3/24/2018 Chapter Quiz

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1 Which of the following statements concerning MRP systems is false?

INCORRECT
A) MRP is a computer-based inventory planning and control information system designed to handle production scheduling
of dependent-demand inventories for batch systems.
B) MRP is designed to determine how much is needed and when the need occurs for items that experience dependent
demand (components, subassemblies, parts, and raw materials).
C) A Type II MRP system includes a check of available capacity and a feedback loop to the master schedule if capacity is
insufficient.
D) MRP systems are based upon a replenishment philosophy, which indicates that material should be ordered when stock
runs low.
E) The ordering philosophy of MRP may result in "lumpy" demand for component parts.
Feedback: (pp. 400, MRP systems use the requirement philosophy versus the replenishment philosophy used in order-
point systems.)
2 As defined by Joseph Orlicky, the three principal functions of MRP are:
INCORRECT
A) Managing inventories, establishing priorities, and managing capacities

B) Managing inventories, establishing order priorities, and scheduling slack resources

C) Managing inventories, establishing order priorities, and job dispatching

D) Managing activity time/cost tradeoffs, establishing priorities, and managing capacities

E) Managing activity time/cost tradeoffs, establishing priorities, and scheduling slack resources

3 Three primary inputs fed into the MRP computer program are:
INCORRECT
A) Master production schedule (MPS), bills of material file, and capacity requirements plan

B) Capacity requirements plan, planned order schedule, and inventory status file

C) MPS, inventory records file, and bills of material file

D) MPS, capacity requirements plan, and inventory records file

E) MPS, planned order schedule, and inventory records file

Feedback: (pp. 397 – The parts explosion process has three principal inputs: master schedule, BOM, and inventory
records.)
4 CORRECT A Type II MRP System is also known as a _________________

A) Material Resource Production System

B) Manufacturing Requirement Production System

C) Manufacturing Resource Planning System

D) Master Resource Planning System

E) Master Requirement Production System

Feedback: (pp. 399, A type II MRP system is called a manufacturing resource planning system.)
5 Which one of the following statements is incorrect about MRP systems?
INCORRECT
A) MRP systems are useful in managing dependent demand type of inventories.

B) MRP systems utilize requirements type of ordering philosophy while managing inventories.

C) MRP systems are best suited for managing lumpy demand patterns.

D) The ABC classification principle is used for managing inventories in MRP systems.

E) None of the above

Feedback: (pp. 401 – The ABC principle does not work well for MRP systems. The amounts ordered in a MRP system are
based on requirements generated from the master schedule.)
6 Correctly complete the following statement. A bill of materials __________.
INCORRECT
A) Is a structured list of all the materials or parts needed to produce one unit of a finished product.

B) Is rarely revised once established.

C) May exist in multiple versions for different functional disciplines throughout an organization.

D) Will lead to sufficient MRP system performance as long as the "threshold degree" of accuracy of approximately 75
percent is met

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3/24/2018 Chapter Quiz
E) Is used as an input for dispatching decisions on the shop floor
Feedback: (pp. 405, The BOM is a structured list of all the materials or parts needed to produce one unit of a finished
product.)
7 In theory, safety stock should not be necessary within an MRP system due to demand certainty. In practice, however, some
INCORRECT safety stock may be maintained. Which of the following statements about safety stock within an MRP system is false?
A) When maintained, safety stock is normally held for end items rather than lower-level items in the bill-of-material
because end items experience uncertain independent demand.
B) When maintained, safety stock is normally held for end items rather than lower level items in the bill-of-material
because at that level less of it is required for the same degree of protection against demand uncertainty.
C) Carrying safety stock may represent a common solution for variable production scrap rates.

D) Safety lead time may be a more cost-effective solution than safety stock for purchased materials that are subject to
variable delivery times.
E) Safety capacity as an alternative to safety stock is widely applied in industry.
Feedback: (pp. 408-409, (pp. 397 – Thus, serious consideration should be given to safety capacity, as an alternative to
safety stock,; this has not been widely done in industry,)
8 CORRECT Which of the following is not an element of a successful MRP system?

A) implementation planning

B) adequate customer support

C) available data

D) management support

E) user knowledge
Feedback: (pp. 409, accurate data is critical for ERP success.)
9 The master production schedule for two products, A and B, is shown below. To manufacture item A, two units of component C
INCORRECT are required. To manufacture item B, four units of component C are required. The inventory balance for C is 10 units at the
start of week 1. Using this information, determine the gross requirements for component C to start week 1.

A) 20 units

B) 15 units

C) 38 units

D) 28 units

E) 48 units
Feedback: (pp. 403, GR for component C = 2(15) for A and 4(2) for B = 38)
10 Using a lot-for-lot ordering strategy for the following item, what is amount of net requirements in week 3? (Note: use a lead
CORRECT time of one week, the gross requirements and scheduled receipts depicted below, and assume you begin with 100 units in
inventory.)

A) 40 units

B) 115 units

C) 50 units

D) 155 units

E) 75 units
Feedback: (pp. 403, net requirement = gross requirement – schedule receipt = 80 -30 = 50. Lot for lot ordering you
order based on net requirement and therefore, on-hand inventory is 0).
11 End item A requires three component parts: B, C and D. The bill of material indicates that for each completed A, one unit of B,
CORRECT 2 units of C, and 1 unit of D are required. Current inventory for the four items is as follows: There are 15 As, 40 Bs, 50 Cs and
15 Ds in stock. If the lead time for all items is one week and there are no scheduled receipts for any item, how many units of
product A can be delivered to customers at the start of next week (week 2) if you realize now that the bill of materials for A is
wrong. You now realize it takes 2 units of B to make 1 finished unit of A (not the 1 unit as previously thought)?
A) 10 units

B) 25 units

C) 30 units

D) 35 units

E) 40 units
Feedback: (pp. 405, when it took one unit of B to complete A, we had 15 As, now if it takes 2 units of B to make 1
finished unit of A, we can deliver 30 units of A next week.)
12 Which one of the following is not an element of a MRP system?
INCORRECT
A) Inventory Record

B) Shop Floor Control

C) Capacity Planning System

D) Master Scheduling

E) Sales and Operations Planning System

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3/24/2018 Chapter Quiz
Feedback: (pp. 405 – 407, MRP elements include master scheduling, BOM, inventory records, capacity planning,
purchasing and shop-floor control.)
13 The Type I MRP system considers the capacity availability and shop floor control while managing the inventory in a factory.
INCORRECT
A) True

B) False
Feedback: (pp. 398, The type I system does not include the capacity planning and shop-floor modules.)
14 MRP systems require almost no safety stock of components to be carried because of a predictable demand pattern.
CORRECT
A) True

B) False
Feedback: (pp. 408, To the surprise of many managers, little safety stock is needed if MRP is properly used.)
15 The master schedule, the capacity plan, and inventory records are used as inputs for the part explosion process.
INCORRECT
A) True

B) False
Feedback: (pp. 397 – The parts explosion process has three principal inputs: master schedule, BOM, and inventory
records.)
16 Capacity Planning Systems are also referred to as Manufacturing Execution Systems (MES).
INCORRECT
A) True

B) False
Feedback: (pp. 407, shop floor control systems are also referred to as MES.)
17 An ERP system could be used by all of the functional areas of a business.
CORRECT
A) True

B) False
Feedback: (pp. 399 and 412, MRP can also be extended into all business functions through the use of an ERP system.
ERP is a companywide system to plan and control all resources.)

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