Chapter 15  Resource Planning

Chapter

15 / Resource Planning

TRUE/FALSE

  1. An ERP system revolves around a single comprehensive database that is made available across the entire organization.

Answer: True

Reference: Enterprise Resource Planning

Difficulty: Easy

Keywords: enterprise, resource, planning, ERP

  1. Companies that fully customize their ERP implementation reap the greatest rewards from such systems since they can continue to use the same processes to which all employees are accustomed.

Answer: False

Reference: Enterprise Resource Planning

Difficulty: Moderate

Keywords: enterprise, resource, planning, ERP, implementation

  1. Material requirements planning (MRP) is a computerized information system developed specifically to aid in managing dependent demand inventory and scheduling replenishment orders.

Answer: True

Reference: Material Requirements Planning

Difficulty: Easy

Keywords: material, requirements, planning, MRP

  1. A parent is any item manufactured from one or more components.

Answer: True

Reference: Planning and Control Systems for Manufacturers

Difficulty: Easy

Keywords: parent, component

  1. Dependent demand occurs because the quantity required is a function of the demand for other items held in inventory.

Answer: True

Reference: Planning and Control Systems for Manufacturers

Difficulty: Easy

Keywords: dependent, demand, inventory

  1. A component is an item that may go through one or more operations to be transformed into or become part of one or more parents.

Answer: True

Reference: Planning and Control Systems for Manufacturers

Difficulty: Easy

Keywords: component, parent, transform

  1. Lumpy dependent demand can result even from continuous independent demand.

Answer: True

Reference: Planning and Control Systems for Manufacturers

Difficulty: Moderate

Keywords: lumpy, dependent, demand, continuous

  1. Part commonality refers to the degree to which a component has more than one immediate parent.

Answer: True

Reference: Material Requirements Planning

Difficulty: Moderate

Keywords: part, commonality, component, parent

  1. Part commonality tends to increase inventory costs.

Answer: False

Reference: Material Requirements Planning

Difficulty: Moderate

Keywords: part, commonality, inventory

  1. Gross requirements are the total demand derived from all parent production plans.

Answer: True

Reference: Material Requirements Planning

Difficulty: Moderate

Keywords: gross, requirements, demand, parent

  1. A bill of materials (BOM) shows all of the components of an item, the parent–component relationships, usage quantities, and lot size derived from engineering and process designs.

Answer: False

Reference: Material Requirements Planning

Difficulty: Moderate

Keywords: BOM, bill, materials, parent, component

  1. An intermediate item must have at least one parent and at least one component.

Answer: True

Reference: Material Requirements Planning

Difficulty: Moderate

Keywords: intermediate, parent, component

  1. The master production schedule (MPS) is the part of the material-requirements plan that specifies when components must be ordered or assembled.

Answer: False

Reference: Material Requirements Planning

Difficulty: Moderate

Keywords: master, production, schedule, MPS, material, requirements, plan

  1. Available to promise inventory is the amount of end items that marketing can promise to customers by a certain date.

Answer: True

Reference: Material Requirements Planning

Difficulty: Easy

Keywords: ATP, available, promise, inventory, MPS

  1. The portion of the master production schedule furthest in the future is often frozen to reduce forecasting requirements.

Answer: False

Reference: Material Requirements Planning

Difficulty: Moderate

Keywords: MPS, master, production, schedule, freezing

  1. Planned receipts are estimates of the amount of inventory available each week after gross requirements have been satisfied.

Answer: False

Reference: Material Requirements Planning

Difficulty: Moderate

Keywords: planned, receipts, projected, on-hand, inventory

  1. A planned order release provides an indication of when an order for a specified quantity of an item is to be issued.

Answer: True

Reference: Material Requirements Planning

Difficulty: Moderate

Keywords: planned, order, release

  1. For items manufactured in-house, one component of lead-time is waiting time.

Answer: True

Reference: Material Requirements Planning

Difficulty: Moderate

Keywords: lead, time, waiting

  1. Periodic order quantity (POQ) is a rule that tends to keep more inventory on hand than lot-for-lot quantity, but less inventory on hand than fixed-order quantity.

Answer: True

Reference: Material Requirements Planning

Difficulty: Moderate

Keywords: periodic, fixed, order, quantity, lot, POQ, FOQ, L4L

  1. Lot-for-lot (L4L) is a rule that maintains the same order quantity each time an order is issued.

Answer: False

Reference: Material Requirements Planning

Difficulty: Moderate

Keywords: lot, L4L, order, quantity

  1. Data integrity is not vital to successful MRP implementation.

Answer: False

Reference: Material Requirements Planning

Difficulty: Moderate

Keywords: data, integrity, MRP, material, requirements, planning

  1. MRP II ties MRP to the company’s financial system.

Answer: True

Reference: Material Requirements Planning

Difficulty: Moderate

Keywords: MRP, MRP II, material, requirements, manufacturing, resource

  1. The process with the least capacity is called a capacity constrained resource if its output is less than market demand.

