MPR Test Yourself

The capacity planning sections within Master Planning are

• Resource Planning, which validates the Production Plan
• Rough Cut Capacity planning, which validates the MPS

Capacity Requirements Planning is used to validate the planned production as defined by MRP

The Production Forecast is the exploded option requirements based on the ATP of end products in an Assemble-to-Order environment. This becomes the forecast requirements for these options at MPS level

The greater the complexity, the greater the opportunity for error

A firm planned order is a planned order for which the planner has taken responsibility. The master scheduler has control over every planned MPS order, therefore they are FIRM planned orders. They will only become scheduled receipts when they are converted into works orders and released into production

The item used to assist in order promising is the Available to Promise information created during master scheduling. All of the others are valid uses of Planning BOMs

ALL potential elements of independent demand need to be taken into account when constructing the MPS. Each of the above is such an element

The standard deviation or MAD sizes the error;

ATP identifies the rate at which the forecast is being consumed.

A tracking signal will help identify if the appropriate forecasting system is being used, but not whether the MOST appropriate system is being used.

Tracking signals do, however, detect bias (i.e. whether or not the forecast is consistently over or understated.)

Both MAD and Standard Deviation Measure just the size of the error; neither measures the direction as both use the absolute value of the error, ie they treat a deviation of +10 and –10 as equal

Exponential smoothing lags behind a trend, but with a high alpha (i.e. with fewer periods taken into account) the trend will be more closely tracked. At the introductory phase of a product it is more usual to use a qualitative rather than quantitative technique

A level strategy produces at the same rate in every period, thus minimizing the amount of capacity change that will be required. Inventory levels will vary to create the balance between supply and demand

The final assembly schedules will only look as far into the future as there are customer orders

A phantom BOM is a bill of material for a product that is never stored – the product is used in the manufacture of a higher level item as soon as it is produced. Each of the others is used within the Planning BOM structures

The product promotion plans will have been taken into account in the forecast, which is also an input to the MPS

DRP, like MRP, creates a schedule of planned orders which drives the production and delivery schedules. Reorder point, on the other hand, is a pull system

Second answer is also valid but the most immediate effect is the deterioration in customer service, followed by the overtime to try to catch-up again

A chase strategy matches output with demand at all times, thus eliminating inventory buildups. The answer therefore is 1.

The balancing mechanism is the changing in capacity, so 2 and 3 are false.

In all strategies, the objective is to maintain a high level of customer service, so 4, while possibly true, is not the best answer

MPS at the finished goods level applies in a make to stock scenario. This is illustrated in figure I.

Figure II relates to an assemble to order situation, and figure III relates to a make to order situation.

First answer is the best answer

RCCP looks at ALL known bottleneck resources, so 1 is false.

It cannot guarantee that the plant will not be overloaded, as a change in product mix may create new bottlenecks that have not been included in RCCP, so 2 is false.

New bottlenecks will be identified through CRP, so 3 is false.

That leaves 4 as the correct answer. 4 is true because for the master scheduling to be successful we must create a realistic MPS, and using RCCP enables us to validate the draft MPS to increase the probability of that

The only true statement in the four statements above is statement 2, as safety stock levels are set to cope with the variation in demand, which is the variation between orders and forecast.  The smaller this variation the less safety stock will be required to achieve the appropriate level of customer service.

Standard deviation measures the size rather than the direction of forecast error; it is orders rather than shipments that is used to compute forecast error, and statement 4 is untrue because what needs to be considered when making a forecast will remain the same until the forecast method – not the accuracy – changes

All of the above statements are true, so the best answer is D

With an overloaded MPS customer service will deteriorate, and the level of unplanned overtime will increase. Therefore neither 1 nor 2 can be the correct answer. Productivity will decrease, and quality may deteriorate. Of options 3 and 4, 3 is the better answer as that is most unlikely in practically all situations. 4 will not happen typically only if a company places a high enough emphasis on product quality

With an area picking system, each order is picked separately from all other orders. Therefore 1 and 2 are false, and 3 is true. 4 is false because this system can be used regardless of the warehouse organisation

The matched pairs of Priority and Capacity Planning steps are:

• Production Planning & Resource Planning
• Master Production Scheduling and RCCP
• MRP and CRP
• Production Activity Control and Input/Output Control.

The one of the above options that is not a matched pair is 1, Business Planning and Resource Planning

A make to stock policy is most appropriate where a narrow range of products are offered, the demand is stable and the customer expects delivery in less time than the producer can make it.

Of the above options, 1 is not necessarily true because we are not told the production leadtime; 2 is false because it talks of a WIDE range of production options; 3 is true – it is one of the criteria – and while 4 is important, it will merely dictate the amount of inventory that can be put into stock. The best answer of the options given is 3

The only one of the above options that is true is 3. We must have a forecast to create plans in the mid to long term – the degree of “badness” can be identified and the risks assessed accordingly. Forecasts are necessary in all environments, and we must continuously monitor the forecast as market changes can occur at any time

Statement I is possibly true – “improvement” depends on the starting point.

Statement II is false – machine utilisation is determined by the amount of time that the machine is available, i.e. not “down”,  during the working day.

Statement III is false – there may be still overtime required to match capacity with load.

Statement IV is true – overtime can now be planned because of the predictability of movement of product in the plant.

The only option that satisfies these true/false decisions is 1, even though we still have not made a definitive decision in relation to statement I – because we do not need to as each of the other options contain II and/or III as true statements, which they are not

Of these four options, two are completely false – 1 and 3. 1 is false, as the requirements at the feeder center come from the planned RELEASES at the receiving center; 3 is false because it can and does work even with inaccurate forecasts.

2 is partially true, as each distribution still manages its own planned supply strategy but the linking of supplying DCs to receiving DCs reduces the overall independence of each.

4 is true, and is the correct answer, as the knowledge of planned demand – rather than a forecast of demand – will enable the producer to put the resources in place to meet the demand

Let us look at each of the options from the point of is it likely to happen:

Option 1 will happen – WIP inventory will increase as queues increase in the factory and raw material will increase as material that cannot be processed is brought in to satisfy the plan.

Option 2 will happen as production tries to cope with the overload.

Option 3 will not happen – the disruptions created by the degree of expediting to try to meet customer demand will actually reduce capacity and productivity.

Option 4 will happen, as queues increase so also will leadtimes.

The answer to the question – which will NOT happen – is 3

Raw materials planning is a function of MRP. Each of the others are elements of Master Planning. The answer is 4