The goal of the basic EOQ model is to: Minimize the sum of
ordering and holding costs.
Aggregate operations planners seek to match supply and demand
at minimum overall cost and: by staying within company policy.
Which of the following is not included in ordering cost? Cost of
the items purchased
Master production scheduling (MPS) involves long term capacity
planning that typically covers a time horizon of one to three
years. FALSE
A fill rate is the percentage of _ filled by stock on hand demand
Which one of the following is not a determinant of the reorder
point (ROP)? Purchase cost
A "chase" demand strategy in aggregate operations planning
would be attempting to match capacity and demand, period by
period. TRUE
The goal of the basic EOQ model is to: Minimize the sum of
ordering and holding costs.
Among the basic demand options in aggregate operations
planning are promotion and the use of overtime. FALSE
If average demand for an item is 20 units per day. safety stock is
50 units. and lead time is four days. the reorder point (ROP) will
be: 130
One advantage to using graphs in the development of aggregate
plans is the ability to visualize a production plan. TRUE
The reorder point (ROP) models determine the point at which the
inventory, in terms of quantity must be reordered. TRUE
Which one of the following is not an input in an MRP system?
Planned-order releases
Using the EOQ model. the maximum inventory level is equal to Q
or economic order quantity. FALSE
The MRP input stating which end items are to be produced, when
they are needed, and what quantities are needed, is the: master
production schedule.
The A-B-C approach involves classifying inventory items based on
their unit cost. FALSE
In MRP, "scheduled receipts" are: open orders already scheduled
to be delivered.
In the A-B-C approach to classify inventory, items that have high
unit costs are always classified as "A" category items. FALSE
The hierarchical diagram that depicts the subassemblies and
components that are needed to produce and/or assemble a
product is called a(n): product structure tree.
The average inventory level and the number of orders per year
are inversely related; as one increases. the other decreases. TRUE
Inspection of goods for quality and quantity upon arrival is part of
ordering cost. TRUE
What three things are needed when updating the monthly sales
and operations plan? Previous months sales records, production
levels, inventory levels
Changes in this MPS zone require middle management approval.
Zone 1
What cannot take place when using the transportation model in
aggregate planning? Holding costs
The gross requirements of a given part or component are
determined from: planned order release of the immediate
parent(s)
Which is true of a net-change system? The basic production plan
is modified to reflect changes as they o cur.
The three basic inputs of MRP are: 1) the bill of material; 2)
inventory on hand, open orders and lead times; and 3) planned
order releases. FALSE
The MRP requires a list of the individual parts that will be
converted to finished goods. TRUE
Dependent demand is derived demand. TRUE
The main disadvantage(s) of trial-and-error techniques used for
aggregate operations planning is (are): that they are expensive to
do.
Which of the following is NOT a consideration in the decision to
use hiring and laying off permanent full-time workers as a
capacity option? Finished goods inventory that is stockpiled
Load reports compare planned capacity requirements with
projected capacity and availability. TRUE
Fixed-interval ordering in MRP places orders that cover a
predetermined number of periods. TRUE
The output of MRP is a schedule of planned orders for all parts
and end items. TRUE
Which one of the following is implied by a “lead time” service
level of 95 percent? The probability is .95 that demand during
lead time will not exceed the amount on hand at the beginning
of lead time.
Which one of the following is implied by an annual service level
of 95 percent? Approximately 95 percent of all demand will
actually be satisfied directly from on-hand inventory.
Which is not considered a holding cost? Preparing purchase
orders
In the basic EOQ model, the annual ordering cost is equal to:
ordering cost multiplied by the ratio of annual demand to the
EOQ.
A fixed order quantity/reorder point model for inventory control
is usually used with perpetual tracking. TRUE
Purchase cost is not generally determinant of the reorder point.
FALSE
In the A-B-C classification of inventory, C items typically range
from 50 to 60 percent of the number of items, but only 5 to 10
percent of the annual dollar value (ADV). TRUE
Inspection of goods for quality and quantity upon arrival is part of
ordering cost. TRUE
The service level for inventory planning is associated with the risk
of a stock-out. TRUE