Answer: False

Reference: Drum-Buffer-Rope System

Difficulty: Moderate

Keywords: DBR, drum, buffer, rope, CCR, capacity, constrained, resource

  1. A transfer batch combined with a constraint buffer makes a full process batch at a capacity constrained resource.

Answer: True

Reference: Drum-Buffer-Rope System

Difficulty: Moderate

Keywords: DBR, CCR, capacity, constrained, resource, process, transfer, batch

  1. The bill of resources (BOR) is a record of all the required material, equipment time, staff, and other resources needed, the parent–component relationships, and the usage quantities.

Answer: True

Reference: Resource Planning for Service Providers

Difficulty: Moderate

Keywords: BOR, bill, resources

MULTIPLE CHOICE

  1. A companywide process that cuts across traditional functional areas, business units, geographic regions, and product lines is a(n):
  2. enterprise process.
  3. drum-buffer-rope process.
  4. kinetic process.
  5. full-business process.

Answer: a

Reference:Enterprise Resource Planning

Difficulty: Easy

Keywords: enterprise, resource

  1. New information entered in the database of an ERP system is a(n):
  2. data packet.
  3. transaction.
  4. record.
  5. file.

Answer: b

Reference:Enterprise Resource Planning

Difficulty: Easy

Keywords: enterprise, resource, planning, transaction, ERP

  1. A front-office module for an ERP system includes the:
  2. manufacturing component.
  3. accounting and finance component.
  4. sales and marketing component.
  5. human resources component.

Answer: c

Reference:Enterprise Resource Planning

Difficulty: Easy

Keywords: enterprise, resource, planning, ERP, front, office

  1. Which of the following is a back-office module in a typical ERP system?
  2. Customer service
  3. Sales
  4. Marketing
  5. Human resources

Answer: d

Reference:Enterprise Resource Planning

Difficulty: Easy

Keywords: enterprise, resource, planning, ERP, front, office

  1. Which of the following statements about ERP systems is best?
  2. Recent studies have shown that the most successful ERP implementations use standardized systems.
  3. ERP systems written in XML require complete replacements of a company’s legacy systems.
  4. A company must adapt their ERP system to their existing processes in order for all employees to gain a benefit from the new system.
  5. An ERP system requires a regular synchronization of all of the module databases, which is usually accomplished automatically when the business is not conducting business.

Answer: a

Reference:Enterprise Resource Planning

Difficulty: Moderate

Keywords: enterprise, resource, planning, ERP

  1. Which of the following is NOT an example of dependent demand items?
  2. Shoelaces, shoes
  3. Wheels, car
  4. Carafes, coffeemakers
  5. Ice skates, roller skates

Answer: d

Reference: Planning and Control Systems for Manufacturers

Difficulty: Moderate

Keywords: dependent, demand

  1. Any item manufactured from one or more components is a(n):
  2. parent.
  3. component.
  4. intermediate item.
  5. purchased item.

Answer: a

Reference: Planning and Control Systems for Manufacturers

Difficulty: Moderate

Keywords: parent, component

  1. Which best defines the gross requirements for a component item?
  2. The forecasted customer demand for the component
  3. The amount of safety stock needed to buffer against uncertainties
  4. The sum of gross requirements for all parents of the component
  5. The total demand for the component derived from all immediate parents

Answer: d

Reference: Planning and Control Systems for Manufacturers

Difficulty: Moderate

Keywords: component, parent

  1. MRP can be used to best advantage under which one of the following circumstances?
  2. When the item’s demand depends only on customer demand
  3. When the item’s demand is uniform
  4. When the item’s demand is constant
  5. When the item’s demand depends on its parent’s demand

Answer: d

Reference: Material Requirements Planning

Difficulty: Moderate

Keywords: MRP, material, requirements, planning

  1. Which of the following statements about MRP is TRUE?
  2. To be classified as a successful MRP user, a company must use either the L4L or POQ rules for lot sizing.
  3. MRP gross requirements for a parent item are equal to the planned order releases of its components.
  4. MRP logic is based on the logic of uniform, continuous demand, and item independence.
  5. MRP gross requirements for a component depend on the planned order releases of its immediate parents.

