Operations Management, 11e (Krajewski et al.

)
Chapter 11: Resource Planning

11.1 Material Requirements Planning

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
Learning Outcome: Apply the process of materials requirements planning (MRP)
AACSB: Application of Knowledge

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

Answer: TRUE
Reference: Material Requirements Planning
Difficulty: Easy
Keywords: parent, component
Learning Outcome: Apply the process of materials requirements planning (MRP)
AACSB: Application of Knowledge

3) Dependent demand for an item occurs because the quantity required for it varies with the
production plans of one or more parents.
Answer: TRUE
Reference: Material Requirements Planning
Difficulty: Moderate
Keywords: dependent demand, parent
Learning Outcome: Apply the process of materials requirements planning (MRP)
AACSB: Application of Knowledge

4) 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: Material Requirements Planning
Difficulty: Easy
Keywords: component, parent, transform
Learning Outcome: Apply the process of materials requirements planning (MRP)
AACSB: Application of Knowledge

1
Copyright © 2016 Pearson Education, Inc.
5) If the demand for an independent demand item is continuous and uniform, so will the planned
order releases of its components.
Answer: FALSE
Reference: Material Requirements Planning
Difficulty: Moderate
Keywords: dependent demand, continuous
Learning Outcome: Apply the process of materials requirements planning (MRP)
AACSB: Application of Knowledge

6) Which of the following is NOT an example of dependent demand items?

A) shoelaces, shoes
B) wheels, car
C) carafes, coffeemakers
D) ice skates, roller skates
Answer: D
Reference: Material Requirements Planning
Difficulty: Moderate
Keywords: dependent demand
Learning Outcome: Apply the process of materials requirements planning (MRP)
AACSB: Application of Knowledge

7) Any item manufactured from one or more components is a(n):

A) parent.
B) component.
C) intermediate item.
D) purchased item.
Answer: A
Reference: Material Requirements Planning
Difficulty: Moderate
Keywords: parent, component
Learning Outcome: Apply the process of materials requirements planning (MRP)
AACSB: Application of Knowledge

8) Under which one of the following circumstances can an MRP system be used to its best
advantage?
A) when the item's demand depends only on customer demand
B) when the item's demand is uniform
C) when the item's demand is constant
D) when the item's demand depends on the production plans of its parent(s)
Answer: D
Reference: Material Requirements Planning
Difficulty: Moderate
Keywords: material requirements plan, MRP
Learning Outcome: Apply the process of materials requirements planning (MRP)
AACSB: Application of Knowledge

2
Copyright © 2016 Pearson Education, Inc.
9) In MRP, a(n) ________ is any item manufactured from one or more components.
Answer: parent
Reference: Material Requirements Planning
Difficulty: Moderate
Keywords: parent, component
Learning Outcome: Apply the process of materials requirements planning (MRP)
AACSB: Application of Knowledge

10) In MRP, a(n) ________ is an item that may go through one or more operations to be
transformed into or become part of one or more parents.
Answer: component
Reference: Material Requirements Planning
Difficulty: Moderate
Keywords: component, parent
Learning Outcome: Apply the process of materials requirements planning (MRP)
AACSB: Application of Knowledge

11) ________ is a computerized information system developed specifically to aid in managing

dependent-demand inventory and scheduling replenishment orders.
Answer: MRP, material requirements planning
Reference: Material Requirements Planning
Difficulty: Easy
Keywords: MRP, material requirements planning, dependent demand
Learning Outcome: Apply the process of materials requirements planning (MRP)
AACSB: Application of Knowledge

12) Explain the difference between independent and dependent demand and illustrate your
explanation with an example.
Answer: Examples will vary. The key difference between the two is whether the demand for
items A is driven directly or by the demand for item B. End items are typically independent
demand since their demand is subject only to customers' appetite. The components used to make
up the end item have their demand determined by the number of end items that are required
during any production period.
Reference: Material Requirements Planning
Difficulty: Moderate
Keywords: MRP, material requirements planning, input
Learning Outcome: Apply the process of materials requirements planning (MRP)
AACSB: Application of Knowledge

3
Copyright © 2016 Pearson Education, Inc.
11.2 Master Production Scheduling

1) The master production schedule (MPS) is the part of the material requirements planning that
specifies when components must be ordered or assembled.
Answer: FALSE
Reference: Master Production Scheduling
Difficulty: Moderate
Keywords: master production schedule, MPS, material requirements plan
Learning Outcome: Apply the process of materials requirements planning (MRP)
AACSB: Application of Knowledge

2) Available-to-promise inventory is the amount of end items that marketing can promise to
customers by a certain date.
Answer: TRUE
Reference: Master Production Scheduling
Difficulty: Easy
Keywords: ATP, available to promise inventory, MPS, master production schedule
Learning Outcome: Apply the process of materials requirements planning (MRP)
AACSB: Application of Knowledge

3) The portion of the master production schedule farthest into the future is often frozen to reduce
forecasting requirements.
Answer: FALSE
Reference: Master Production Scheduling
Difficulty: Moderate
Keywords: MPS, master production schedule, freezing
Learning Outcome: Apply the process of materials requirements planning (MRP)
AACSB: Application of Knowledge

4) The projected on-hand inventory in the MPS takes into account scheduled receipts, but not
planned receipts.
Answer: FALSE
Reference: Master Production Scheduling
Difficulty: Moderate
Keywords: MPS, master production schedule, freezing
Learning Outcome: Apply the process of materials requirements planning (MRP)
AACSB: Application of Knowledge

5) The projected on-hand inventory in the MPS takes into account customer orders (booked) as
well as the MPS quantities.
Answer: TRUE
Reference: Master Production Scheduling
Difficulty: Moderate
Keywords: MPS, master production schedule, projected on-hand inventory
Learning Outcome: Apply the process of materials requirements planning (MRP)
AACSB: Application of Knowledge

4
Copyright © 2016 Pearson Education, Inc.
6) Gross requirements are the total demand derived from all parent production plans.
Answer: TRUE
Reference: Master Production Scheduling
Difficulty: Moderate
Keywords: gross requirements
Learning Outcome: Apply the process of materials requirements planning (MRP)
AACSB: Application of Knowledge

7) Available-to-promise (ATP) quantities are only shown in the first period (if the projected on-
hand inventory is greater than zero in the first period), and subsequently in periods when the
MPS quantity is greater than 0.
Answer: TRUE
Reference: Master Production Scheduling
Difficulty: Moderate
Keywords: Available-to-promise quantities, ATP, MPS quantity
Learning Outcome: Apply the process of materials requirements planning (MRP)
AACSB: Application of Knowledge

Table 11.1
Big Truck Tacos has developed the following forecast of demand and accepted orders for their
holiday tacos as they enter the Taco Festival Season. They enter the planning period with 65
holiday tacos in inventory as shown in Week 0.

