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Basics of Supply Chain Management
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Question 1 of 30
1. Question
Work center data contains all of the following except?
Correct
Set-up times relate to the products rather than the work center and therefore would be included in the routing data
Incorrect
Set-up times relate to the products rather than the work center and therefore would be included in the routing data
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Question 2 of 30
2. Question
Measuring forecast error is important for all of the following reasons except
Correct
This is HOW the forecast error is measured, the other three options are the reasons for doing it
Incorrect
This is HOW the forecast error is measured, the other three options are the reasons for doing it
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Question 3 of 30
3. Question
A company needs to reduce its manufacturing lead-time. The most effective start-point for this is to
Correct
The longest element of lead-time is queue time. Delaying the issue of new orders enables the queue to reduce before new orders join in; therefore they will spend less time in queue. Each of the other options will also reduce lead-time, but not by significant amounts
Incorrect
The longest element of lead-time is queue time. Delaying the issue of new orders enables the queue to reduce before new orders join in; therefore they will spend less time in queue. Each of the other options will also reduce lead-time, but not by significant amounts
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Question 4 of 30
4. Question
Capacity management is most complicated in which of the following manufacturing environments?
Correct
In project manufacturing the wide variety of tasks, the parallel and successive nature of them, and the assignment of resources at the appropriate times, makes this the most complicated.It is also complicated in batch manufacturing, but relatively straightforward in repetitive and continuous manufacturing because of the limited range of products manufactured
Incorrect
In project manufacturing the wide variety of tasks, the parallel and successive nature of them, and the assignment of resources at the appropriate times, makes this the most complicated.It is also complicated in batch manufacturing, but relatively straightforward in repetitive and continuous manufacturing because of the limited range of products manufactured
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Question 5 of 30
5. Question
What is the major prerequisite to be satisfied by a potential JIT supplier?
Correct
Unless the quality can be relied upon, there will always be an uncertainty about the effective availability for use. Therefore, this is the start point
Incorrect
Unless the quality can be relied upon, there will always be an uncertainty about the effective availability for use. Therefore, this is the start point
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Question 6 of 30
6. Question
A company has a manufacturing scrap rate of 8%. So as to satisfy an order for 200 units, how many units would have to be stared in production?
Correct
Start Quantity = Required quantity of good parts / yield rate.
Yield rate = 100% – Scrap rate.
Therefore start quantity = 200 / .92 = 217.4 = 218
Incorrect
Start Quantity = Required quantity of good parts / yield rate.
Yield rate = 100% – Scrap rate.
Therefore start quantity = 200 / .92 = 217.4 = 218
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Question 7 of 30
7. Question
A works order with a critical ratio of 1.2 indicates which of the following
Correct
The order is ahead of schedule but by how much is not identified. (CR = 1.2 means that we have 1.2 days to get 1 days worth of work done). Therefore this order can be delayed if a more urgent order is required
Incorrect
The order is ahead of schedule but by how much is not identified. (CR = 1.2 means that we have 1.2 days to get 1 days worth of work done). Therefore this order can be delayed if a more urgent order is required
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Question 8 of 30
8. Question
The potential effects of inaccurate inventory records in a materials requirements planning system include
I. Material shortages
II. Reduction of productivity
III. Excess stock
IV. Poor customer service
Correct
All of these can result from underplanning or overplanning inventory replenishments, which is a direct result of inaccurate inventory records
Incorrect
All of these can result from underplanning or overplanning inventory replenishments, which is a direct result of inaccurate inventory records
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Question 9 of 30
9. Question
Using “Where used” information is most appropriate in which of the following circumstances
Correct
Where used shows every parent of a component, which is what would be needed in this scenario. Answer 1 would call for pegging rather than where used information, and options 3 and 4 have nothing to do with either where used or pegging
Incorrect
Where used shows every parent of a component, which is what would be needed in this scenario. Answer 1 would call for pegging rather than where used information, and options 3 and 4 have nothing to do with either where used or pegging
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Question 10 of 30
10. Question
Actual output running ahead of planned output can result in which of the following?
Correct
As work moves more quickly than planned, queues will reduce thus reducing lead-times.
Options 2 and 3 are possible causes of the greater output rather than results of it.
Option 4 may occur, but only if the original plan was not based on achieving on-time delivery anyway
Incorrect
As work moves more quickly than planned, queues will reduce thus reducing lead-times.
Options 2 and 3 are possible causes of the greater output rather than results of it.
Option 4 may occur, but only if the original plan was not based on achieving on-time delivery anyway
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Question 11 of 30
11. Question
A company had $1.2M worth of inventory at the commencement of its financial year. If it achieved sales of $25M with inventory turns of 25, what was the value of its inventory at the end of the year?