Answer: d

Reference: Material Requirements Planning

Difficulty: Moderate

Keywords: MRP, material, requirements, planning, component

  1. Which one of the following systems is an input to the MRP system?
  2. Shop-floor scheduling system
  3. Financial reporting system
  4. Master production-scheduling system
  5. Purchasing system

Answer: c

Reference: Material Requirements Planning

Difficulty: Moderate

Keywords: MRP, material, requirements, planning, input

  1. If a planned receipt for an item is due in week 6 and the item’s lead-time is two weeks, in which week will the corresponding planned order release occur?
  2. Week 2
  3. Week 4
  4. Week 6
  5. Week 8

Answer: b

Reference: Material Requirements Planning

Difficulty: Moderate

Keywords: planned, order, receipt, release

  1. Which one of the following statements about lot-sizing rules is TRUE?
  2. The periodic order quantity (POQ) rule seeks to create inventory remnants.
  3. If the POQ rule is used, an item’s lot size can vary each time an order is placed.
  4. The lot-for-lot (L4L) rule is a special case of the fixed-order quantity (FOQ) rule.
  5. All lot-sizing rules seek to minimize inventory levels.

Answer: b

Reference: Material Requirements Planning

Difficulty: Moderate

Keywords: lot, sizing, POQ, periodic, order

  1. Which one of the following is an MRP lot-sizing rule that attempts to minimize the amount of average inventory?
  2. Periodic order quantity (POQ), with P = 2
  3. Fixed order quantity (FOQ)
  4. Economic order quantity (EOQ)
  5. Lot for lot (L4L)

Answer: d

Reference: Material Requirements Planning

Difficulty: Moderate

Keywords: MRP, material, requirements, planning, L4L, lot

  1. MRP explosion means estimating the total number of:
  2. subassemblies, components, and raw materials needed for each parent item.
  3. raw materials to be purchased from all suppliers.
  4. parts to be produced for each parent item.
  5. parts needed to be produced less the number of parts on hand for each parent item.

Answer: a

Reference: Material Requirements Planning

Difficulty: Moderate

Keywords: MRP, material, requirements, planning, explosion

  1. Which of the following statements concerning MRP is TRUE?
  2. Dependent-demand items tend to experience relatively constant demand rates.
  3. MRP systems use independent demands for each component item.
  4. Capacity requirements planning (CRP) uses open orders (scheduled receipts) and planned order releases to estimate capacity requirements for critical workstations.
  5. The most accurate way to forecast dependent demand is to examine past usage rates.

Answer: c

Reference: Material Requirements Planning

Difficulty: Moderate

Keywords: MRP, material, requirements, planning, capacity

  1. Which one of the following is a feature of MRP II, but not available in basic MRP systems?
  2. Financial reporting
  3. Action notices
  4. Dispatch lists
  5. Capacity reporting

Answer: a

Reference: Material Requirements Planning

Difficulty: Moderate

Keywords: MRP, material, requirements, planning, MRP II, resource

  1. Which of the following statements about MRP II is TRUE?
  2. It is computationally faster than regular MRP.
  3. It is limited only to aiding order-launching decisions.
  4. It incorporates informal systems through the use of expert systems technology.
  5. It provides more extensive information than MRP because it is tied to the company’s financial system.

Answer: d

Reference: Material Requirements Planning

Difficulty: Moderate

Keywords: MRP II, manufacturing, resource, planning

  1. The Big Mistake Company uses an MRP system. However, the company’s database contains many inaccuracies. Which type of inaccuracy is most likely to result in incorrect planned order release quantities for its dependent demand items?
  2. Incorrect routings
  3. Incorrect bills of materials
  4. Incorrect cost and pricing data
  5. Incorrect machine capacity data

Answer: b

Reference: Material Requirements Planning

Difficulty: Moderate

Keywords: dependent, demand

  1. Which one of the following conditions enhances the effectiveness or success in implementing MRP?
  2. Accurate inventory records
  3. Small lot sizes
  4. Few BOM levels
  5. A volatile manufacturing environment

Answer: a

Reference: Material Requirements Planning

Difficulty: Moderate

Keywords: MRP, material, requirements, planning, implementation

  1. Which of the following statements on MRP is TRUE?
  2. The payoffs from MRP tend to be greater when there are more BOM levels and larger lot sizes.
  3. When MRP systems are enhanced to include financial reporting, they are called basic MRP systems, or “little mrps.”
  4. The fixed-order quantity (FOQ) eliminates remnants.
  5. MRP is an inventory control system that derives the gross requirements of the end items from purchase commitments with vendors.

Answer: a

Reference: Material Requirements Planning

Difficulty: Moderate

Keywords: MRP, material, requirements, planning

  1. Use the following MRP record to answer the question.

ITEM: ABCLot Size P = 2
Description:Lead Time: 2 weeks
Date / 1 / 2 / 3 / 4 / 5 / 6 / 7 / 8
Gross
requirements / 30 / 30 / 60 / 75 / 70
Scheduled
receipts / 60
Projected on Hand / 0
Planned
receipts
Planned order
releases

What are the quantities of planned order releases for item ABC for the first five weeks (weeks 1, 2, 3, 4, and 5)?