Week 0 1 2 3 4 5 6 7 8
Forecast 70 80 90 100 120 140 170 220
Customer
80 50 30 10 0 0 0 0
Orders
Projected on-
hand 65
inventory
MPS
ATP

8) Use Table 11.1 to answer this question. If Big Truck Tacos makes tacos in batches of 20, what
should their MPS entry be for the first week of production?
A) 60
B) 80
C) 100
D) 120
Answer: D
Reference: Master Production Scheduling
Difficulty: Moderate
Keywords: master production schedule
Learning Outcome: Apply the process of materials requirements planning (MRP)
AACSB: Analytical Thinking

5
Copyright © 2016 Pearson Education, Inc.
9) Use Table 11.1 to answer this question. After scoring a terrific deal on tortillas, Big Truck
Tacos decides to produce 120 tacos in weeks 1, 2, and 3. If they make tacos in batches of 20,
what should their MPS entry be for fifth week of production?
A) 60
B) 80
C) 100
D) 120
Answer: A
Reference: Master Production Scheduling
Difficulty: Moderate
Keywords: master production schedule
Learning Outcome: Apply the process of materials requirements planning (MRP)
AACSB: Analytical Thinking

10) Use Table 11.1 to answer this question. After scoring a terrific deal on tortillas, Big Truck
Tacos decides to produce 120 tacos in weeks 1, 2, and 3. What is their projected on-hand
inventory for week 4?
A) 55
B) 65
C) 75
D) 85
Answer: C
Reference: Master Production Scheduling
Difficulty: Moderate
Keywords: master production schedule
Learning Outcome: Apply the process of materials requirements planning (MRP)
AACSB: Analytical Thinking

11) Use Table 11.1 to answer this question. In week 1 the inventory manager discovers, much to
his horror, that instead of 65 tacos in inventory, they have only 6.5 tacos. They had already
planned to make exactly what they needed, based on the erroneous inventory number of 65 and
they can't alter their week 1 schedule. How many tacos do they need to have on their MPS for the
second week of production to correct their shortfall and move forward through the rest of the
production period?
A) 80
B) 90
C) 100
D) 110
Answer: B
Reference: Master Production Scheduling
Difficulty: Moderate
Keywords: master production schedule
Learning Outcome: Apply the process of materials requirements planning (MRP)
AACSB: Analytical Thinking

6
Copyright © 2016 Pearson Education, Inc.
Table 11.2
Mutts Amazing Dogs has developed the following demand forecast for The Pitbull, a spicy
concoction graced by pepperjack cheese, serrano, habanero, poblano and jalapeno peppers,
onion, and a cilantro-lime aioli. They enter the planning period with 20 hotdogs in inventory as
shown in Week 0. A few customers have standing orders for hotdogs and they have booked
catering events over the next two months. They buy their hotdogs in packages of ten just like you
and me.

Week 0 1 2 3 4 5 6 7 8
Forecast 70 80 90 100 120 140 170 220
Customer
80 50 30 10 0 0 0 0
Orders
Projected on-
hand 20
inventory
MPS
ATP

12) Use Table 11.2 to answer this question. What should the MPS quantity be for week 5?
A) 190
B) 150
C) 170
D) 160
Answer: B
Reference: Master Production Scheduling
Difficulty: Moderate
Keywords: master production schedule
Learning Outcome: Apply the process of materials requirements planning (MRP)
AACSB: Analytical Thinking

13) Use Table 11.2 to answer this question. What is their available to promise inventory for week
4?
A) 3
B) 5
C) 7
D) 9
Answer: A
Reference: Master Production Scheduling
Difficulty: Moderate
Keywords: master production schedule
Learning Outcome: Apply the process of materials requirements planning (MRP)
AACSB: Analytical Thinking

7
Copyright © 2016 Pearson Education, Inc.
14) Use Table 11.2 to answer this question. The sales manager realizes that he shifted a decimal
point for week 3; instead of customer orders for 30, they actually have customer orders for 300.
"My bad," he says to no one in particular. The production manager retreats to the sanctity of his
office and after dismembering his sales-manager voodoo doll, sets about making things right.
What's the proper MPS quantity for week 3 now that the orders are straightened out?
A) 280
B) 270
C) 300
D) 290
Answer: C
Reference: Master Production Scheduling
Difficulty: Moderate
Keywords: master production schedule
Learning Outcome: Apply the process of materials requirements planning (MRP)
AACSB: Analytical Thinking

15) Use Table 11.2 to answer this question. Mutt decides to operate on a level MPS plan for
weeks 1 through 4. What MPS quantity brings them into week 5 with the same ATP as if they
had adopted a more traditional approach?
A) 190
B) 150
C) 170
D) 160
Answer: A
Reference: Master Production Scheduling
Difficulty: Hard
Keywords: master production schedule
Learning Outcome: Apply the process of materials requirements planning (MRP)
AACSB: Analytical Thinking

16) Operations produces a number of items in one production period. Those items that are not
produced for a specific customer order are ________.
Answer: available to promise inventory
Reference: Master Production Scheduling
Difficulty: Moderate
Keywords: available to promise, ATP
Learning Outcome: Apply the process of materials requirements planning (MRP)
AACSB: Application of Knowledge

17) ________ is an estimate of the amount of inventory available each week after gross
requirements have been satisfied.
Answer: Projected on-hand inventory
Reference: Master Production Scheduling
Difficulty: Moderate
Keywords: projected on-hand inventory
Learning Outcome: Apply the process of materials requirements planning (MRP)
AACSB: Application of Knowledge
8
Copyright © 2016 Pearson Education, Inc.
18) Complete the following MPS Record

Answer:

Reference: Master Production Scheduling

Difficulty: Moderate
Keywords: MPS, master production schedule
Learning Outcome: Apply the process of materials requirements planning (MRP)
AACSB: Analytical Thinking

9
Copyright © 2016 Pearson Education, Inc.
19) Complete the following MPS Record.

Answer:

Reference: Master Production Scheduling

Difficulty: Moderate
Keywords: MPS, master production schedule
Learning Outcome: Apply the process of materials requirements planning (MRP)
AACSB: Analytical Thinking

11.3 MRP Explosion

1) A materials requirements planning (MRP) explosion occurs when the system is bombarded
with too many orders to schedule at one time.
Answer: FALSE
Reference: MRP Explosion
Difficulty: Easy
Keywords: material requirements planning, MRP explosion
Learning Outcome: Apply the process of materials requirements planning (MRP)
AACSB: Application of Knowledge

10
Copyright © 2016 Pearson Education, Inc.
2) A bill of materials is a record of all the components of an item, the parent-component
relationships, and the usage quantities derived from engineering and process designs.
Answer: TRUE
Reference: MRP Explosion
Difficulty: Moderate
Keywords: bill of materials, BOM
Learning Outcome: Apply the process of materials requirements planning (MRP)
AACSB: Application of Knowledge

3) Part commonality tends to increase inventory costs.

