2
INTRODUCTION TO MATERIALS MANAGEMENT
CHAPTER 1
ANSWERS TO PROBLEMS
1.2
Profit
= Sales – (direct costs + overhead)
1.5
Using $1 million as the units:
3
4
MULTIPLE CHOICE QUESTIONS
1
. Select the best answer to the following:
a
. traditionally the supply-production-distribution functions have reported to
different departments
b
. the supply, production and distribution functions are part of a total system
c
. materials flow into an organization, are processed in some way and distributed
to the consumer
d
. all the above are correct
2
. Manufacturing is important to the economy because:
a
. it generates wealth
b
. it supports service industries
c
. it adds value to products
d
. all of the above
3
. Which of the following is the best statement about the operating environment in which
operations management functions?
a
. most organizations do not need to worry about competition
b
. customers are more demanding
c
. government regulation is not important for companies
d
. price is more important than quality
4
. Which of the following statements is best regarding order winners?
a
. they persuade a company’s customers to choose its product
b
. they are the same in every market
c
. they are the same as order qualifiers, only better
d
. they are present in every product
5
. Which of the following strategies has the shortest delivery lead time and the least customer
input?
a
. make-to-order
b. configure-to-order
c
. assemble-to-order
d
. make-to-stock
6
. Which of the following statements is best?
a
. the supply chain includes all activities and processes to provide a product or
service to a customer.
b
. material in the supply chain usually flows from producer to customer.
c
. the supply chain contains only one supplier.
d
. all of the above are true.
e
. a and b only are true.
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7
. Companies A and B supply company C, which supplies customers D and E. Which of the
following statements is best?
a
. the supply chain for company A includes B, C, D, and E.
b
. the supply chain for company B includes A, C, D and E.
c
. the supply chain for company C includes A, B, D, and E.
d
. all the above are true.
8
. Which of the following statements is best?
a
. the basic elements of a supply chain are supply, production, and distribution
b
. the elements of a supply chain are interdependent
c
. design information generally flows from customer to supplier
d. all the above are true
9. Delivery lead time for an engineer-to-order product includes which of the following?
a. Design, purchase, manufacture, assemble, ship
b. Design, manufacture, assemble, ship
c. Purchase, manufacture, assemble, ship
d. Purchase, assemble, ship
10
. If a firm wishes to maximize profit, which of the following objectives are in conflict?
I
. Maximize customer service.
II
. Minimize production costs.
III. Minimize inventory costs.
IV. Minimize distribution costs.
a
. all the above
b
. I and II only
c. I and III only
d
. II and III only
11
. Which of the following statements is best?
I
. The conflict between marketing, finance and production centers on customer
service, disruption to production, and inventory levels.
II
. Marketing’s objectives can be met with higher inventories.
III
. Finance’s objectives can be met with higher inventories.
IV. Production’s objectives can be met with higher inventories.
a
. all of the above are true
b
. I and II only are true
c
. I, II and III only are true
d
. I, II and IV only are true
e
. II, III and IV only are true
12
. Which of the following is normally a major activity of materials management?
I
. Manufacturing planning and control.
II
. Physical supply/distribution.
a
. both I and II
b
. neither I nor II
c
. I only
d
. II only
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13
. The objective of materials management is to:
I. Provide the required level of customer service.
II. Maximize the use of the firm‘s resources.
a
. I only
b
. II only
c
. I and II
d
. neither I nor II
14
. Which of the following is/are primary activities of manufacturing planning and control?
I
. Production planning.
II
. Implementation and control.
III
. Inventory management.
a
. I and II only
b
. II and III only
c
. I and III only
d
. all the above are primary activities
15
. Which of the following is (are) input(s) to manufacturing planning and control?
a
. product description
b
. process description
c
. available facilities
d
. quantities to be produced
e
. all the above are inputs
16
. Which of the following is NOT an activity of physical supply/distribution?
a
. transportation
b
. factory inventory
c
. warehousing
d
. packaging
e
. material handling
17
. Materials management can be considered a balancing act because:
I
. There are trade-offs between customer service and the cost of providing the service.
II
. Priority and capacity must be balanced.
a
. neither I nor II
b
. I only
c
. II only
d
. I and II
18
. If the cost of manufacturing (direct labor and materials) is 50% of sales and profit is 15% of
sales, what would the profit percentage be if the direct costs of manufacturing was reduced
from 50% to 47%?
a
.
3%
b
.
6%
c
.
12%
d
.
15%
e
.
18%
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19
. Which of the following are generally considered overall objectives of an organization?
I
. Providing good customer service.
II
. Maintaining low levels of inventory investment.
III
. Optimizing use of resources.
IV. Providing sufficient return on investment.
a
. I and II only
b
. I, II and III only
c
. I, III and IV only
d
. all the above
20
. The purpose of the materials management concept is:
I
. To manage materials in a production operation.
II
. To have purchasing support the needs of production.
III
. To have production support the needs of purchasing.
a
. II and III only
b
. I and II only
c
. I, II and III
d
. I and III only
21
. Making a pizza at a fast-food restaurant would be considered a form of:
a
. Engineer to order
b
. Assemble to order
c
. Make to stock
d
. Make to order
22
. Metrics in a supply chain are:
a
. Governed by the International Metric Commission
b
. Measurements of performance
c
. A charge passed on to customers
d
. Not used on transportation
23
. Performance measures in a supply chain:
a
. Should be objective
b
. Are viewed mostly by finance
c
. Must be measurements of one parameter only
d
. Concentrate on cost only
e
. Are not used once a process is automated
24
. Which statement is best?
a
. Performance standards are set by the supplier
b
. Performance standards set the goal
c
. Performance measurements show how well you did
d
. Both b and c are correct
25
. Savings in the supply chain mostly are the result of:
a
. Members in the chain sharing information
b
. Being able to ship in larger quantities
c
. Members having clout with suppliers
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d
. Sticking with local competition
e
. Cutting cost after the design phase
26
. Postponement is best described as:
a
. Delaying payment to a supplier until the goods have been sold
b
. Delaying the removal of inventory until the last possible moment
c. Delaying the customer-specific differentiation until the last possible moment
d
. Delaying the change to the BOM until the old components have been used up
27
. Postponement is best used with items that:
a
. Have a long lead time and many product configurations
b
. Are standardized and have short lead times
c
. Experience a yield that you won’t know until the product is complete
d
. Suppliers with poor delivery performance
28
. A channel master in a supply chain
a
. Initiates integration of a supply chain
b
. Is the final customer in a supply chain
c
. Is the largest member of a supply chain
d
. Controls the raw material supplies in a supply chain
29. The process of managing the recovery, recycling and reuse of material is called
a. Kaizen
b. Heijunka
c. Reverse logistics
d. Return material authorization
30
. If the manufacturing lead time of an item is reduced by 50% the work in process inventory:
a
. Does not change
b
. Is reduced by approximately 70%
c
. Is reduced by approximately 50%
d
. More information is needed for this problem