Correct
Average inventory = sales / inventory turns = 25/25 = 1
Average inventory = (opening inventory + closing inventory) / 2
Which gives 1 = (1.2 + closing inventory)/2, or 2 = 1.2 + closing inventory
The answer therefore is option 4, 0.8M
Incorrect
Average inventory = sales / inventory turns = 25/25 = 1
Average inventory = (opening inventory + closing inventory) / 2
Which gives 1 = (1.2 + closing inventory)/2, or 2 = 1.2 + closing inventory
The answer therefore is option 4, 0.8M
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Question 12 of 30
12. Question
“95% inventory accuracy” means
Correct
If answer is 1 then no record is accurate
Incorrect
If answer is 1 then no record is accurate
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Question 13 of 30
13. Question
Material requirements planning will create a planned order when
Correct
MRP operates to bring in inventory only when it is needed. The only one of the options above that satisfies that criteria is 3. While a is technically true, the safety stock is included in the requirements, so 3 is a more complete answer
Incorrect
MRP operates to bring in inventory only when it is needed. The only one of the options above that satisfies that criteria is 3. While a is technically true, the safety stock is included in the requirements, so 3 is a more complete answer
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Question 14 of 30
14. Question
Which of the manufacturing objectives are in conflict with one another?
Correct
The best answer is 4, as in each pair trying to achieve one is inhibited by the need to achieve the other
Incorrect
The best answer is 4, as in each pair trying to achieve one is inhibited by the need to achieve the other
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Question 15 of 30
15. Question
The length of the forecast horizon is dependent upon
Correct
Each of the planning processes will require a forecast. As each of the processes is aimed at achieving a different objective, different information over different time periods will be required. The answer therefore is 3
Incorrect
Each of the planning processes will require a forecast. As each of the processes is aimed at achieving a different objective, different information over different time periods will be required. The answer therefore is 3
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Question 16 of 30
16. Question
A work center operates 2 shifts of eight hours each for 5 days per week. The work center is fully manned to operate its 4 machines. Each operator is allowed one 30 minutes break per shift. In addition, each machine is taken out of operation for 3 hours per week for maintenance. Set-ups typically take 1.5 hours per machine per shift. What is the work center utilization?
Correct
Utilization = time spent working / time at work.
Time spent working = time at work – time not working.
Time not working per machine = 30 minutes per shift + 3 hours per week maintenance = 8 hours per week.
Uitilisation therefore (per machine) = (80 – 8) / 80 = 90%
Note: Setting up a machine is work, so is NOT included in “time not working” – even though no product is being produced
Incorrect
Utilization = time spent working / time at work.
Time spent working = time at work – time not working.
Time not working per machine = 30 minutes per shift + 3 hours per week maintenance = 8 hours per week.
Uitilisation therefore (per machine) = (80 – 8) / 80 = 90%
Note: Setting up a machine is work, so is NOT included in “time not working” – even though no product is being produced
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Question 17 of 30
17. Question
In a JIT-Pull system, which of the following statements is best relating to delivery quantity?
Correct
Option 2 is the best answer, as we need to “add value” from the customer’s perspective. If the producer cannot produce in that quantity, then achieving that ability becomes an objective. Availability at the producer should not be an issue. The workload at the receiver will change the frequency of delivery rather than the size of the delivery
Incorrect
Option 2 is the best answer, as we need to “add value” from the customer’s perspective. If the producer cannot produce in that quantity, then achieving that ability becomes an objective. Availability at the producer should not be an issue. The workload at the receiver will change the frequency of delivery rather than the size of the delivery
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Question 18 of 30
18. Question
The potential effects of an overstated Master Production Schedule include which of the following
I. Material shortages
II. Reduction of productivity
III. Excess stock
IV. Poor customer service
Correct
Each of the above 4 outcomes may – and do – occur with an overloaded MPS. The answer is 4
Incorrect
Each of the above 4 outcomes may – and do – occur with an overloaded MPS. The answer is 4
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Question 19 of 30
19. Question
Using “Pegging” information is most appropriate in which of the following circumstances
Correct
Pegging identifies the source of a requirement. The answer therefore is 1, as the shortage may affect the ability to deliver the end product causing the requirement.
“Where used” rather than pegging would be used for option 2; and neither where used nor pegging would be of any great help in options 3 and 4
Incorrect
Pegging identifies the source of a requirement. The answer therefore is 1, as the shortage may affect the ability to deliver the end product causing the requirement.
“Where used” rather than pegging would be used for option 2; and neither where used nor pegging would be of any great help in options 3 and 4
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Question 20 of 30
20. Question
A store that regularly buys a large variety of inexpensive product from the same supplier would be most likely to use which of the following replenishment techniques?
Correct
The best answer is 2, as the cost of ordering and delivering can be spread over many parts. In each of the others, each part is treated in isolation
Incorrect
The best answer is 2, as the cost of ordering and delivering can be spread over many parts. In each of the others, each part is treated in isolation
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Question 21 of 30
21. Question
Which of the following is not a “matched pair” in the set of planning steps?
Correct
Option 1 is the correct answer. Resource planning is paired with production planning
Incorrect
Option 1 is the correct answer. Resource planning is paired with production planning
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Question 22 of 30
22. Question
Which of the following objectives is most likely to be at risk if the queues are eliminated in a job-shop environment?