Answer: FALSE
Reference: MRP Explosion
Difficulty: Moderate
Keywords: part commonality, inventory
Learning Outcome: Apply the process of materials requirements planning (MRP)
AACSB: Application of Knowledge

4) Gross requirements are the total demand derived from all parent production plans.
Answer: TRUE
Reference: MRP Explosion
Difficulty: Moderate
Keywords: gross requirements, demand, parent
Learning Outcome: Apply the process of materials requirements planning (MRP)
AACSB: Application of Knowledge

5) 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: MRP Explosion
Difficulty: Moderate
Keywords: BOM, bill of materials, parent, component
Learning Outcome: Apply the process of materials requirements planning (MRP)
AACSB: Application of Knowledge

6) An intermediate item must have at least one parent and at least one component.
Answer: TRUE
Reference: MRP Explosion
Difficulty: Moderate
Keywords: intermediate item, parent, component
Learning Outcome: Apply the process of materials requirements planning (MRP)
AACSB: Application of Knowledge

11
Copyright © 2016 Pearson Education, Inc.
7) Planned receipts are estimates of the amount of inventory available each week after gross
requirements have been satisfied.
Answer: FALSE
Reference: MRP Explosion
Difficulty: Moderate
Keywords: planned receipts, projected on-hand inventory
Learning Outcome: Apply the process of materials requirements planning (MRP)
AACSB: Application of Knowledge

8) For items manufactured in-house, one component of the planned lead time is waiting time.
Answer: TRUE
Reference: MRP Explosion
Difficulty: Moderate
Keywords: planned lead time, waiting time
Learning Outcome: Apply the process of materials requirements planning (MRP)
AACSB: Application of Knowledge

9) The periodic order quantity (POQ) rule tends to keep more inventory on hand than the lot-for-
lot rule, but less inventory on hand than the fixed order quantity rule.
Answer: TRUE
Reference: MRP Explosion
Difficulty: Moderate
Keywords: periodic order quantity rule, fixed order quantity rule, lot for lot rule, POQ, FOQ,
L4L
Learning Outcome: Apply the process of materials requirements planning (MRP)
AACSB: Application of Knowledge

10) Lot-for-lot (L4L) is a rule that maintains the same order quantity each time an order is
issued.
Answer: FALSE
Reference: MRP Explosion
Difficulty: Moderate
Keywords: lot-for-lot rule, L4L, order quantity
Learning Outcome: Apply the process of materials requirements planning (MRP)
AACSB: Application of Knowledge

11) MRP II ties MRP to the company's financial system.

Answer: TRUE
Reference: MRP Explosion
Difficulty: Moderate
Keywords: MRP, MRP II, material requirements planning
Learning Outcome: Apply the process of materials requirements planning (MRP)
AACSB: Application of Knowledge

12
Copyright © 2016 Pearson Education, Inc.
12) Which of the following statements about MRP is TRUE?
A) To be classified as a successful MRP user, a company must use either the L4L or POQ rules
for lot sizing.
B) MRP gross requirements for a parent item are equal to the planned order releases of its
components.
C) MRP logic is based on the logic of uniform, continuous demand, and item independence.
D) MRP gross requirements for a component depend on the planned order releases of its
immediate parents.
Answer: D
Reference: MRP Explosion
Difficulty: Moderate
Keywords: MRP, material requirements planning, component
Learning Outcome: Apply the process of materials requirements planning (MRP)
AACSB: Application of Knowledge

13) Which one of the following is an input to the MRP system?

A) shop-floor schedules
B) financial reports
C) master production schedule
D) purchasing orders
Answer: C
Reference: MRP Explosion
Difficulty: Moderate
Keywords: MRP, material requirements planning, input
Learning Outcome: Apply the process of materials requirements planning (MRP)
AACSB: Application of Knowledge

14) 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?
A) week 2
B) week 4
C) week 6
D) week 8
Answer: B
Reference: MRP Explosion
Difficulty: Moderate
Keywords: planned order receipt, planned order release
Learning Outcome: Apply the process of materials requirements planning (MRP)
AACSB: Application of Knowledge

13
Copyright © 2016 Pearson Education, Inc.
15) Which one of the following statements about lot-sizing rules is TRUE?
A) The periodic order quantity (POQ) rule seeks to create inventory remnants.
B) If the POQ rule is used, an item's lot size can vary each time an order is placed.
C) The lot-for-lot (L4L) rule is a special case of the fixed-order quantity (FOQ) rule.
D) All lot-sizing rules seek to minimize inventory levels.
Answer: B
Reference: MRP Explosion
Difficulty: Moderate
Keywords: lot, sizing, POQ, periodic order quantity
Learning Outcome: Apply the process of materials requirements planning (MRP)
AACSB: Application of Knowledge

16) Which one of the following is an MRP lot-sizing rule that attempts to minimize the amount
of average inventory?
A) periodic order quantity (POQ), with P = 2
B) fixed order quantity (FOQ)
C) economic order quantity (EOQ)
D) lot for lot (L4L)
Answer: D
Reference: MRP Explosion
Difficulty: Moderate
Keywords: MRP, material requirements planning, L4L
Learning Outcome: Apply the process of materials requirements planning (MRP)
AACSB: Application of Knowledge

17) Which statement on MRP explosion is BEST?

A) It calculates the total number of subassemblies, components, and raw materials needed for
each parent item.
B) It calculates the total number of raw materials to be purchased from all suppliers.
C) It calculates the total number of parts to be produced for each parent item.
D) It calculates the total number of parts needed to be produced less the number of parts on hand
for each parent item.
Answer: A
Reference: MRP Explosion
Difficulty: Moderate
Keywords: MRP, material requirements planning, explosion
Learning Outcome: Apply the process of materials requirements planning (MRP)
AACSB: Application of Knowledge

14
Copyright © 2016 Pearson Education, Inc.
18) Which of the following statements concerning MRP is TRUE?
A) Dependent-demand items tend to experience relatively constant demand rates.
B) MRP systems use independent demands for each component item.
C) Capacity requirements planning (CRP) uses open orders (scheduled receipts) and planned
order releases to estimate capacity requirements for critical workstations.
D) The most accurate way to forecast dependent demand is to examine past usage rates.
Answer: C
Reference: MRP Explosion
Difficulty: Moderate
Keywords: MRP, material requirements planning, CRP, capacity requirements planning
Learning Outcome: Apply the process of materials requirements planning (MRP)
AACSB: Application of Knowledge

19) Which one of the following is a feature of MRP II, but not available in basic MRP systems?
A) financial projections
B) action notices
C) dispatch lists
D) capacity reporting
Answer: A
Reference: MRP Explosion
Difficulty: Moderate
Keywords: MRP, material requirements planning, MRP II
Learning Outcome: Apply the process of materials requirements planning (MRP)
AACSB: Application of Knowledge

20) Which of the following statements about MRP II is BEST?

