operations management exam 3

What is the demand for finished goods considered?

independent

What is the demand for components and raw materials?

dependent

MRP is a methodology that translates BLANK requirements for end items into time-phased requirements for subassemblies, parts, and raw materials?

master schedule

What is true of the master schedule?

It does not have a predetermined or fixed time horizon, and it must be at least as long as the cumulative lead time

What is the visual depiction of the requirements on a bill of materials?

A product structure tree

What is the term for combining all occurrences of a component to the lowest level at which it appears on a bill of materials?

low-level coding

What statements describe dependent demand?

Dependent demand applies to components and materials that are part of a finished product, and once forecasts or production schedules are set, the quantity needed is known exactly.

When inventory records are one of three primary inputs in MRP. These inputs include information on the status of each time period are called what?

Time buckets

What key questions is MRP designed to answer?

What is needed, how much is needed, and when is it needed?

MRP processing takes end item requirements specified by the master schedule and BLANK them into time-phased requirements for assemblies, parts, and raw materials using the bill of materials offset by lead times.

explodes

What is MPS stand for?

Master Production Schedule

What does a Master Production Schedule (MPS) do?

It is the anticipated build schedule stating which end items are to be produced, when, and in what quantities for the next 12 weeks or so

MRP in services usually involves what?

Labor requirements for the service

In MRP what does projected on hand mean?

the expected amount of on-hand inventory at the beginning of a period

What are some of the advantages of MRP?

Ability to evaluate capacity requirements, low levels of in-process inventory, and a means to allocate production time

In managing inventory of lower-level components, what is used to offset the risk caused by variable lead times?

safety time

What is the goal in inventory management for both dependent and independent demand?

Minimize the sum of ordering/setup and holding cost

What are the requirements of MRP?

Integrity of file data, accurate master schedule and accurate inventory records

When will the economic order quantity result in an appropriate lot size for dependent-demand items?

When demand is uniform, use EOQ

True or False: MRP is applicable to services as well as manufacturing.

True

What advantage of MRP eliminates the need to collect detailed usage information on the production floor?

Backflushing

What is capacity planning?

the process of determining short-range capacity requirements

True or False: When dealing with variable lead times, it is better to use safety stock than safety time to mitigate the impact of a shortage of any component required for final assembly.

False

What are potential risks that come with MRP?

Assumption of constant lead time, products being produced differently from the bill of materials and inaccurate forecasts

What is true about lot-sizing?

Lot-for-lot ordering does not tend to take advantage of economies of fixed order size. Lot-for-lot ordering requires a new setup for each order. Fixed-period ordering provides coverage for several periods at one time.

What is true for time fences within capacity requirements planning?

They are used to prevent system nervousness and the closest time fence is the most restricted.

MRP in services usually involves what?

Material in service package

What is true about capacity requirements planning?

Inputs include the current shop load, inputs include routing information and key outputs include load reports for each work center

What are some options for dealing with insufficient capacity?

Shifting orders to adjacent periods, Prioritize orders, delaying some, and to schedule overtime

What is a method used for planning orders in a supply chain?

Distribution resource planning

A computerized system designed to connect all parts of a business organization as well as a part of its supply chain to a single database for the purpose of information sharing is known as BLANK

Enterprise resource planning (ERP)

What term describes how systems might react to changes?

System Nervousness

What are some advantages of ERP?

The integration of financial data and standardizing HR information

What are the disadvantages of ERP?

There are a number of associated hidden costs, it can be very expensive to implement and it may require extended use of consultants

What are load reports?

In capacity requirement planning, load reports are reports that compare known and expected future capacity requirements with project capacity availability

What extends MRP to the entire supply chain?

distribution requirements planning

Marketing

Supports lead generation, target marketing, direct mail, and sales

Purchasing

Facilitates vendor selection, price negotiation, making purchasing decisions, and bill payments

Inventory Management

Identifies inventory requirements, inventory availability, replenishment rules, and inventory tracking.

Distribution

Contains information on third-party shippers, shipping and delivery schedules, delivery tracking.

Sales

Information on orders, invoices, order tracking, and shipping.

Supply Chain Management

Facilitates supplier and customer management, supply chain visibility, and event management.

Customer Relationship Management

Contact information, buying behavior, shipping preferences, contracts, payment terms, and credit history.

What are some of the advantages of ERP?

It standardizes manufacturing processes, increases efficiency of operations and standardizes financial information across the company.

ERP has been expanded beyond manufacturing into what role?

Enterprise applications integration

What does sales and operations planning combine?

the aggregate plan and the sales plan

What is not apart of the aggregate planning process?

Business process improvement

Aggregate production strategies are apart of what phase of planning?

Intermediate range

The level strategy and the chase strategy are examples of which aggregate production strategy?

pure

Dynamic pricing tries to do what?

sell to as many high value customers as possible

What type of cost is holding cost?

variable cost

What is considered a direct holding cost?

Refrigeration costs, disposal cost after the unit is removed from inventory, purchasing cost of a new forklift for the warehouse and weekly inventory quality checks for every unit in inventory

What type of cost is ordering cost?

fixed cost

What is considered part of ordering cost?

minimum shipping charge, renting a truck to haul the order, cost of the office building housing your employees

Which two things drive the need for safety stock?

demand variability and delays

The “right” amount of safety stock is often a function of service level. what is service level?

the probability of meeting demand during a delay

A stock or store of goods is called a(n)?

inventory

In an ABC system, the typical percentage of the number of items in inventory that is classified as A items is about…?