Correct
In a job shop, if queues are eliminated then inventory will reduce (good thing!), customer service will improve due to the shorter lead time (another good thing!) but we run the risk of some workcenter or centers running out of work due to the disparity of times needed in each work center. If an area runs out of work – temporarily – then the costs are still being incurred but nothing is being produced. The answer is 3
Incorrect
In a job shop, if queues are eliminated then inventory will reduce (good thing!), customer service will improve due to the shorter lead time (another good thing!) but we run the risk of some workcenter or centers running out of work due to the disparity of times needed in each work center. If an area runs out of work – temporarily – then the costs are still being incurred but nothing is being produced. The answer is 3
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Question 23 of 30
23. Question
A job shop organisation offers which of the following advantages over repetitive manufacturing?
Correct
Repetitive manufacturing offers shorter leadtimes, less WIP and simpler overhead planning and control – thus lower overhead costs.
Job shops, because they are not tied to the manufacture of any particular product, offer flexibility in terms of product mix and product volume – the volumes can range fro 1 to wherever, depending on the batch size required.
The answer is 3
Incorrect
Repetitive manufacturing offers shorter leadtimes, less WIP and simpler overhead planning and control – thus lower overhead costs.
Job shops, because they are not tied to the manufacture of any particular product, offer flexibility in terms of product mix and product volume – the volumes can range fro 1 to wherever, depending on the batch size required.
The answer is 3
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Question 24 of 30
24. Question
Which of the following statements about safety stock to guard against demand fluctuations is best?
Correct
Safety stock can only be held for standard products, so 4 is false.
The safety stock level is determined by the degree of fluctuation, so 3 is an untrue statement.
1 is a better answer than 2 because sometimes the stock is held in matched sets of components that can quickly be converted to finished goods – and anyway nothing is ALWAYS true. The answer is 1
Incorrect
Safety stock can only be held for standard products, so 4 is false.
The safety stock level is determined by the degree of fluctuation, so 3 is an untrue statement.
1 is a better answer than 2 because sometimes the stock is held in matched sets of components that can quickly be converted to finished goods – and anyway nothing is ALWAYS true. The answer is 1
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Question 25 of 30
25. Question
Which of the following statements is true concerning lot-for-lot batch sizing in MRP?
Correct
The planned order receipt will equal the gross requirement when the projected available balance reaches the safety stock level, as MRP will plan receipts to cover the gross requirement and the safety stock in each period thereafter. Therefore 1 is untrue and 2 is true.
Gross requirements will only generate a planned order if the there is a net requirement, so 3 is false.
Safety stock is only necessary where we are dealing with uncertainty in supply or demand, and many lot-for-lot parts are component parts for which reliable supply chains have been established, so 4 is false
Incorrect
The planned order receipt will equal the gross requirement when the projected available balance reaches the safety stock level, as MRP will plan receipts to cover the gross requirement and the safety stock in each period thereafter. Therefore 1 is untrue and 2 is true.
Gross requirements will only generate a planned order if the there is a net requirement, so 3 is false.
Safety stock is only necessary where we are dealing with uncertainty in supply or demand, and many lot-for-lot parts are component parts for which reliable supply chains have been established, so 4 is false
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Question 26 of 30
26. Question
Distribution Requirements Planning is
Correct
DRP is considered to be part of a push system. It creates planned orders that in time will be converted into scheduled receipts.
The answer is 2
Incorrect
DRP is considered to be part of a push system. It creates planned orders that in time will be converted into scheduled receipts.
The answer is 2
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Question 27 of 30
27. Question
Which of the following actions is inappropriate before releasing an MRP planned order to production?
Correct
Before issuing an order to production we should check the availability of the resources – material, capacity, tooling – to actually produce the product. MRP has through its process seen the need for the planned order, so we do not need to verify that. The answer is 1
Incorrect
Before issuing an order to production we should check the availability of the resources – material, capacity, tooling – to actually produce the product. MRP has through its process seen the need for the planned order, so we do not need to verify that. The answer is 1
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Question 28 of 30
28. Question
All of the following are ways to exploit the constraint except
Correct
A queue of inventory should be maintained ahead of the constraint to ensure the resource is never idle for material
Incorrect
A queue of inventory should be maintained ahead of the constraint to ensure the resource is never idle for material
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Question 29 of 30
29. Question
Which production environment is most appropriate for a company whose products are in the decline phase?
Correct
Since demand is declining, making products only when there is a customer order avoids the risk of obsolete inventory
Incorrect
Since demand is declining, making products only when there is a customer order avoids the risk of obsolete inventory
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Question 30 of 30
30. Question
Which of the following is one of the eight generally accepted categories of waste?
Correct
Although the other three options may be elements of the categories, only 3 is one of the categories of waste
Incorrect
Although the other three options may be elements of the categories, only 3 is one of the categories of waste