  1. 30, 0, 60, 0, 145
  2. 60, 0, 145, 0, 0
  3. 0, 30, 60, 0, 0
  4. 30, 0, 60, 145, 0

Answer: b

Reference: Material Requirements Planning

Difficulty: Moderate

Keywords: MRP, material, requirements, planning, planned release

  1. Use the following MRP record to answer the question.

ITEM: XYZLot Size P = 1
Description:Lead Time: 1 week
Date / 1 / 2 / 3 / 4 / 5 / 6 / 7 / 8
Gross
requirements / 50 / 20 / 30 / 40 / 20
Scheduled
receipts / 25
Projected on Hand / 40
Planned
receipts
Planned order
releases

What are the quantities of planned order releases for item XYZ for the first six weeks (weeks 1, 2, 3, 4, 5, and 6)?

  1. 35, 0, 0, 60, 0, 0
  2. 35, 0, 60, 0, 0, 0
  3. 5, 30, 0, 40, 20, 0
  4. 35, 0, 0, 40, 20, 0

Answer: a

Reference: Material Requirements Planning

Difficulty: Moderate

Keywords: MRP, material, requirements, planning, order, release

  1. Use the following MRP record to answer the following question.

ITEM: XYZLot Size P = 2
Description:Lead Time: 1 week
Date / 1 / 2 / 3 / 4 / 5 / 6 / 7 / 8
Gross
requirements / 100 / 50 / 70 / 40 / 90 / 50
Scheduled
receipts / 100
Projected on Hand / 20
Planned
receipts
Planned order
releases

What is the planned order release quantity in week 4?

  1. 0 units
  2. Greater than 0 units but fewer than or equal to 50 units
  3. Greater than 50 units but fewer than or equal to 100 units
  4. Greater than 100 units

Answer: d

Reference: Material Requirements Planning

Difficulty: Moderate

Keywords: MRP, material, requirements, planning, planned, release

  1. Use the information in Table 15.1. In which week will the second planned order release occur?
  2. Week 1
  3. Week 2
  4. Week 3
  5. Week 4, 5, 6, 7, or 8

Answer: c

Reference: Material Requirements Planning

Difficulty: Moderate

Keywords: planned, release

  1. Use the information in Table 15.1. If the safety stock level were 30 units instead of 0 units, in which week would the first planned receipt occur?
  2. Week 1
  3. Week 2 or 3
  4. Week 4 or 5
  5. Week 6 or 7

Answer: c

Reference: Material Requirements Planning

Difficulty: Moderate

Keywords: planned, receipt

  1. Use the following MRP record to answer the question.

What will be the projected on-hand inventory quantity in week 7

  1. Fewer than or equal to 30 units
  2. Greater than 30 units but fewer than or equal to 60 units
  3. Greater than 60 units but fewer than or equal to 90 units
  4. Greater than 90 units

Answer: a

Reference: Material Requirements Planning

Difficulty: Moderate

Keywords: projected, inventory

  1. Use the following MRP record to answer the question.

ITEM: ABCLot Size P = 2
Description:Lead Time: 2 weeks
Date / 1 / 2 / 3 / 4 / 5 / 6 / 7 / 8
Gross
requirements / 60 / 90 / 150
Scheduled
receipts / 160
Projected on Hand / 0
Planned
receipts
Planned order
releases

What are the quantity and the week of the first planned order release?

  1. 20 units; week 1
  2. 140 units; week 2
  3. 150 units; week 1
  4. 150 units: week 2

Answer: b

Reference: Material Requirements Planning

Difficulty: Moderate

Keywords: planned, release

  1. Use the following MRP record to answer the question.

ITEM: QRSLot Size P = 2
Description:Lead Time: 2 weeks
Date / 1 / 2 / 3 / 4 / 5 / 6 / 7 / 8
Gross
requirements / 50 / 100 / 90 / 100
Scheduled
receipts / 120
Projected on Hand / 20
Planned
receipts
Planned order
releases

Which one of the following statements about item QRS is TRUE?

  1. Exactly one action notice is needed.
  2. The first planned receipt occurs in week 1.
  3. The second planned order release quantity is 90 units.
  4. The total planned order release quantity (summing up all eight weeks) is 190 units.

Answer: a

Reference: Material Requirements Planning

Difficulty: Moderate

Keywords: planned, receipt

  1. Use the following MRP record to answer the question.

How many action notices are needed for item A?

  1. Zero
  2. One
  3. Two
  4. Three or more

Answer: c

Reference: Material Requirements Planning

Difficulty: Moderate

Keywords: action, notice

  1. Use the information in Table 15.2. Which one of the following statements about item C is TRUE?
  2. It has a planned receipt of 80 units in week 3.
  3. Its second planned order release is for 200 units in week 3.
  4. It has a planned receipt of 180 units in week 6.
  5. Its first planned order release is for 130 units in week 1.

Answer: b