19) An order for 110 units of Product A has been made. There are currently 60 units of Product A on
hand. Each A requires 2 units of Part B. There are 30 units of B available.
(a) Calculate the net requirements for A.
(b) Calculate the gross requirements for B.
(c) Calculate the net requirements for B.
20) An order has been placed for 50 units of Product A and 60 units of Product B. There are currently 35
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.
(a) Calculate the net requirements for B.
(b) Calculate the gross requirements for C.
(c) Calculate the net requirements for C.
21) (a) Consider the product structure shown below. Assuming 1 A is to be made, how many units of
each of the other items would need to be made?
(b) If there are 20 of every item except A in on-hand inventory, how many As can be assembled?
22) Product A is made from 2 Bs and 1 C. Lead times for A, B, and C are 2, 3, and 2 weeks respectively.
Currently there are 2 Bs and a 5 Cs on hand, with 5 of each scheduled to arrive at the end of week 1. If 20
As are needed during week 4, can the order be completed (it is the start of week 0 currently)?
Section 4 MRP Management
1) In MRP, a “bucket” refers to a fixed order quantity, such as an EOQ.
2) Time fences divide that segment of the master schedule that can be revised from that section that is
“not to be rescheduled.”
3) MRP is an excellent tool for scheduling components with variable lead times.
4) What is the process of tracing upward in the bill of material from the component to the parent item in
order to determine the cause for the component requirement?
A) net requirements planning
B) time fencing
C) pegging
D) backtracking
E) leveling
5) In MRP, system nervousness is caused by:
A) management’s attempt to continually respond to minor changes in production requirements.
B) the use of the lot-for-lot approach.
C) management’s marking part of the master production schedule as “not to be rescheduled”.
D) the use of phantom bills of material.
E) management’s attempt to evaluate alternative plans before making a decision.
6) What is one of the tools that is particularly useful in reducing system nervousness in an MRP system?
A) modular bills
B) time phasing
C) time fences
D) lot sizing
E) closed loop system
7) ________ are a way of allowing a segment of the master schedule to be designated as “not to be
rescheduled.”
8) ________ are the time units in a material requirements planning (MRP) system.
9) A working MRP system allows a firm to react to even minor changes in production requirements.
Discuss both the advantage and disadvantage of having such ability.
10) What are time fences? Why are they used?
11) Explain what is meant by “nervousness” of the MRP schedule. Provide an example. Name two tools
that are particularly useful in reducing system nervousness in MRP systems.
Section 5 Lot-Sizing Techniques
1) The lot-for-lot lot-sizing technique is particularly appropriate when demand is not very smooth and set
up cost is small compared to holding cost.
2) In general, the lot-for-lot approach should be used whenever economical.
3) MRP can be effective only if very accurate lot sizes are calculated in advance.
4) Which of the following lot-sizing techniques results in the lowest holding costs?
A) lot-for-lot
B) EOQ
C) POQ
D) Wagner-Whitin algorithm
E) the quantity discount model
5) Which of the following statements is TRUE about the MRP plan when using lot-for-lot ordering?
A) The quantity of gross requirements for a child item is always equal to the quantity of planned order
releases for its parent.
B) The quantity of gross requirements for a child item is equal to the quantity of planned order release(s)
multiplied by the number of child items used in the parent assembly.
C) The quantity of gross requirements for a child item is always equal to the quantity of gross
requirements for its parent.
D) The quantity and gross requirements for a child item is always equal to the quantity of net
requirements for its parent.
E) All of the above are true.
6) What lot-sizing technique is generally preferred when inventory holding costs are extremely high?
A) lot-for-lot
B) EOQ
C) POQ
D) the Wagner-Whitin algorithm
E) All of the above are appropriate for the situation.
7) For the lot-sizing technique known as lot-for-lot to be appropriate:
A) future demand should be known for several weeks.
B) setup cost should be relatively small.
C) annual volume should be rather low.
D) item unit cost should be relatively small.
E) the independent demand rate should be very stable.
8) Which of the following statements regarding lot-sizing is TRUE?
A) EOQ principles should be followed whenever economical.
B) Too much concern with lot-sizing results in false accuracy.
C) Lot-for-lot cannot be modified for scrap allowance or process constraints.
D) The Wagner-Whitin algorithm simplifies lot size calculations.
E) All of the above are true.
9) Which lot-sizing technique orders the quantity needed during a predetermined time between orders?
A) economic order quantity
B) periodic order quantity
C) lot-for-lot
D) time fencing
E) part-period balancing
10) What does the POQ interval equal?
A) the number of periods of average demand covered by the safety stock
B) the same number of periods that are on the “not to be rescheduled” side of the time fence
C) EOQ / maximum gross requirement
D) the number of periods until the incoming projected on hand runs out
E) EOQ / average demand per period
11) Which of the following is TRUE regarding the POQ lot-sizing method?
A) Each POQ interval is recalculated at the time of the order release.
B) Each order quantity and POQ interval are recalculated at the time of the order release.
C) The POQ interval and all order quantities remain fixed throughout the planning horizon.
D) Each order quantity is recalculated at the time of the order release.
E) POQ lot sizes are always at least as large as the EOQ lot sizes would be.
12) Which MRP lot-sizing technique should be considered to be the goal (i.e., the technique of choice
under ideal conditions)?
A) Wagner-Whitin
B) EOQ
C) lot-for-lot
D) POQ
E) Silver-Meal
13) ________ is a lot-sizing technique that generates exactly what is required to meet the plan.
14) You have seen several methods for lot sizing in MRP. Why is lot sizing important in MRP? Can too
much concern be given to lot sizing?
