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Indicate whether the statement is true or false.
1. Enterprise resource planning (ERP) systems integrate all aspects of a business into a unified information system.
a. True
b. False
2. In industries where jobs have low skill requirements, changing workforce levels can be cost effective.
a. True
b. False
3. The purpose of a master production schedule (MPS) is to break down the aggregate planning decisions into such details
as order sizes and schedules for individual subassemblies and resources by week and day.
a. True
b. False
4. Resource management for most service-providing organizations generally requires as many intermediate levels of
planning as it does for manufacturing.
a. True
b. False
Indicate the answer choice that best completes the statement or answers the question.
5. _____ is the process of translating aggregate plans into short-term operational plans that provide the basis for weekly
and daily schedules and detailed resource requirements.
a. Aggregation
b. Execution
c. Disaggregation
d. Enterprise resource planning
6. _____ is the process of determining the amount of labor and machine resources required to accomplish the tasks of
production on a more detailed level, taking into account all component parts and end items in the materials plan.
a. Capacity requirements planning
b. Materials requirements planning explosion
c. Disaggregation
d. Execution
7. A company currently has 100 items in inventory. The demand for the next four months is 500, 800, 900, and 300 units.
Determine the monthly production rate if a level strategy is selected with the goal of ending the fourth month with 400
units in inventory.
a. 500 units/month
b. 700 units/month
c. 900 units/month
d. 1100 units/month
8. The periodic-order quantity (POQ) can be determined using an economic time interval, which is the economic order
quantity (EOQ) divided by _____.
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a. on-hand inventory
b. annual demand
c. gross requirements
d. total required inventory
9. Which of the following is true of a master production schedule (MPS)?
a. Its primary output is a time-phased report for scheduling raw materials purchase.
b. It provides a means for evaluating alternative schedules in terms of capacity requirements.
c. Its input is obtained from the materials requirements planning.
d. It projects the requirements for the individual parts based on the demand for the finished goods.
10. In the context of aggregate planning options, which of the following costs are an implication of allowing stockouts?
a. Inventory-carrying costs
b. Lost sales and customer loyalty costs
c. High labor costs and premiums
d. Separation costs
11. For goods-producing firms, at which of the following levels of resource planning does scheduling for individual
subassemblies and resources by week and day take place?
a. Aggregate planning
b. Disaggregation
c. Execution
d. Demand forecasting
12. _____ refers to moving work from one workstation to another, assigning people to tasks, setting priorities for jobs,
scheduling equipment, and controlling processes.
a. Aggregate planning
b. Disaggregation
c. Capacity planning
d. Execution
13. JamTime Music Company manufactures two types of headsets: a basic model and a professional model. In order to
manufacture the headsets, they go through two departments: assembly and testing. The assembly department has 9
workers who work 8 hours/day each. The testing department has 3 workers who also work 8 hours/day each. Each basic
headset model spends 3 hours in the assembly department and 1.5 hours in the testing department. Each professional
headset model spends 5 hours in the assembly department and 3 hours in the testing department. The company makes a
net profit of $100 for each basic headset and $175 for each professional headset. JamTime Music Co. predicts that they
will sell at least two times as many basic models as professional models. Using this information, determine the objective
function to maximize profit. Use the variable B for the number of basic model headsets and P for the number of
professional model headsets.
a. 5B + 3P
b. 3B + 5P
c. 100B + 175P
d. 175B + 100P
14. _____ models seek to determine quantities of different products to produce and sell in order to maximize contribution
to profit.
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a. Product mix
b. Process selection
c. Linear optimization
d. Linear regression
15. Aggregate planning:
a. is not driven by demand forecasts.
b. includes detailed staff schedules.
c. helps in defining budget allocations and associated resource requirements.
d. does not translate forecast into production plans.
16. A company currently has no items in inventory. The demand for the next four months is 200, 400, 250, and 350 units.
Assuming a level production rate of 350 units per month, determine the ending inventory at the end of the fourth month.
a. 100
b. 150
c. 200
d. 250
17. _____ is the process of using the logic of dependent demand to calculate the quantity and timing of orders for all
subassemblies and components that go into and support the production of the end item(s).
a. Final assembly schedule
b. Materials requirements planning explosion
c. Disaggregation
d. Capacity requirements planning
18. Which of the following is true of the lot-for-lot (LFL) rule?
a. It minimizes the costs associated with production setups.
b. It ignores the costs associated with purchase orders.
c. It maximizes the amount of inventory that needs to be carried.
d. It masks the true nature of dependent demand.
19. _____ are the quantity of a component needed to support production at the next-higher level of assembly.
a. Planned order receipts
b. Scheduled receipts
c. Explosions
d. Gross requirements
20. Which of the following is true of a level production strategy?
a. Labor schedules are dynamic.
b. Equipment schedules are stable.
c. There are no capacity restrictions.
d. The production rate keeps changing.
21. Which of the following is true of process selection models?
a. The objective is usually to minimize cost, and typical constraints are meeting demand requirements and resource
limitations.
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b. The goal is to use machines with identical capabilities.
c. They seek to determine quantities of different products to produce and sell in order to maximize contribution to
profit.
d. Typical constraints include marketing requirements such as minimum and maximum amounts to produce.
22. In manufacturing, a _____ is a statement of how many finished items are to be produced and when they are to be
produced.
a. master production schedule
b. capacity requirements plan
c. materials requirements plan
d. planned order receipt
23. A company currently has 500 items in inventory. The demand for the next 2 months is 900 and 1200 units. Assuming
a level production rate of 1000 units per month, determine the ending inventory at the end of the second month.
a. 300
b. 400
c. 500
d. 600
24. Which of the following lot sizing rules is best applied when setup or order costs are high?
a. The fixed-order quantity rule
b. The lot-for-lot rule
c. The periodic-order quantity rule
d. The gross requirements rule
25. Which of the following lot sizing rules bases the order quantity on a standard-size container or pallet load?
a. The lot-for-lot rule
b. The fixed-order quantity rule
c. The periodic-order quantity rule
d. The gross requirements rule
26. In a garments factory, a part requires 0.10 hours of labor per unit in Work Center B and 1 hour of setup time. The
planned order release (order size) for a week is 2000 units. Which of the following is the capacity requirement for a week
at Work Center B?
a. 101
b. 151
c. 201
d. 251
27. Capacity requirements are computed by multiplying the number of units scheduled for production at a work center by
the:
a. the unit resource requirements and then adding in the setup time.
b. the setup time and then subtracting the unit resource requirements.
c. the setup time and then adding in the unit resource requirements.
d. the unit resource requirements and then subtracting the setup time.
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28. The lot-for-lot (LFL) rule is best applied when:
a. inventory-carrying costs are high.
b. space constraints are low.
c. costs associated with purchase orders are high.
d. setup costs are moderate.
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Answer Key
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