Chapter 1: Business Functions and Business Processes MULTIPLE CHOICE 1. Which of the following is a functional area of operation? a. Packaging c. b. Supply Chain d. Management ANS: B PTS: 1 REF: 2 2. Which business function is performed by Accounting and Finance? a. Cost allocation and c. control b. Taking sales orders d. ANS: A PTS: 1 Shipping Baking Benefits Plant maintenance REF: 2 3. What are the computers, people, procedures, and software that store, organize, and deliver information in an organization? a. The CPU c. Information systems b. The Process System d. Personnel systems ANS: C PTS: 1 REF: 3 4. Today’s managers are beginning to think in terms of business process. A business process cuts across which functional areas of operation? a. Marketing and Sales d. Human Resources b. Supply Chain e. All of the above Management c. Accounting and Finance ANS: E PTS: 1 REF: 3 5. Information systems that can be designed so that functional areas of operation share data are called: a. integrated c. non-middleware information systems information systems b. complete information d. linked information systems systems ANS: A PTS: 1 REF: 4 6. Estimates of future product demand, which are the amount of a product that customers will want to buy, are called: a. sales forecasts c. sales diving b. sales divining d. sales deriving ANS: A PTS: 1 REF: 7 7. Which of the following is an input to the Marketing and Sales functional area? a. Production plans c. Per-unit cost b. Raw material orders d. Accounts payable data ANS: C PTS: 1 REF: 10 8. When purchasing a computer, the functional area responsible for handling the financial help for purchasing that computer is: a. Marketing and Sales c. Supply Chain Management b. Accounting and d. Human Resources Finance ANS: B PTS: 1 REF: 3 9. Successful business managers view their business operations from the perspective of a(n): a. satisfied customer c. profitable sale b. positive cash flow d. accurate sales forecast ANS: A PTS: 1 REF: 4 10. When manufacturing runs out of raw material, it is known as a(n): a. shortfall c. b. empty shelf d. ANS: D PTS: 1 REF: 11 11. ____ can result in management overinvesting in inventory. a. Bulging raw c. materials b. Stockup d. ANS: C PTS: 1 depletion stockout Safety stock Excess baggage REF: 11 12. Which of the following outputs would emerge from the Accounting and Finance functional area? a. Packaging orders c. Regulation compliance b. Sales strategy d. Financial reports ANS: D PTS: 1 REF: 13 13. Which of the following is an input to HR? a. Personnel forecasts b. ANS: A Sales data PTS: 1 c. d. Layoff and recall company policy Travel expense company policy REF: 14 COMPLETION 1. ____________________ programs are core software used by companies to coordinate information in every area of the business. ANS: Enterprise Resource Planning ERP Enterprise Resource Planning (ERP) ERP (Enterprise Resource Planning) PTS: 1 REF: 1 2. A collection of activities that takes one or more kinds of input and creates an output that is of value to the customer is called a(n) ____________________. ANS: business process PTS: 1 REF: 1 3. The business functions of financial accounting, cost allocation and control, planning and budgeting, and cash-flow management take place in the ____________________ functional area of operation. ANS: Accounting and Finance A/F Accounting and Finance (A/F) A/F (Accouting and Finance) PTS: 1 REF: 2 4. One example of the business function that happens in the human resource area of operation would be ____________________. ANS: Recruiting and hiring Training Payroll Benefits Government compliance PTS: 1 REF: 2 5. A(n) ____________________ includes the computers, people, procedures, and software that store, organize, and deliver information. ANS: information system IS information system (IS) IS (information system) PTS: 1 REF: 3 6. Information systems designed so that functional areas share data are called ____________________. ANS: integrated information systems integrated IS integrated information systems (IIS) IIS PTS: 1 REF: 4 7. A shortfall of raw materials is known as a(n) ____________________. ANS: stockout PTS: 1 REF: 11 8. To avoid stockouts, manufacturers might carry extra raw materials known as ____________________. ANS: safety stock PTS: 1 REF: 11 Chapter 2: The Development of Enterprise Resource Planning Systems MULTIPLE CHOICE 1. Individual information systems for each functional area in a company are known as: a. silos c. tubers