A) It is computationally faster than regular MRP.
B) It is limited only to aiding order-launching decisions.
C) It incorporates informal systems through the use of expert systems technology.
D) It provides more extensive information than MRP because it is tied to the company's financial
system.
Answer: D
Reference: MRP Explosion
Difficulty: Moderate
Keywords: MRP II, manufacturing resource planning
Learning Outcome: Apply the process of materials requirements planning (MRP)
AACSB: Application of Knowledge

15
Copyright © 2016 Pearson Education, Inc.
21) Use the following partially completed MRP record to answer the question.

What are the quantities of planned order releases for item ABC for the first five weeks (weeks 1,
2, 3, 4, and 5)?
A) 30, 0, 60, 0, 145
B) 60, 0, 145, 0, 0
C) 0, 30, 60, 0, 0
D) 30, 0, 60, 145, 0
Answer: B
Reference: MRP Explosion
Difficulty: Moderate
Keywords: MRP, material requirements planning, planned order release
Learning Outcome: Apply the process of materials requirements planning (MRP)
AACSB: Analytical Thinking

22) Use the following partially completed MRP record to answer the question.

What are the quantities of planned order releases for item XYZ for the first six weeks (weeks 1,
2, 3, 4, 5, and 6)?
A) 20, 30, 0, 40, 20, 0
B) 35, 0, 60, 0, 0, 0
C) 5, 30, 0, 40, 20, 0
D) 35, 0, 0, 40, 20, 0
Answer: A
Reference: MRP Explosion
Difficulty: Moderate
Keywords: MRP, material requirements planning, planned order release
Learning Outcome: Apply the process of materials requirements planning (MRP)
AACSB: Analytical Thinking
16
Copyright © 2016 Pearson Education, Inc.
23) Use the following partially completed MRP record to answer the question.

What is the planned order release quantity in week 4?

A) 0 units
B) greater than 0 units but fewer than or equal to 50 units
C) greater than 50 units but fewer than or equal to 100 units
D) greater than 100 units
Answer: D
Reference: MRP Explosion
Difficulty: Moderate
Keywords: MRP, material requirements planning, planned order release
Learning Outcome: Apply the process of materials requirements planning (MRP)
AACSB: Analytical Thinking

17
Copyright © 2016 Pearson Education, Inc.
24) Use the following MRP record to answer the question.

Which one of the statements concerning item LMN is TRUE?

A) The scheduled receipt of 80 units in week 3 should be expedited so that it is finished in week
2.
B) The planned order release quantity in week 3 is 80 units.
C) The planned receipt quantity in week 6 is 30 units.
D) The projected on-hand inventory in week 8 is 70 units.
Answer: A
Reference: MRP Explosion
Difficulty: Hard
Keywords: scheduled receipt, planned order release, projected on-hand inventory
Learning Outcome: Apply the process of materials requirements planning (MRP)
AACSB: Analytical Thinking

25) Management wishes to use a POQ lot-sizing rule for an item that experiences an average
demand of 30 units per week. If the desired average lot size is 120 units, what should P be?
A) zero or one weeks
B) two or three weeks
C) four or five weeks
D) more than five weeks
Answer: C
Reference: MRP Explosion
Difficulty: Moderate
Keywords: lot sizing, POQ
Learning Outcome: Apply the process of materials requirements planning (MRP)
AACSB: Analytical Thinking

18
Copyright © 2016 Pearson Education, Inc.
26) Management wishes to use an FOQ lot-sizing rule for an item based on the economic order
quantity. If the annual demand is 1,200 units, the holding cost is $10 per unit per year, and the
setup cost is $50 per lot, which one of the following fixed-order quantities is most appropriate?
A) 90 units
B) 110 units
C) 130 units
D) 150 units
Answer: B
Reference: MRP Explosion
Difficulty: Moderate
Keywords: lot sizing, FOQ
Learning Outcome: Apply the process of materials requirements planning (MRP)
AACSB: Analytical Thinking

Scenario 11.1
Sunshine Manufacturing produces three products: X, Y, Z. The production of these end items is
controlled by an MRP system. Each end item X is assembled with two components of A and one
component of B. Each end item of Y is assembled with two components of C and one component
of A. End item Z is assembled from one unit of D and one unit of C; D is manufactured from one
unit of A; and C is manufactured from one unit of B.

27) Use the information in Scenario 11.1. Which of the following sequences is an acceptable way
to process the inventory records for components A, B, C, and D?
A) A B C D
B) D A B C
C) B A D C
D) C B D A
Answer: D
Reference: MRP Explosion
Difficulty: Hard
Keywords: order processing
Learning Outcome: Apply the process of materials requirements planning (MRP)
AACSB: Analytical Thinking

28) Use the information in Scenario 11.1. If item C has a manufacturing lead time of two weeks,
and a planned receipt of 65 units is needed in week 4, which of the following statements is
TRUE?
A) The planned order release in week 2 for item C is 130 units.
B) The gross requirements for item B in week 4 is 65 units.
C) The gross requirements for item B in week 2 is 130 units.
D) The gross requirements for item B in week 2 is 65 units.
Answer: D
Reference: MRP Explosion
Difficulty: Hard
Keywords: gross requirements
Learning Outcome: Apply the process of materials requirements planning (MRP)
AACSB: Analytical Thinking
19
Copyright © 2016 Pearson Education, Inc.
Scenario 11.2

Item Amount Item Amount Item Amount

O 17 F 15 D 30
P 25 U 11 E 93
C 13 N 34

Inventory amounts indicated in the table are available to produce the end item indicated in this
bill of materials.

29) Use Scenario 11.2 to answer this question. How many additional units of E are needed to
produce ten end items?
A) 620
B) 103
C) 236
D) 350
Answer: B
Reference: MRP Explosion
Difficulty: Moderate
Keywords: bill of materials, BOM
Learning Outcome: Apply the process of materials requirements planning (MRP)
AACSB: Analytical Thinking

30) Use Scenario 11.2 to answer this question. How many additional units of D are needed to
produce seven end items?
A) 40
B) 46
C) 68
D) 54
Answer: D
Reference: MRP Explosion
Difficulty: Moderate
Keywords: bill of materials, BOM
Learning Outcome: Apply the process of materials requirements planning (MRP)
AACSB: Analytical Thinking

20
Copyright © 2016 Pearson Education, Inc.
31) Use Figure Scenario 11.2 to answer this question. How many additional units of P are needed
to produce ten end items?
A) 46
B) 38
C) 10
D) 13
Answer: C
Reference: MRP Explosion
Difficulty: Moderate
Keywords: bill of materials, BOM
Learning Outcome: Apply the process of materials requirements planning (MRP)
AACSB: Analytical Thinking

32) Use Scenario 11.2 to answer this question. How many additional units of F are needed to
produce twelve end items?
A) 174
B) 192
C) 182
D) 160
Answer: D
Reference: MRP Explosion
Difficulty: Moderate
Keywords: bill of materials, BOM
Learning Outcome: Apply the process of materials requirements planning (MRP)
AACSB: Analytical Thinking

33) Use Scenario 11.2 to answer this question. In order to keep their suppliers happy, the
company assembling the end item wants to make sure they build enough product to order at least
one of each of the components on the lowest level of the BOM. What number of end items will
make that happen?
A) 8
B) 10
C) 13
D) 16
Answer: C
Reference: MRP Explosion
Difficulty: Hard
Keywords: bill of materials, BOM
Learning Outcome: Apply the process of materials requirements planning (MRP)
AACSB: Analytical Thinking

