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Operations Management, 12e (Heizer/Render/Munson)
Chapter 14 Material Requirements Planning (MRP) and ERP
Section 1 Dependent Demand
1) Wheeled Coach obtains competitive advantage through MRP in part because of their excellent record
integrity and insistence on record accuracy.
2) MRP is generally applicable to items with dependent demand.
3) Reduced inventory levels and faster response to changes in demand are both benefits of MRP.
4) A dependent demand item is so called because its demand is dependent on customer preferences.
5) The quantity required of a dependent demand item is computed from the demand for the final
products in which the item is used.
6) Which of the following statements regarding Wheeled Coach is FALSE?
A) Wheeled Coach has found competitive advantage through MRP.
B) Wheeled Coach builds ambulances in a repetitive process.
C) Wheeled Coach's MRP system allowed the company to meet tight schedules, but caused inventory to
rise.
D) Wheeled Coach's MRP system maintains excellent record integrity.
E) Low inventory and high quality are two positive outcomes of Wheeled Coach's use of MRP.
7) Which of the following is NOT one of the four key tasks that Wheeled Coach insists are necessary for
successful MRP implementation?
A) The material plan must meet both schedule requirements and facility capabilities.
B) The plan must be executed as designed.
C) Inventory investment must be minimized.
D) Excellent record integrity must be maintained.
E) The process must adhere to stringent quality control standards.
8) Demand for a given item is said to be dependent if:
A) it originates from the external customer.
B) there is a deep bill of material.
C) the finished products are mostly services (rather than goods).
D) there is a clearly identifiable parent.
E) the item has several children.
9) Dependent demand and independent demand items differ in that:
A) for any product, all components are dependent-demand items.
B) the need for independent-demand items is forecast.
C) the need for dependent-demand items is calculated.
D) All of the above are true.
E) None of the above is true.
10) Which of the following is NOT a key benefit of MRP?
A) increased quality
B) better response to customer orders
C) faster response to market changes
D) improved utilization of facilities and labor
E) reduced inventory levels
11) Wheeled Coach uses ________ as the catalyst for low inventory, high quality, tight schedules, and
accurate records.
12) ________ is a dependent demand technique that uses a bill of material, inventory, expected receipts,
and a master production schedule to determine material requirements.
13) Describe the role of record accuracy in Wheeled Coach's successful use of MRP.
14) What is MRP? Identify four benefits from its use.
Section 2 Dependent Inventory Model Requirements
1) Lead times, inventory availability, and purchase orders outstanding are among the five things
operations managers must know for effective use of dependent inventory models.
2) "Phantom bills" are bills of material for subassemblies that do not exist in reality.
3) Planning bills of material are bills of material for "kits" of inexpensive items such as washers, nuts, and
bolts.
4) The time-phased product structure, unlike the bill of material, adds the concept of lead times.
5) If X consists of one A and one B, and each A consists of one F and two Gs, then A is the "parent"
component of G.
6) By convention, the top level in a product structure is designated level 1.
7) Effective use of MRP and other dependent demand models does not require which of the following?
A) master production schedule
B) bill of materials
C) inventory availability
D) lead times
E) cost of individual components
8) Firms making many different final products use ________ to facilitate production scheduling.
A) planning bills
B) modular bills
C) phantom bills
D) overdue bills
E) gross requirements bills
9) Which of the following statements best compares modular bills and phantom bills?
A) Both pertain to assemblies that are not inventoried.
B) There is no difference between the two.
C) Both pertain to assemblies that are inventoried.
D) Modular bills are used for assemblies that are not inventoried, unlike phantom bills.
E) Modular bills represent subassemblies that actually exist and are inventoried, while phantom bills
represent subassemblies that exist only temporarily and are not inventoried.
10) A paint company mixes ten different base colors into 3,000 different color options. If production
scheduling is organized around the ten different base colors , then the bills of material are classified as
which of the following?
A) phantom
B) planning
C) modular
D) low-level
E) A and B
11) A grill assembly takes 20 washers. Instead of listing these washers separately, they are grouped into a
single kit for production. How is the bill of material for the washers classified?
A) phantom bill
B) component bill
C) modular bill
D) low-level bill
E) planning bill
12) The minimum record accuracy required for successful MRP is approximately which of the following?
A) lower than 90%
B) 90%
C) 95%
D) 97%
E) 99%
13) Consider the following product structure.
If the demand for product A is 50 units, how many units of component E will be needed?
A) 4
B) 100
C) 200
D) 250
E) 300
14) Consider the following product structure.
If the demand for product A is 50 units, how many units of component E will be needed?
A) 50
B) 100
C) 150
D) 200
E) 300
15) Low-level coding means that:
A) a final item has only a few levels in the BOM structure.
B) the code being used is the code for the lowest level in the BOM structure.
C) a component item is coded at the lowest level at which it appears in the BOM structure.
D) the top level of the BOM is below level zero and that BOMs are not organized around the finished
product.
E) the lowest-paid staff member in the production department performs the coding.
16) By convention, what is the top level in a product structure?
A) level 0
B) level 1
C) level T
D) level 10
E) level 100
17) Bills of material organized by major subassemblies or by product options are called ________.
18) A(n) ________ is a bill of material for components, usually subassemblies, that exist only temporarily;
they are never inventoried.
19) If the explosion of the bill of material tells MRP how much of each part is needed, how does MRP
learn when each of these parts is needed?
20) What information is necessary for an operations manager to make effective use of a dependent
inventory demand model?
21) Consider the following product structure. Fifty units of Product A are needed. How many units of B,
C, D, and E are needed?