b. bagpipes d. separated systems ANS: A PTS: 1 REF: 20 2. The complex software and hardware required for ERP systems was not available until the a. 1960s c. 1980s b. 1970s d. 1990s ANS: D PTS: 1 REF: 21 3. The observation that the number of transistors built onto a computer chip doubles every 18 months is known as: a. Moore’s Law c. Doubletake b. Gate’s Prophesy d. Acceleration ANS: A PTS: 1 REF: 21 4. When a piece of equipment’s capacity is exceeded, its capacity can be increased by adding new hardware. This is commonly known as: a. adaptability c. scalability b. middleware d. computability ANS: C PTS: 1 REF: 22 5. In the 1980s, ____, the technology that holds data in an organized fashion, existed for ERP development. a. spreadsheets c. client/server architecture b. DBMS d. word-processors ANS: B PTS: 1 REF: 22 6. ____ software allows a plant manager to plan production and raw materials requirements by working backward from the sales forecast. a. DBMS c. MRP b. ANS: C EDI PTS: 1 d. EFT REF: 23 7. The direct computer-to-computer exchange of standard business documents is known as: a. MRP c. EDI b. e-mail d. DDS ANS: C PTS: 1 REF: 23 8. In a process-oriented company, the flow of information and management activity is ______, in line with the flow of materials and products. a. horizontal across functions b. vertical from top level management down through the hierarchical management structure c. vertical through functions d. horizontal from marketing and sales to inventory and production ANS: A PTS: 1 REF: 24 9. Software ____ are individual programs that can be purchased, installed, and run separately, but extract data from the common database. a. nodes c. modules b. chunks d. tidbits ANS: C PTS: 1 REF: 26 10. In ______, third-party software companies are encouraged to develop add-on software products that can be integrated with existing software. a. open architecture c. integrated pieces b. clip-ons d. piecemeal nodes ANS: A PTS: 1 11. ____ is SAP’s biggest competitor. a. J.D. Edwards b. PeopleSoft ANS: D PTS: 1 REF: 27 c. d. REF: 28 12. Old information and computer systems are known as ______. a. dinosaurs c. b. passe systems d. ANS: C PTS: 1 Microsoft Oracle legacy systems relics REF: 27 13. Which ERP package is a popular software choice for managing human resources and financial activities at universities? a. SAP c. Microsoft Dynamics b. PeopleSoft d. J.D. Edwards ANS: B PTS: 1 14. Which R/3 module records sales orders? REF: 27-28 a. b. ANS: A SD MM PTS: 1 c. d. PP QM REF: 29 15. Which of the following modules in SAP ERP maintains production information? a. SD c. PP b. MM d. QM ANS: C PTS: 1 REF: 29 16. The ______ module helps the company manage fixed-asset purchases (plant and machinery) and related depreciation. a. Plant Maintenance c. Materials Management b. Asset Management d. Product Planning ANS: B PTS: 1 REF: 30 17. Which of the following module in SAP is a set of tools that can automate the activities in SAP ERP? a. Workflow c. Financial Accounting b. Controlling d. Project System ANS: A PTS: 1 REF: 31 18. When top management is queried on the reasons for implementing ERP systems, the overriding answer is ____. a. cost saving c. increased profitability b. control d. inventory management ANS: B PTS: 1 REF: 31 19. Which R/3 module records transactions in the general ledger? a. CO c. b. WF d. ANS: C PTS: 1 FI PS REF: 31 20. After a company chooses the modules they want to implement, they must decide on ____ options, which allow the customer to customize the modules to fit their business to some extent. a. settings c. flexible b. configuration d. tandem ANS: B PTS: 1 REF: 32 21. As part of the ______ process, a company can define any number of tolerance groups with a range of limits, and can then assign employees to these tolerance groups. Figure 2-6 A customization example: tolerance groups to set transaction limits a. b. manufacturing development c. d. configuration programming ANS: C PTS: 1 REF: 32 22. Which of the following is a benefit to running an ERP system? a. Global integration b. Elimination of updating and repairing multiple systems c. Capability to manage operations, not just monitor them d. All of the above are benefits ANS: D PTS: 1 REF: 36 23. An ERP system for a large company will cost ____, including software, training, and implementation. a. $100-500 million c. $1-5 billion b. $1-5 million d. $50,000-$500,000 ANS: A PTS: 1 REF: 37 24. SAP’s internal programming language is called: a. R/3 c. b. C++ d. ANS: D PTS: 1 REF: 38 25. One assessment of a project’s value is calculated by the: a. DVT c. b. PMT d. ANS: C PTS: 1 PTS: 1 ROI PPT REF: 39 26. Bumpy rollouts of ERP systems are usually caused by: a. software problems c. b. people problems d. ANS: B Visual Basic ABAP hardware problems configuration problems REF: 40 COMPLETION 1. ____________________ states that the number of transistors on a computer chip doubles every 24 months. ANS: Moore’s Law PTS: 1 REF: 21 2. A central-local computer arrangement is called ____________________ architecture. ANS: client server client/server client-server PTS: 1 REF: 22 3. ____________________ means that the capacity of a piece of equipment can be increased by adding new hardware. ANS: Scalable Scalability PTS: 1 REF: 22 4. The software that holds that data in an organized fashion, and that allows for the easy retrieval of data, is the ____________________. ANS: database management system DBMS database management system (DBMS) DBMS (database management system) PTS: 1 REF: 22 5. ____________________ software allows a plant manager to plan production and raw materials requirements by working backward from the sales forecast. ANS: MRP material requirements planning material requirements planning (MRP) MRP (material requirements planning) PTS: 1 REF: 23 6. The prediction of future sales is the ____________________. ANS: sales forecast PTS: 1 REF: 23 7. ____________________ is the direct computer-to-computer exchange of standard business documents. ANS: Electronic data interchange EDI Electronic data interchange (EDI) EDI (electronic data interchange) PTS: 1 REF: 23 8. Originially, in English, SAP was an acronym for ____________________. ANS: Systems Analysis and Program Development PTS: 1 REF: 25 9. In ____________________, third-party software companies are encouraged to develop add-on software products that can be integrated with existing software. ANS: open architecture PTS: 1 REF: 27 10. Old systems are known as ____________________. ANS: legacy systems PTS: 1 REF: 27 11. SAP’s biggest competitor is ____________________. ANS: Oracle PTS: 1 REF: 28 12. The ____________________ records sales orders and scheduled deliveries. Information about the customer (pricing, address and shipping instructions, billing details, and so on) is maintained and accessed from this module. ANS: Sales and Distribution SD Sales and Distribution (SD) SD (Sales and Distribution) PTS: 1 REF: 29 13. When data are entered into the system, data in all related files in the ____________________ are automatically updated. ANS: central database PTS: 1 REF: 33 14. R/3’s design incorporates ____________________, which means that R/3 designers choose the best, most efficient ways in which business processes should be handled. ANS: best practices PTS: 1 REF: 34 15. SAP’s internal programming language is ____________________. ANS: ABAP Advanced Business Application Programming Advanced Business Application Programming (ABAP) ABAP (Advanced Business Application Programming) PTS: 1 REF: 38 16. ____________________ help businesses customize the software to fit their unique needs. ANS: configuration PTS: 1 REF: 38 17. An assessment of an investment’s project value that is calculated by dividing the value of the project’s benefits by the value of the project’s cost is known as a(n) ____________________. ANS: ROI return on investment return on investment (ROI) ROI (return on investment) PTS: 1 REF: 39 Chapter 3: Marketing Information Systems and the Sales Order Process MULTIPLE CHOICE 1. In SAP ERP the electronic evidence of a transaction is called a(n) ____. a. trail d. b. marker e. c. tag ANS: E PTS: 1 audit number document REF: 56 2. A customer calls up to find out how much 1000 units of a product would cost. This is an example of ____ in the sales and distribution process. a. presales activities d. delivery and billing b. sales order processing e. payment c. inventory sourcing ANS: A PTS: 1 REF: 56 3. A customer is granted a 10% price discount in a large order. This is an example of an activity in ____ in the sales and distribution process. a. presales activities d. delivery and billing b. sales order processing e. payment c. inventory sourcing ANS: B PTS: 1 REF: 56 4. A customer's order is checked to see if it can be produced and delivered by the requested date. This is an example of ____ in the sales and distribution process. a. presales activities d. delivery and billing b. sales order