21
Copyright © 2016 Pearson Education, Inc.
34) Which of the following is NOT used to derive an item's gross requirements?
A) the MPS for immediate parents that are end items
B) the planned order releases for immediate parents below the MPS level
C) the MPS components that are not purchased items
D) any other requirements not originating in the MPS, such as the demand for replacement parts
Answer: C
Reference: MRP Explosion
Difficulty: Moderate
Keywords: gross requirements, MRP explosion
Learning Outcome: Apply the process of materials requirements planning (MRP)
AACSB: Application of Knowledge

35) A computer-generated memo used by inventory planners to make decisions about releasing
new orders and adjusting due dates of scheduled receipts is a(n):
A) enterprise report.
B) infinite capacity.
C) action notice.
D) input-output report.
Answer: C
Reference: MRP Explosion
Difficulty: Moderate
Keywords: planned order release, scheduled receipt, action notice
Learning Outcome: Apply the process of materials requirements planning (MRP)
AACSB: Application of Knowledge

22
Copyright © 2016 Pearson Education, Inc.
Scenario 11.3
Use this bill of materials and inventory records to answer the questions.

Item Amount Item Amount Item Amount

O 7 F 11 D 2
P 12 U 7 E 8
C 3 N 12

36) Use Scenario 11.3 to answer this question. How many units of E are required to produce 20
end items?
A) 644
B) 720
C) 712
D) 692
Answer: A
Reference: MRP Explosion
Difficulty: Moderate
Keywords: BOM, inventory record, bill of materials
Learning Outcome: Apply the process of materials requirements planning (MRP)
AACSB: Analytical Thinking

37) Use Scenario 11.3 to answer this question. How many units of N are required to produce 25
end items?
A) 138
B) 150
C) 124
D) 112
Answer: C
Reference: MRP Explosion
Difficulty: Moderate
Keywords: BOM, inventory record, bill of materials
Learning Outcome: Apply the process of materials requirements planning (MRP)
AACSB: Analytical Thinking

23
Copyright © 2016 Pearson Education, Inc.
38) Use Scenario 11.3 to answer this question. How many units of F are required to produce 17
end items?
A) 332
B) 326
C) 340
D) 314
Answer: D
Reference: MRP Explosion
Difficulty: Moderate
Keywords: BOM, inventory record, bill of materials
Learning Outcome: Apply the process of materials requirements planning (MRP)
AACSB: Analytical Thinking

39) Use Scenario 11.3 to answer this question. How many units of E are required to produce 33
end items?
A) 1112
B) 2046
C) 928
D) 1914
Answer: A
Reference: MRP Explosion
Difficulty: Moderate
Keywords: BOM, inventory record, bill of materials
Learning Outcome: Apply the process of materials requirements planning (MRP)
AACSB: Analytical Thinking

40) A technique used for projecting time-phased capacity requirements for workstations is called:
A) capacity requirements planning.
B) time-adjusted output control.
C) input-output control.
D) work center planning.
Answer: A
Reference: MRP Explosion
Difficulty: Moderate
Keywords: capacity requirements planning
Learning Outcome: Apply the process of materials requirements planning (MRP)
AACSB: Application of Knowledge

24
Copyright © 2016 Pearson Education, Inc.
41) Which of the following uses of MRP in promoting a healthy environment is NOT used?
A) An MRP system can track waste in a bill of materials as a component of an item.
B) When the master production schedule is developed for a product, reports can be generated
that project the quantity of waste.
C) When the master production schedule is developed for a product, reports can be generated
that project the timing of waste.
D) The MRP system can be used to communicate directly with the International Organization for
Standardization to file ISO 9000 documentation.
Answer: D
Reference: MRP Explosion
Difficulty: Easy
Keywords: MRP, environment
Learning Outcome: Apply the process of materials requirements planning (MRP)
AACSB: Application of Knowledge

42) Which best defines the gross requirements for a component item?
A) the forecasted customer demand for the component
B) the amount of safety stock needed to buffer against uncertainties
C) the sum of gross requirements for all parents of the component
D) the total demand for the component derived from all immediate parents
Answer: D
Reference: Material Requirements Planning
Difficulty: Moderate
Keywords: component, parent
Learning Outcome: Apply the process of materials requirements planning (MRP)
AACSB: Application of Knowledge

43) MRP ________ is a process that converts the requirements of various final products into a
material requirements plan that specifies the replenishment schedule of all the subassemblies,
components, and raw materials needed by the final products.
Answer: explosion
Reference: MRP Explosion
Difficulty: Moderate
Keywords: explosion, MRP, material requirements plan
Learning Outcome: Apply the process of materials requirements planning (MRP)
AACSB: Application of Knowledge

44) The ________ is a record of all components of an item, the parent-component relationships,
and usage quantities derived from engineering and process design.
Answer: bill of materials, BOM
Reference: MRP Explosion
Difficulty: Moderate
Keywords: BOM, bill of materials
Learning Outcome: Apply the process of materials requirements planning (MRP)
AACSB: Application of Knowledge

25
Copyright © 2016 Pearson Education, Inc.
45) A(n ) ________ item has one or more parents but no components.
Answer: purchased
Reference: MRP Explosion
Difficulty: Moderate
Keywords: purchased item, parent, component
Learning Outcome: Apply the process of materials requirements planning (MRP)
AACSB: Application of Knowledge

46) The L4L rule is a special case of the ________.

Answer: POQ rule
Reference: MRP Explosion
Difficulty: Moderate
Keywords: POQ
Learning Outcome: Apply the process of materials requirements planning (MRP)
AACSB: Application of Knowledge

47) Among the four core processes of an organization that link activities within and across firms
in a supply chain, the ________ interacts with all of them either through its inputs or outputs.
Answer: MRP system
Reference: MRP Explosion
Difficulty: Moderate
Keywords: MRP system, material requirements planning
Learning Outcome: Apply the process of materials requirements planning (MRP)
AACSB: Application of Knowledge

48) A(n) ________ is an intermediate item that is assembled from one or more components.
Answer: subassembly
Reference: MRP Explosion
Difficulty: Moderate
Keywords: subassembly, intermediate item, component
Learning Outcome: Apply the process of materials requirements planning (MRP)
AACSB: Application of Knowledge

49) ________ is the degree to which a component has more than one immediate parent.
Answer: Part commonality
Reference: MRP Explosion
Difficulty: Moderate
Keywords: part commonality, component, parent
Learning Outcome: Apply the process of materials requirements planning (MRP)
AACSB: Application of Knowledge

26
Copyright © 2016 Pearson Education, Inc.
50) The sums of the quantities in the master production schedule must equal those in the
________.
Answer: sales and operations plan
Reference: MRP Explosion
Difficulty: Moderate
Keywords: master production schedule, MPS, material requirements planning, MRP
Learning Outcome: Apply the process of materials requirements planning (MRP)
AACSB: Application of Knowledge