10%

In the ABC classification system, items which account for about 15 percent of the annual dollar value, but which account for the majority of the inventory items would be classified as what?

C items

What is the purpose of cycle couting?

reduce discrepancies between inventory records and actual quantities

A risk avoided would want what relative amount of safety stock?

more

If no variations in demand or lead time exist, the ROP will equal what?

expected usage during lead time

If average demand for an inventory item is 200 units per day, lead time is three days, and safety stock is 100 units, the reorder point is…?

700 units

What is a good definition of supply chain?

The sequence of organizations, their facilities, functions, and activities- that are involved in producing and delivering a product or service

What is resilience?

The ability of a firm to recover quickly from a supply chain disruption

What is a positive factor of globalization?

The technological advances in communications linking operations world-wide

True or False? A company holding the major brand in the supply chain does not have to be concerned about negative media perceptions of unethical supplier practices because these suppliers are independently-owned businesses.

False

For wholesalers and retailers, what approximate percentage of the cost of finished goods comes from purchased inventories?

90%

What type of facilities do supply chains make use of?

Retail outlets, warehouses, distribution centers and factories

Which functional group generates most of the purchase orders which procurement then processes?

operations

True or False? Businesses can eliminate the need for resiliency by managing risk

False

Which functional groups will often assist procurement in negotiating with suppliers when a supplier bid is received for a large order?

legal

What are some of the many ways that global supply chains are more complex than purely domestic supply chains?

increased transportation costs and lead times, currency fluctuations and cultural and language differences

What are the advantages of centralized purchasing?

Efficiency, better service and lower prices

What elements should a company consider when developing a supply chain code of ethics?

human relations, recruitment policies, environmental issues, customer, supplier, and company behaviors

True or False? Purchasing agents should be concerned about the perception of wrongdoing when conducting business on behalf of their employer even when they have done nothing unethical

True

For manufacturing companies approximately what percentage of the cost of finished goods comes from purchased parts and materials?

60%

What are the different ways that companies use electronic technology in their commercial transactions for e-Business?

Internet buying and selling, Email communication internal and external, and Electronic tracking of shipments

Which functional group is responsible for handling payments to suppliers and must be notified promptly when goods are received.

Accounting

What are the two essential features of e-Commerce?

Web-site and order fulfillment

Put the main steps of the purchasing cycle in order from 1 to 5 with 1 being the first step and 5 being the last.

1. Receive the requisition

2. select a supplier

3. place an order

4. monitor the order

5. receive the order

What is the difference between centralized and decentralized purchasing?

Centralized purchasing handles all orders from one special department. Decentralized purchasing is done by each individual department separately.

Select the best definition of vendor analysis.

Evaluating the sources of supply in terms of price, quality, reputation and service giving a weighting factor for each criterion.

Which of the following constitutes a conflict of interest in Procurement?

One of the suppliers on the bid list is owned by a close relative of the purchasing agent

Why are supplier audits conducted periodically by the buyer?

To keep current on vendor capabilities, quality, performance, problems and their resolutions.

What is a broad definition of e-Business?

The use of electronic technology to facilitate business transactions

True or False? Sometimes if a buyer does not want to develop its own supplier certification program, it will accept standard industry certifications such as ISO 9000.

True

The back end of e-Commerce, order fulfillment, involves what activities?

order processing & billing

warehousing & inventory management

packing, shipping & delivering

What is the supplier relationship like when the vendor is viewed as a partner? More than one answer may be correct.

Price is moderately important but flexibility is very important

Openness and sharing of strategic and tactical information readily occurs

One or few number of suppliers

Which functional groups will often assist Procurement in negotiating with suppliers when a supplier bid is received for a large order.

Legal

Which of the following challenges are obstacles to establishing partnerships with suppliers?

Many benefits from the partnership accrue to the buyer.

The cultures of the buyer and supplier might conflict.

Suppliers may need to increase their investment in equipment.

What are the main factors involved in choosing a supplier? More than one answer may be correct.

Flexibility and lead times

Reputation and financial stability

Quality and quality assurance

Price

Select the best definition of strategic partnering.

Two or more business organizations with complementary products or services join so that each may realize a strategic benefit.

All of the following aspects of the business are typically covered in a supplier audit except which?

cleanliness of site cafeteria and break rooms

What is meant by the term bullwhip effect in inventory management?

Inventory oscillations become progressively larger looking backward through the supply chain.

What does it mean when a buyer certifies a supplier?

The buyer has certified the supplier has met or exceeded its requirements and can forgo inspecting their incoming goods.

What is the difference between Engineer-to-order and Make-to-order?

Engineer-to-order requires more customization and Make-to-order is based upon a standard design with some changes.

What is the supplier relationship like when the vendor is viewed as an adversary? More than one answer may be correct.

There are many suppliers who are pitted against one another

Cost is the primary driver and quality inspection is performed by buyer

All of the following are support items usually required to perform Logistics operations EXCEPT…?

marketing brochures

What are the advantages of supplier partnerships?

Fewer suppliers

Longer-term relationships

Cooperation in planning