processing e. payment c. inventory sourcing ANS: C PTS: 1 REF: 57 5. A customer's documents are released to the warehouse so that the goods can be gathered, packed and boxed. This is an example of ____ in the sales and distribution process. a. presales activities d. delivery and billing b. c. ANS: D sales order processing e. inventory sourcing PTS: 1 payment REF: 57 6. A customer's remittance causes Cash to be debited and Accounts Receivable to be credited. This is an example of ____ in the sales and distribution process. a. presales activities d. delivery and billing b. sales order processing e. payment c. inventory sourcing ANS: E PTS: 1 REF: 57 7. In SAP ERP, the history of a transaction (such as a sales order) can be researched by looking at its ____. a. trail mix d. material master data b. transaction index e. sales master data c. document flow ANS: C PTS: 1 REF: 63 8. What kind of software can give top management an overview of a company's complete relationship with a customer? a. One to One Marketing Software b. Open Relationship Software c. Denouement Software d. Customer Relationship Management Software e. Supply Chain Management Software ANS: D PTS: 1 REF: 67 9. In the sales order process, there is a number used in the SAP ERP sales order that in a paper process would be pre-printed on the sales document, usually in sequential number order. It’s assigned by the customer to the sales order. What is this number? a. Customer ID c. Material Number b. Purchase Order d. Billing Code Number ANS: B PTS: 1 REF: 58 10. Setting prices for customers can be very complex. SAP helps by offering a control mechanism, called ____, to determine how much to charge a given customer for a given product. a. pricing variance c. condition technique b. price fixing d. fluctuation ANS: C PTS: 1 REF: 64 11. The ____ system communicates with SAP ERP, BW, and APO systems in developing and executing its plans. a. PPO c. CRM b. SSA d. GUp ANS: C PTS: 1 REF: 69 12. What software can automatically route customers who contact the company to a sales representative? Companies can use this software to forecast customer needs. a. Marketing c. One-to-one encyclopedias marketing b. Sales campaign d. Sales force management automation ANS: D PTS: 1 REF: 67 13. The SAP ERP system allows users to define various ways to group customers and salespeople. These groups are called ____. a. organizational c. document flows structures b. master data d. audit trails ANS: A PTS: 1 REF: 61 14. In ____ CRM, the software and equipment reside with the CRM provider; it is not installed in-house. a. walk-up c. Internet b. on-demand d. ERP ANS: B PTS: 1 REF: 67 15. Which of the following are benefits to CRM? a. b. c. d. ANS: D PTS: 1 Lower costs Higher revenue Improved strategy and performance measurement All of the above REF: 72 COMPLETION 1. The goal of ____________________ software is to provide a “single face to the customer.” ANS: customer relationship management CRM customer relationship management (CRM) CRM (customer relationship management) PTS: 1 REF: 67 2. With global____________________, the R/3 system automatically checks all facilities and determines the most cost-efficient facility to use to meet the customer’s request in terms of ordering and delivering goods. ANS: ATP Available-To-Promise available to promise PTS: 1 REF: 71 Chapter 4: Production and Supply Chain Management Information Systems MULTIPLE CHOICE 1. A make-to-stock production system is where: a. b. c. d. items are made for inventory in anticipation of sales orders. items are produced to fill specific customer orders. items are assembled for a specific customer order from an inventory of components both a and c ANS: A Make-to-stock items are made for inventory in anticipation of sales orders: most consumer products are made this way. PTS: 1 REF: 78 2. An unexpected increase in product demand can lead to: a. a depletion of finished goods inventories b. a depletion of raw materials inventories c. increased overtime and transportation expenses d. all of the above e. both a and b ANS: D When Production must meet an unexpected increase in demand, several things happen. First, warehouse inventories are depleted. To compensate, Production must schedule overtime labor, which results in higher production costs for products. Second, because some materials (such as ingredients, wrappers, and display boxes) are custom products purchased from a single vendor, a sudden increase in sales demand can cause shortages or even a stockout of these materials. PTS: 1 REF: 80 The Fitter Snacker company sold 6,435 cases of snack bars in June of the previous year. They are expecting sales to increase by 3% this year. In addition, they are launching a promotional campaign in May, which they expect will increase sales in June by an additional 500 cases. 