51) A(n) ________ is a record that divides the future into time periods called time buckets.
Answer: inventory record
Reference: MRP Explosion
Difficulty: Moderate
Keywords: inventory record, time bucket
Learning Outcome: Apply the process of materials requirements planning (MRP)
AACSB: Application of Knowledge

52) One thing that an MRP II system has that an MRP system does not is ________.
Answer: a linkage to the financial system
Reference: MRP Explosion
Difficulty: Moderate
Keywords: MRP II
Learning Outcome: Apply the process of materials requirements planning (MRP)
AACSB: Application of Knowledge

53) ________ are the total demand derived from all parent production plans.
Answer: Gross requirements
Reference: MRP Explosion
Difficulty: Moderate
Keywords: gross requirements, parent
Learning Outcome: Apply the process of materials requirements planning (MRP)
AACSB: Application of Knowledge

54) ________ are orders that have been placed but not yet completed.
Answer: Scheduled receipts
Reference: MRP Explosion
Difficulty: Moderate
Keywords: scheduled receipts, order
Learning Outcome: Apply the process of materials requirements planning (MRP)
AACSB: Application of Knowledge

27
Copyright © 2016 Pearson Education, Inc.
55) Waiting time and process time are two components of ________.
Answer: lead time
Reference: MRP Explosion
Difficulty: Moderate
Keywords: waiting time, processing time, lead time
Learning Outcome: Apply the process of materials requirements planning (MRP)
AACSB: Application of Knowledge

56) ________ is a lot-sizing rule under which the lot size ordered covers the gross requirements
of a single week.
Answer: Lot-for-lot, L4L
Reference: MRP Explosion
Difficulty: Moderate
Keywords: L4L, lot-for-lot sizing rule
Learning Outcome: Apply the process of materials requirements planning (MRP)
AACSB: Application of Knowledge

57) A(n) ________ is inventory carried into a week but too small to prevent a shortage.
Answer: remnant
Reference: MRP Explosion
Difficulty: Moderate
Keywords: remnant, inventory
Learning Outcome: Apply the process of materials requirements planning (MRP)
AACSB: Application of Knowledge

58) The lot-for-lot (L4L) rule minimizes inventory investment but it also maximizes the number
of ________.
Answer: orders, orders placed
Reference: MRP Explosion
Difficulty: Moderate
Keywords: lot-for-lot rule, L4L
Learning Outcome: Apply the process of materials requirements planning (MRP)
AACSB: Application of Knowledge

59) ________ is a technique used for projecting time-phased capacity requirements for
workstations.
Answer: Capacity requirements planning, CRP
Reference: MRP Explosion
Difficulty: Moderate
Keywords: CRP, capacity requirements planning
Learning Outcome: Apply the process of materials requirements planning (MRP)
AACSB: Application of Knowledge

28
Copyright © 2016 Pearson Education, Inc.
60) ________ ties the basic MRP system to the company's financial system.
Answer: Manufacturing resource planning, MRP II
Reference: MRP Explosion
Difficulty: Moderate
Keywords: MRP, material requirements planning, MRP II, manufacturing resource planning
Learning Outcome: Apply the process of materials requirements planning (MRP)
AACSB: Application of Knowledge

61) What are the key inputs to an MRP system?

Answer: The key inputs are the bill of materials, master production schedule, and inventory
records.
Reference: MRP Explosion
Difficulty: Moderate
Keywords: MRP, material requirements planning, input
Learning Outcome: Apply the process of materials requirements planning (MRP)
AACSB: Application of Knowledge

62) What is the explosion of the MPS and what are the outputs?
Answer: MRP translates, or explodes, the MPS and other sources of demand into the
requirements needed for all of the subassemblies, components, and raw materials the firm needs
to produce parent items. This process generates the material requirements plan for each
component item. An item's gross requirements are derived from three sources: 1. The MPS for
immediate parents that are end items; 2. The planned order releases (not the gross requirements,
scheduled receipts, or planned receipts) for immediate parents below the MPS level; 3. Any other
requirements not originating in the MPS, such as the demand for replacement parts.
Reference: MRP Explosion
Difficulty: Moderate
Keywords: MRP, material requirements planning, input, MPS, explode
Learning Outcome: Apply the process of materials requirements planning (MRP)
AACSB: Application of Knowledge

63) What information can be gleaned from a bill of materials? If you were asked to produce an
item based solely on a copy of its BOM, what missing information would you need?
Answer: A bill of materials is a record of all the components of an item, the parent component
relationships, and the usage quantities derived from engineering and process designs. You would
have a parts list, but would have no idea how long it might take to assemble an item, or receive
the components from a supplier (lead times). You would also need to know what the levels of
inventory were for each item listed in the BOM. Since the question is phrased as "produce an
item" you might assume that only one end item was required, but if the interpretation is
otherwise, you would need to know a production quantity.
Reference: MRP Explosion
Difficulty: Moderate
Keywords: MRP, material requirements planning, input
Learning Outcome: Apply the process of materials requirements planning (MRP)
AACSB: Application of Knowledge

29
Copyright © 2016 Pearson Education, Inc.
64) Explain the key differences between the FOQ, POQ, and L4L lot-sizing rules.
Answer: A fixed-order-quantity (FOQ) rule maintains the same order quantity each time an
order is issued but varies the time interval between orders. A periodic-order-quantity (POQ) rule
allows a different order quantity to be specified but each order covers the requirements for a
fixed number of time periods. A lot-for-lot (L4L) rule covers the gross requirements of a single
week's production. POQ and L4L rules strive to avoid remnants and thus have smaller average
inventory than FOQ. Because their average inventory is lower, they are less able to respond to
last-minute changes in customer requests.
Reference: MRP Explosion
Difficulty: Moderate
Keywords: FOQ, POQ, L4L lot-sizing rules
Learning Outcome: Apply the process of materials requirements planning (MRP)
AACSB: Application of Knowledge

65) Explain why, in a dependent demand environment, MRP does a better job of estimating the
need to replenish inventory items than does the reorder point system.
Answer: MRP works better for dependent-demand environments because statistical forecasting
for components with lumpy demand results in large forecast errors. It also provides managers
with information useful for planning capacities and estimating financial requirements, and it
automatically updates the demand and inventory-replenishment schedules of components when
the production schedule of parent items changes.
Reference: MRP Explosion
Difficulty: Moderate
Keywords: MRP, material requirements planning, lumpy demand
Learning Outcome: Apply the process of materials requirements planning (MRP)
AACSB: Application of Knowledge

66) How can an MRP system be used in a firm's sustainability efforts?

