economic order quantity will also double.

Answer 5

False

Question 6

In the Economic Order Quantity (EOQ) Model, if annual demand doubles, the
economic order quantity will also double.

Answer 6

False

Question 7

The Reorder Level is the inventory level that when reached, steps are taken to
replenish the stored item.

Answer 7

True

Question 8

The only SKUs that can have independent demand are finished products.

Answer 8

False

Question 9

The Master Production Schedule (MPS) is the part of the MRP that specifies when the
finished product component SKUs should be ordered or assembled.

Answer 9

False

Question 10

Available to promise (ATP) inventory refers to the quantity of finished products that
Marketing can promise to clients by a certain date.

Answer 10

True

Question 11

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.

Answer 11

True

Question 12

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

Answer 12

True

Question 13

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.

Answer 13

False (other way around)

Question 14

In MRP systems, the quantity of a purchase SKU is variable, while the quantity is fixed
in the reorder point system

Answer 14

True

Question 15

ERP systems include MRP, Supply Chain Management and CRM (except the financial
area).

Answer 15

False

include MRP, Supply Chain Management, CRM, SCM, Sustainability, and finance

Question 16

In the Industry 4.0 context, 3 D manufacturing is included within the “human machine
interaction” dimension

Answer 16

False

Advanced engineering

Question 17

In the Industry 4.0 context, virtual and augmented reality are included within the
“advanced engineering” dimension.

Answer 17

False

Human-Machine interaction

Question 18

What are the limitations of ABC classification

Answer 18

1. Only takes into account financial aspects (ignores control system, forecasting, manufacturing, inventory)
2. Based on accumulated annual consumption –> Doesn’t necessarily equal current inventory situation

Question 19

Define reorder point system

Answer 19

System that orders an amount whenever the level of stock reaches reorder level

Question 20

Define Economic Order Quantity

Answer 20

The order amount that minimizes total annual inventory holding and ordering cost

Question 21

What does the MPS specify?

Answer 21

What is to be made and when