3. What is the sales forecast for June of this year that Fitter Snacker should use? a. 6,628 c. 6,935 b. 7,128 d. 7,143 ANS: B 6,435 x 1.03 + 500 = 7,128 PTS: 1 REF: 85 Fitter Snacker can produce 333.3 cases of snack bars per day during the standard 8-hour work week. They can work 2 hours of overtime per weekday, plus 4 hours on Saturday. They are developing an SOP for a month with 23 weekdays and 4 Saturdays. 4. What is the maximum number of cases that Fitter Snacker can produce in the month if they schedule workers for overtime on weekdays only? a. 7,666 c. 9,582 b. 9,199 d. 10,249 ANS: C On weekday overtime, they can produce 1.25 times the normal output, or (1.25)(333.3) = 416.6. In 23 days, they can produce (416.6)(23) = 9,581.8 cases, which rounds to 9,582. Adding in Saturdays is equivalent to two additional days of regular production, or (2)(333.3) = 666.6. The total time available is 9,582 + 666 = 10,248.6, which rounds to 10,249. PTS: 1 REF: 96 5. What is the maximum number of cases they can product in the month if they schedule workers for overtime on weekdays and Saturdays? a. 7,666 c. 9,582 b. 9,199 d. 10,249 ANS: D On weekday overtime, they can produce 1.25 times the normal output, or (1.25)(333.3) = 416.6. In 23 days, they can produce (416.6)(23) = 9,581.8 cases, which rounds to 9,582. Adding in Saturdays is equivalent to two additional days of regular production, or (2)(333.3) = 666.6. The total time available is 9,582 + 666 = 10,248.6, which rounds to 10,249. PTS: 1 REF: 96 6. The production plan at Fitter Snacker calls for 4,134 cases of snack bars in January. If there are 22 days in the month, how many cases of snack bars should be produced in a 4-day week? a. 188 c. 940 b. 752 d. 1034 ANS: B To calculate the weekly quantity, we take (4,134 / 22) (4) = 751.63, which rounds to 752. PTS: 1 REF: 96 Fitter Snacker orders oats in 44,000 lb. batches. Given the following (incomplete) MRP record: Oats Lead Time = 2 weeks Gross Requireme nts (lb) Scheduled Receipts Planned Receipts On Hand Week 1 18,000 Week 2 24,323 Week 3 24,872 Week 4 18,464 44,000 23,635 5,635 25,312 440 Week 5 17,938 Planned Orders 7. What Planned Orders will the MRP logic create? a. b. c. d. An order for 44,000 units in week 2 An order for 44,000 units in week 3 An order for 44,000 units for weeks 2 and 3 An order for 88,000 units for week 3 ANS: A The completed MRP record is: Oats Lead Time = 2 weeks Gross Requireme nts (lb) Scheduled Receipts Planned Receipts On Hand Planned Orders PTS: 1 Week 1 Week 2 18,000 24,323 Week 3 24,872 Week 4 18,464 Week 5 17,938 44,000 44,000 23,635 5,635 25,312 44,000 440 25,976 8,038 REF: 99 8. What will the On Hand inventory be in week 5 after the system calculated planned orders? a. 0 c. 8,038 b. 440 d. 14,038 ANS: C The completed MRP record is: Oats Lead Time = 2 weeks Gross Requireme nts (lb) Scheduled Receipts Planned Receipts On Hand Planned Orders PTS: 1 Week 1 Week 2 18,000 24,323 Week 3 24,872 Week 4 18,464 Week 5 17,938 44,000 44,000 23,635 5,635 REF: 99 9. Immediately after MRP is run in SAP ERP: 25,312 44,000 440 25,976 8,038 a. the stock/requirements list and MRP list are both updated and show the same information. the MRP list is updated but the stock/requirements list is unaffected. the stock/requirements list is updated but the MRP list is unaffected. none of the above. b. c. d. ANS: A The MRP list shows the results of the MRP calculations, while the Stock/Requirements List shows those results plus any changes that have occurred since the MRP list was generated (planned orders converted to purchase orders or production orders, material receipts, and so on). PTS: 1 REF: 101 10. In detailed scheduling, longer production runs of a particular product: a. increases the available capacity by reducing the frequency of setups. b. increases finished goods inventory levels. c. reduces finished goods inventory levels. d. both a and b e. both a and c ANS: D Longer production runs mean that fewer machine setups are required, reducing production costs and increasing the effective capacity of the equipment. On the other hand, shorter production runs