Answer: Companies can modify their MRP systems to help them track their wastes and plan for
their disposal. The type and amount of waste associated with each item can be entered into its
BOM by treating the waste much like you would a component of the item. When the MPS is
developed for a product, reports can be generated that project the amount of waste expected
during the production process and when it will occur. Although this approach can require that a
firm's BOM be modified substantially, the benefits are also substantial. Firms can identify their
waste problems in advance to eliminate them in some cases (through process improvement
efforts) or plan for their proper disposal in others. It also gives the firm a way to generate any
formal documentation required by the government to verify that it has complied with
environmental laws and policies.
Reference: MRP Explosion
Difficulty: Moderate
Keywords: MRP, material requirements planning, lumpy demand
Learning Outcome: Apply the process of materials requirements planning (MRP)
AACSB: Application of Knowledge

30
Copyright © 2016 Pearson Education, Inc.
67) Complete the following MRP record using the POQ rule.

Answer:

Reference: MRP Explosion

Difficulty: Moderate
Keywords: MRP record. POQ, periodic order quantity
Learning Outcome: Apply the process of materials requirements planning (MRP)
AACSB: Analytical Thinking

31
Copyright © 2016 Pearson Education, Inc.
68) Complete the following MRP record using the L4L rule:

Answer:

Reference: MRP Explosion

Difficulty: Moderate
Keywords: MRP record, L4L, lot-for-lot rule
Learning Outcome: Apply the process of materials requirements planning (MRP)
AACSB: Analytical Thinking

32
Copyright © 2016 Pearson Education, Inc.
69) Complete the following MRP record using the FOQ rule:

Answer:

Reference: MRP Explosion

Difficulty: Moderate
Keywords: MRP record, FOQ, fixed order quantity
Learning Outcome: Apply the process of materials requirements planning (MRP)
AACSB: Analytical Thinking

33
Copyright © 2016 Pearson Education, Inc.
70) Complete the following MRP record using the FOQ rule:

Answer:

Reference: MRP Explosion

Difficulty: Moderate
Keywords: MRP, material requirements planning, FOQ, fixed order quantity
Learning Outcome: Apply the process of materials requirements planning (MRP)
AACSB: Analytical Thinking

34
Copyright © 2016 Pearson Education, Inc.
71) Use the bill of materials and inventory records to determine the quantity of purchased items
necessary to assemble 20 end items if the manufacturer uses lot-for-lot ordering. There are no
end items currently on hand, and none of the components have any scheduled receipts.

Component On-hand Component On-hand

A 5 D 15
B 75 E 3
C 10 F 20

Answer: 20 End Items → 40 As less 5 on hand → 35 As

35 As → 70 Bs
35 As → 70 Ds less 15 Ds on hand → 55 Ds

20 End Items → 40 Cs less 10 on hand → 30 Cs

30 Cs → 30 Es less 3 on hand → 27 Es
30 Cs → 60 Fs less 20 on hand → 40 Fs
30 Cs → 90 Bs

90 Bs + 70 Bs →160 Bs less 75 on hand → 85 Bs

Purchased
Item Qty to Order
B 85
D 55
E 27
F 40

Reference: MRP Explosion

Difficulty: Moderate
Keywords: BOM, inventory record, bill of materials
Learning Outcome: Apply the process of materials requirements planning (MRP)
AACSB: Analytical Thinking

35
Copyright © 2016 Pearson Education, Inc.
72) Use the bill of materials and inventory records to determine the additional quantities of
purchased items necessary to assemble 15 end items if the manufacturer uses lot-for-lot ordering.
There are no end items currently on hand, and none of the components have any scheduled
receipts.

Item Amount Item Amount Item Amount

O 7 F 11 D 2
P 12 U 7 E 8
C 3 N 12

Inventory amounts indicated in the table are available to produce the end item indicated in this
bill of materials.
Answer:
Purchased Quantity to
Item Order
D 150
E 464
F 274
N 64
P 57

Reference: MRP Explosion

Difficulty: Moderate
Keywords: BOM, inventory record, bill of materials
Learning Outcome: Apply the process of materials requirements planning (MRP)
AACSB: Analytical Thinking

36
Copyright © 2016 Pearson Education, Inc.
73) Use the bill of materials and inventory records to determine the additional quantities of
purchased items necessary to assemble 20 end items if the manufacturer uses lot-for-lot ordering.
There are no end items currently on hand, and none of the components have any scheduled
receipts.

Item Amount Item Amount Item Amount

O 5 F 17 D 12
P 14 U 3 E 6
C 7 N 10

Inventory amounts indicated in the table are available to produce the end item indicated in this
bill of materials.
Answer:
Purchased Quantity to
Item Order
D 216
E 618
F 142
N 104
P 91

Reference: MRP Explosion

Difficulty: Moderate
Keywords: BOM, inventory record, bill of materials
Learning Outcome: Apply the process of materials requirements planning (MRP)
AACSB: Analytical Thinking

37
Copyright © 2016 Pearson Education, Inc.
74) Consider the MPS, BOM, and inventory data shown.

Master Production Schedule:

The following table shows the MPS start quantities for the next 10 weeks.

Finished Item A 1 2 3 4 5 6 7 8 9 10

Finished Item A MPS Start 20 40 30 20 40

Bill of Material:
- Item A uses 2 each of component D, 1 each of component C and 2 each of subassembly B.
- Subassembly B uses 2 each of component E.

Selected Inventory Data:

Scheduled
Item Lot Sizing Rule Lead Time Receipts On-Hand
B L4L 1 40 in period 1
C POQ = 3 2 40
D FOQ = 250 1 100
E L4L 2 160 in period 2

Construct the MRP schedule using the preceding information. Blank MRP records are provided
at the end of this test.
Answer:

38
Copyright © 2016 Pearson Education, Inc.
Reference: MRP Explosion
Difficulty: Hard
Keywords: MRP, material requirements planning, lot-for-lot, L4L, fixed order quantity, FOQ,
periodic order quantity, POQ
Learning Outcome: Apply the process of materials requirements planning (MRP)
AACSB: Analytical Thinking

39
Copyright © 2016 Pearson Education, Inc.
11.4 Enterprise Resource Planning

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
Learning Outcome: Describe the process and applications of enterprise resource planning (ERP)
AACSB: Application of Knowledge

2) 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
Learning Outcome: Describe the process and applications of enterprise resource planning (ERP)
AACSB: Application of Knowledge

3) A firm's existing, older information system is called a "legacy system."