22) Consider the following product structure. Fifty units of Product A are needed. How many units of B,
C, D, E, and F are needed?
23) Consider the following product structure. Forty units of Product A are needed. How many units of B,
C, D, E, F, and G are needed?
24) Each R requires 3 of component S and 3 of material A; each S requires 3 of part T. The lead time for
assembly of R is 1 week. The lead time for the manufacture of S is 2 weeks. The lead time for material A is
1 week. The lead time for the procurement of T is 4 weeks. Construct the time-phased product structure.
25) Each X requires 2 of component Y and 1 of part W. Each Y requires 10 of Z. Each W requires 3 of Q
and 2 of R. Lead times are X = 1 week, Y = 1 week, W = 2 weeks, R = 1 week, Z = 3 weeks, and Q = 3 weeks.
Construct the time-phased product structure.
26) Construct a product structure tree for a movie purchased in DVD format. Assume that it contains a
single DVD disk. Don't be concerned with artwork—you may use labeled boxes for your parts and
assemblies.
27) A manufacturing company is trying to determine the cost of materials used to produce an A. If Fs cost
$1 and Ds cost $2 how much does it cost to produce an A (in F and D materials only)?
28) Four A washers, five B washers, two C bolts, and a D bolt are required to make one grill parts kit. If
100 grill parts kits are needed, how many more washers will be consumed than bolts?
Section 3 MRP Structure
1) If 100 units of Q are needed and 10 are already in stock, then the gross requirement is 100 and the net
requirement is 90.
2) Gross material requirements do not take into account the amount of inventory on hand.
3) When safety stock is deemed absolutely necessary, the usual policy is to build it into (increase) the
inventory requirement of the MRP logic.
4) Consider the following product structure.
If the demand for product A is 30 units, and there are 10 units of B on hand and none of C, how many
units of part D will be needed?
A) 3
B) 40
C) 70
D) 90
E) 110
5) It is week 1 and there are currently 20 As in stock. We need 300 As at the start of week 5. If there are
scheduled receipts planned for week 3 and week 4 of 120 As each and A has a lead time of 1 week, when
and how large of an order should be placed to meet the requirement of 300 As?
A) Week 1, 300 As
B) Week 1, 40 As
C) Week 5, 40 As
D) Week 4, 40 As
E) Week 4, 300 As
6) If safety stock is desired, it should be built into which portion of MRP?
A) module level
B) purchased component
C) raw materials
D) finished goods
E) all of the above
7) A material requirements plan contains information with regard to all of the following EXCEPT:
A) quantities and required delivery dates of all subassemblies.
B) quantities and required delivery dates of final products.
C) the capacity needed to provide the projected output rate.
D) inventory on hand for each final product.
E) inventory on hand for each subassembly.
8) Which of the following best describes a gross material requirements plan?
A) a schedule that shows total demand for an item, and when it must be ordered from a supplier or when
production must be started
B) an intermediate range plan for the scheduling of families of products
C) a chart illustrating whether capacity has been exceeded
D) a table that corrects scheduled quantities for inventory on hand
E) a schedule showing which products are to be manufactured and in what quantities
9) Which of the following statements regarding the gross material requirements plan is TRUE?
A) It shows total demand for an item.
B) It shows when an item must be ordered from a supplier or when production must be started.
C) It combines a master production schedule with the time-phased schedule.
D) It requires several inputs, including an accurate bill of material.
E) All of the above are true.
10) An order for 110 units of Product M has been placed. There are currently 30 units of Product M on
hand. Each M requires 4 units of Component N. There are 20 units of N on hand. What are the net
requirements for N?
A) 150
B) 170
C) 300
D) 320
E) 440
11) An order for 50 units of Product A and 60 of B has been placed. There are currently 25 units of
Product B on hand. Each A requires 2 units of Part C; each B requires 5 units of C. There are 160 units of C
available. What are the net requirements for C?
A) 115
B) 175
C) 240
D) 690
E) 700
12) An order for 110 units of Product A has been placed. There are currently 60 units of Product A on
hand. Each A requires 4 units of Part B. There are 20 units of B available. What are the net requirements
for B?
A) 20
B) 120
C) 180
D) 240
E) 440
13) In MRP, the number of units projected to be available at the beginning of each time period refers to:
A) net requirements.
B) scheduled receipts.
C) planned order releases.
D) projected on hand.
E) the amount necessary to cover a shortage.
14) Distortion in MRP systems can be minimized when safety stock is held at the:
A) purchased component or raw material level.
B) work-in-process level.
C) finished goods level.
D) A and B
E) A and C
15) ________ are the result of adjusting gross requirements for inventory on hand and scheduled receipts.
16) Explain the difference between a gross requirements plan and a net requirements plan.
17) The large parts of a playground A-frame (from which to hang a swing or glider) consist of a ridge
pole, four legs, and two side braces. Each pair of legs fastens to the ridge with one fastener set. Each side
brace requires two fastener sets for attachment to the legs. Each fastener set includes one zinc-plated bolt,
one lock-washer, and one nut.
There is one order outstanding, to make 80 frame kits. There are 200 legs in inventory. There are no other
large items in inventory, and no scheduled receipts. Fasteners are available from the small parts area.
a. Draw the product structure tree
b. Calculate the net requirements to fulfill the outstanding order.
18) An order for 120 units of Product M has been made. There are currently 30 units of Product M on
hand. Each M requires 4 units of Component N. There are 20 units of N on hand.
(a) Calculate the net requirements for M.
(b) Calculate the gross requirements for N.
(c) Calculate the net requirements for N.