can be used to lower the inventory levels for finished products. PTS: 1 REF: 105 11. The order of the steps in the SAP R/3 production planning process are: a. Sales Forecasting, Demand Management, Purchasing, Sales and Operations Planning, MRP, Detailed scheduling, Production b. Sales Forecasting, Demand Planning, Detailed scheduling, Purchasing, Demand Management, MRP, Production c. Sales and Operations Planning, Sales Forecasting, MRP, Purchasing, Demand Management, Detailed scheduling, Production d. Sales Forecasting, Sales and Operations Planning, Demand Management, MRP, Purchasing, Detailed scheduling, Production ANS: D The order is Sales Forecasting, Sales and Operations Planning, Demand Management, MRP Purchasing, Detailed scheduling, Production. PTS: 1 REF: 83 12. The production plan for Fitter Snacker calls for 7000 cases of the snack bar product group in June. If the snack bar product group consists of NRG-A and NRG-B bars with the proportion 70% NRG-A bars and 30% NRG-B bars, how many NRG-A bars should be produced in June? a. 500 c. 4900 b. 2100 d. 7000 ANS: C 7000 * .7 = 4900 NRG-A 7000 * .3 = 2100 NRG-B PTS: 1 REF: 85 13. The costs normally required to manufacture a product, which are calculated from historical costs and any changes from that, are known as ____. a. standard costs c. known costs b. abbreviated costs d. estimated costs ANS: A Standard costs are the normal costs of manufacturing a product; standard costs are calculated from historical data, factoring in any changes in manufacturing that have occurred since the collection of the historical data. PTS: 1 REF: 81 14. ____ are disaggregated to generate detailed production schedules. a. Bills of materials c. b. Production runs d. ANS: D PTS: 1 Internet sales orders Rough-cut plans REF: 88 15. What is the production plan for all finished goods? a. MPS - master c. production schedule b. QQR - quality query d. run PPR - production planning run RUN - run ANS: A The output of the demand management process is the master production schedule (MPS), which is the production plan for all finished goods. PTS: 1 REF: 95 16. What process answers the question “What do we need to order to produce the product, and when do we need to order these raw materials?” a. SF - sales forecasting c. MRP - materials requirements planning b. SOP - sales and d. DS - detailed operations planning scheduling ANS: C The raw materials requirements planning process answers the questions, “What quantities of raw materials should we order so that we can meet that level of production?” and “When should these materials be ordered?” PTS: 1 REF: 97 17. What metric tracks the number of times a supplier meets the agreed upon delivery date? a. initial fill rate c. on-time performance b. ANS: C initial order lead time PTS: 1 d. cash-to-cash cycle time REF: 112 Figure 4-2 The SAP ERP production planning process 18. In the accompanying figure, which shows the SAP ERP production planning process, what is A? a. MRP c. Starting Inventory b. Sales Forecasting d. Detailed Scheduling ANS: B PTS: 1 REF: 83 19. In the accompanying figure, which shows the SAP ERP production planning process, what is B? a. Starting Inventory c. Sales Forecasting b. Detailed Scheduling d. MRP ANS: A PTS: 1 REF: 83 20. In the accompanying figure, which shows the SAP ERP production planning process, what is C? a. Starting Inventory c. MRP b. Sales Forecasting d. Detailed Scheduling ANS: D PTS: 1 REF: 83 21. In the accompanying figure, which shows the SAP ERP production planning process, what is D? a. Starting Inventory c. Sales Forecasting b. Detailed Scheduling d. MRP ANS: D PTS: 1 REF: 83 22. What stage of the production planning process splits Fitter Snacker’s monthly production planning values into finer time periods? a. Sales Forecasting c. MRP b. BOM d. Demand Management ANS: D In the Demand Management step, the production plan is broken down into smaller time units, such as weekly or even daily production figures, to meet demand for individual products. PTS: 1 REF: 84 COMPLETION 1. The ____________________, shown in the accompanying figure for Fitter Snacker, is a list of the materials needed to make NRG-A and NRG-B bars. ANS: Bill of Materials BOM Bill of Materials (BOM) BOM (Bill of Materials PTS: 1 REF: 97-98 2. ____________________ refers to the process of determining production quantities (for raw materials produced in-house) and order quantities (for purchased items). ANS: Lot sizing PTS: 1 REF: 98