Answer: TRUE
Reference: Enterprise Resource Planning
Difficulty: Moderate
Keywords: enterprise resource planning, legacy system
Learning Outcome: Describe the process and applications of enterprise resource planning (ERP)
AACSB: Application of Knowledge

4) The companies SAP AG and Microsoft have the largest installed base of customers for ERP
packages.
Answer: FALSE
Reference: Enterprise Resource Planning
Difficulty: Easy
Keywords: enterprise resource planning, ERP
Learning Outcome: Describe the process and applications of enterprise resource planning (ERP)
AACSB: Application of Knowledge

40
Copyright © 2016 Pearson Education, Inc.
5) A companywide process that cuts across traditional functional areas, business units,
geographic regions, and product lines is a(n):
A) enterprise process.
B) master production scheduling process.
C) kinetic process.
D) full-business process.
Answer: A
Reference: Enterprise Resource Planning
Difficulty: Easy
Keywords: enterprise process
Learning Outcome: Describe the process and applications of enterprise resource planning (ERP)
AACSB: Application of Knowledge

6) Entering new information in the database of an ERP system is a(n):

A) data packet.
B) transaction.
C) record.
D) file.
Answer: B
Reference: Enterprise Resource Planning
Difficulty: Easy
Keywords: enterprise resource planning, transaction, ERP
Learning Outcome: Describe the process and applications of enterprise resource planning (ERP)
AACSB: Application of Knowledge

7) A front-office module for an ERP system includes:

A) manufacturing.
B) accounting and finance.
C) sales and marketing.
D) human resources.
Answer: C
Reference: Enterprise Resource Planning
Difficulty: Easy
Keywords: enterprise resource planning, ERP, front office
Learning Outcome: Describe the process and applications of enterprise resource planning (ERP)
AACSB: Application of Knowledge

41
Copyright © 2016 Pearson Education, Inc.
8) Which of the following is a back-office module in a typical ERP system?
A) customer service
B) sales
C) marketing
D) human resources
Answer: D
Reference: Enterprise Resource Planning
Difficulty: Easy
Keywords: enterprise resource planning, ERP, back office
Learning Outcome: Describe the process and applications of enterprise resource planning (ERP)
AACSB: Application of Knowledge

9) Which of the following statements about ERP systems is BEST?

A) Recent studies have shown that the most successful ERP implementations use standardized
systems.
B) ERP systems written in XML require complete replacements of a company's legacy systems.
C) A company must adapt their ERP system to their existing processes in order for all employees
to gain a benefit from the new system.
D) 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
Learning Outcome: Describe the process and applications of enterprise resource planning (ERP)
AACSB: Application of Knowledge

10) A companywide process that cuts across functional areas, business units, geographic regions,
and product lines is a(n) ________.
Answer: enterprise process
Reference: Enterprise Resource Planning
Difficulty: Moderate
Keywords: enterprise process, ERP
Learning Outcome: Describe the process and applications of enterprise resource planning (ERP)
AACSB: Application of Knowledge

11) ERP revolves around a(n) ________.

Answer: single database
Reference: Enterprise Resource Planning
Difficulty: Moderate
Keywords: enterprise resource planning, ERP, database
Learning Outcome: Describe the process and applications of enterprise resource planning (ERP)
AACSB: Application of Knowledge

12) What are the differences and similarities among material requirements planning,
manufacturing resource planning, and enterprise resource planning systems?
Answer: The materials requirement planning (MRP) system can be considered a subset of the

42
Copyright © 2016 Pearson Education, Inc.
manufacturing resource planning (MRP II) system, containing all of the production-related
capabilities without the tie-in to the company's financial and other core and supporting process
systems. The MRP II system could be considered a subset of an enterprise resource planning
(ERP) system, containing everything an ERP system has without the single source of data,
streamlined data flows, and availability of a wealth of real-time information for all employees.
Reference: Multiple Sections
Difficulty: Moderate
Keywords: MRP, material requirements planning
Learning Outcome: Describe the process and applications of enterprise resource planning (ERP)
AACSB: Application of Knowledge

13) What is the basic idea behind an enterprise resource planning system?
Answer: An enterprise resource planning system is a large, integrated information system that
supports many, if not all, of a firm's processes and data storage needs. The organization can view
its operations as a whole rather than guessing how activity in one area affects another. The
common database eliminates multiple data entry and the mistakes that are inherent in multiple
entry systems.
Reference: Enterprise Resource Planning
Difficulty: Moderate
Keywords: MRP, material requirements planning
Learning Outcome: Describe the process and applications of enterprise resource planning (ERP)
AACSB: Application of Knowledge

11.5 Resource Planning for Service Providers

1) The bill of resources (BOR) is a record of parent-component relationships and all the required
materials, equipment time, staff, and other resources needed, including the usage quantities.
Answer: TRUE
Reference: Resource Planning for Service Providers
Difficulty: Moderate
Keywords: BOR, bill of resources
Learning Outcome: Apply the process of materials requirements planning (MRP)
AACSB: Application of Knowledge

43
Copyright © 2016 Pearson Education, Inc.
2) Which of the following statements about service resource planning is TRUE?
A) The service analogy to the BOM in a manufacturing company is a bill of lading (BOL).
B) One resource that every service provider manages is cash.
C) There is no such thing as dependent demand in the service sector.
D) As services are completed, the accounts receivable decrease.
Answer: B
Reference: Resource Planning for Service Providers
Difficulty: Moderate
Keywords: service, resource planning
Learning Outcome: Apply the process of materials requirements planning (MRP)
AACSB: Application of Knowledge

3) An example of a dependent demand item for services is a(n):

A) menu in a restaurant.
B) jukebox in a club.
C) operating suite at a hospital.
D) a pilot's checklist for an airline.
Answer: C
Reference: Resource Planning for Service Providers
Difficulty: Moderate
Keywords: dependent demand, service
Learning Outcome: Apply the process of materials requirements planning (MRP)
AACSB: Application of Knowledge

4) Facilitating goods in a hotel's bill of resources would include a:

A) housekeeper.
B) fax machine.
C) towel.
D) front-desk clerk.
Answer: C
Reference: Resource Planning for Service Providers
Difficulty: Moderate
Keywords: facilitating goods, BOR, bill of resources
Learning Outcome: Apply the process of materials requirements planning (MRP)
AACSB: Application of Knowledge

5) The service analogy to the bill of materials in a manufacturing company is the bill of:
A) resources.
B) services.
C) sub-services.
D) tender.
Answer: A
Reference: Resource Planning for Service Providers
Difficulty: Moderate
Keywords: BOR, bill of resources
Learning Outcome: Apply the process of materials requirements planning (MRP)
AACSB: Application of Knowledge

44
Copyright © 2016 Pearson Education, Inc.
6) A(n) ________ is a record of a service firm's parent-component relationships all of the
materials, equipment, time, staff, and other productive assets associated with them, including
usage quantities.
Answer: bill of resources
Reference: Resource Planning for Service Providers
Difficulty: Moderate
Keywords: resource planning, service, bill of resources
Learning Outcome: Apply the process of materials requirements planning (MRP)
AACSB: Application of Knowledge

7) Can MRP be adapted for use in services and, if so, how would it work?
Answer: Service providers must also plan the use of resources and facilitating goods. A bill of
resources (BOR) is a record of all the required materials, equipment, time, staff, and other
resources needed to provide a service, the parent-component relationships, and the usage
quantities. Naturally, the services themselves cannot be inventoried but must instead be supplied
on demand.
Reference: Resource Planning for Service Providers
Difficulty: Moderate
Keywords: BOR, bill of resources, facilitating goods
Learning Outcome: Apply the process of materials requirements planning (MRP)
AACSB: Application of Knowledge

45
Copyright © 2016 Pearson Education, Inc.