15) Why will the POQ almost always outperform the EOQ as an MRP lot-sizing technique?
16) A very simple product (A) consists of a base (B) and a casting (C). The base consists of a plate (P) and
three fasteners (F). There are currently 30 castings and 100 bases on hand. Final assembly takes one week.
The casting has a lead time of three weeks. All other parts have one-week lead times. There are no
scheduled receipts. All components use the lot-for-lot technique. The master schedule requires 80 units of
product A in week 5 and 120 in week 8. Produce the MRP for the upcoming eight weeks. Produce a list of
all planned order releases.
17) Consider the following requirements for a certain product.
Period
1
2
3
4
5
6
7
8
Gross requirements
0
200
200
500
0
400
0
400
Beginning inventory = 500 units
Setup cost = $500 per setup
Lead time = 1 week
Holding cost = $3 per unit per week
a. Develop the lot-for-lot MRP table.
b. Calculate the total relevant costs.
18) Clancy’s Motors has the following demand to meet for custom manufactured fuel injector parts. The
holding cost for that item is $.75 per month and each setup costs $150. Lead time is 0 months. Calculate
the planned order releases using: (a) the EOQ technique, and (b) the POQ technique.
What are the costs of each plan, including the holding cost of any inventory left over after month 7?
Month
1
2
3
4
5
6
7
Requirement
100
150
200
150
100
150
250
19) Consider the bill of material for Product J and the data given in the following table. The gross
requirements for J are 200 units in week 6 and 250 units in week 8. Develop the MRP tables for each item
for an 8-week planning period. Use the lot-for-lot lot-sizing rule.
Lead Time
Quantity on Hand
Scheduled receipts
1
0
2
20
30 in week 2
2
0
1
20
10 in week 1
Section 6 Extensions of MRP
1) Smoothing a resource requirements profile to stay within capacity limits may increase setup costs.
2) Closed-loop MRP systems allow production planners to move work between time periods to smooth
the load or to at least bring it within capacity.
3) Operations splitting sends pieces to the next operation before the entire lot is completed on the
previous operation.
4) Capacity planning in closed-loop MRP:
A) utilizes feedback about workload from each work center.
B) may make use of resource requirements profiles (load reports).
C) may smooth work center loads with such tactics as overlapping and lot splitting.
D) does not add capacity, but rather seeks effective use of existing capacity.
E) All of the above are true.
5) If a load report (resource requirements profile) shows a work center scheduled beyond capacity:
A) the company must add capacity by enlarging the facility.
B) the company must add capacity by such tactics as overtime and subcontracting.
C) the work center’s load may be smoothed by such tactics as operations splitting or lot splitting.
D) the aggregate plan must be revised.
E) the Wagner-Whitin algorithm should be used to rebalance the load.
6) MRP II is accurately described as:
A) MRP software designed for services.
B) MRP with a new set of computer programs that execute on microcomputers.
C) material resource planning.
D) an enhancement of MRP that plans for all levels of the supply chain.
E) a new generation of MRP software that extends MRP to planning and scheduling functions.
7) A(n) ________ provides feedback to the capacity plan, master production schedule, and production
plan so planning can be kept valid at all times.
8) A(n) ________ can illustrate whether a work center has been scheduled beyond its capacity.
9) ________ is a system that allows, with MRP in place, inventory data to be augmented by other resource
variables.
10) Describe the tactics for load smoothing in MRP.
11) What do we mean by closed-loop MRP?
12) Jacquie Welkener, operations manager for ABC Technologies, must schedule work for the next five
days. Each unit takes 30 minutes to process. Available capacity is 8 hours per day. The production order
quantities are 12, 18, 20, 13, and 17 for Monday through Friday, respectively. What should be the
production plan?
Section 7 MRP in Services
1) DRP is a time-phased stock-replenishment plan for all levels of a distribution network.
2) Which of the following statements regarding MRP in services is TRUE?
A) MRP is for manufacturing only, and it is not applicable to services.
B) MRP can be used in services, but only in those that offer very limited customization.
C) MRP only works in services for demand that is independent.
D) Services such as restaurant meals illustrate dependent demand, and they require product structure
trees, bills-of-material, and scheduling.
E) None of the above is true.
3) Distribution resource planning (DRP) is:
A) a transportation plan to ship materials to warehouses.
B) a time-phased stock replenishment plan for all levels of a distribution network.
C) a shipping plan from a central warehouse to retail warehouses.
D) material requirements planning with a feedback loop from distribution centers.
E) a material requirements planning package used exclusively by warehouses.
4) What is DRP?
Section 8 Enterprise Resource Planning (ERP)
1) Firms may discover that, rather than adapting ERP to the way they do business, they have to adapt the
way they do business to accommodate the ERP software.
2) The supply-chain systems that result from using ERP in the grocery industry are called efficient
consumer response (ECR) systems.
3) Enterprise resource planning (ERP):
A) seldom requires software upgrade or enhancement.
B) does not integrate well with functional areas other than operations.
C) is inexpensive to implement.
D) automates and integrates the majority of business processes.
E) all of the above
4) Which of the following is FALSE concerning enterprise resource planning (ERP)?
A) It attempts to automate and integrate the majority of business processes.
B) It shares common data and practices across the enterprise.
C) It is inexpensive to implement.
D) It provides and accesses information in a real-time environment.
E) ERP software promises reduced transaction costs.
5) A(n) ________ system is packaged business software that automates and integrates the majority of
business processes, shares common data and practices across the entire enterprise, and produces
information in a real-time environment.
6) What does enterprise resource planning (ERP) allow an organization to do?