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Which of the following are advantages of using central Costs are not reduced with central storage. There are labor
storage? costs, racking, paper system, and other costs associated with
central storage.
(Arnold, Introduction to Materials Management, Chapter 12).
I. Ease of control
II. Costs are reduced
III. Inventory record accuracy is easier to attain
1-1
IV. Safety stock is reduced
Demand on a work center is caused by the next work The correct answer is B)
center. Product is not made unless signaled by the next A pull system starts with demand from a customer and
work center. This is called : signals each preceding operation. Work is not done on a
A) Push system product unless a signal for demand is generated, thus
B) Pull system "pulling" a product through the manufacturing process. (Arnold,
C) Demand system Introduction to Materials Management, Chapter 14).
1-2 D) MRP II system
Flow systems are usually very cost effective for the Correct answer : D)
following reasons ? In the flow system, workstations are designed to produce a
A) Because workstation are designed to produce a limited range of similar products, and there is very little
varied product. buildup of WIP inventory. Because in their purest form, flow
B) Because material flows from one workstation to the lines are inflexible. They can produce only a limited family of
next, there is large buildup of WIP inventory. similar parts, and the quantity must be sufficient to justify
1-3 C) Because manufacturing lead times are long. economically its use.
D) Because in their purest form, flow lines are inflexible. (J. R. Tony Arnold, Introduction to Material Management.)
Correct Answer : D)
A company orders from supplier once every ten days The quantity equal to the demand during the leadtime plus the
delivery takes three days, average demand for demand during the review period plus safety stock is
SKUs is 100 units per week(five working day). They has called the target level. T = D(R + L) + SS = 20 (10 + 3) +
determined that safety stock is held at one day's supply, 20 = 280.
inventory on hand 10 units, in periodic review system, (J.R.Arnold. Introduction to Material Management, Chapter 11)
which of the following is target level ?
2-3 A) 250 B) 260
C) 270 D) 280
The ability to negotiate price is dependent on the type of The correct answer is D)
product. Which of the following products could generally Generally, made to order items which are made to specification
be negotiated ? and could be obtained from many sources can be negotiated.
A) Maintenance, repair, and operating supplies (Arnold, Introduction to Materials Management, Chapter 7).
B) Copper, coal, wheat, metal
C) Standard electronic components
3-5 D) Made to order motors
The sales and operation planning is done at the level :
A) Part(component) B) Subassembly Correct Answer : C)
C) Product family(group) D) Final assembly Sales and operation planning brings together all the plans for
the business (sales, marketing, development, manufacturing,
sourcing, and financial) into one integrated plan, it is
performed at least one a month and is reviewed by
management at an aggregate(product family) level.
4-1 (APICS Dictionary 9th ed., pp 84)
The primary reason to use operation splitting is: The correct answer is D)
A) Utilize machinery more effectively Operation splitting can be defined as splitting the lot size
B) Increase manpower efficiency over multiple machines. This will reduce the leadtime. For
C) Reduce the maintenance costs example, if a lot size is split over two machines, the lot size
D) Reduce leadtime is essentially cut in half.
(Arnold, Introduction to Materials Management, Chapter 5).
4-2
4-3
5-1
Correct Answer : C
Today's data is 20
Order DUE DATE LT REMAINING
A 30 10
B 40 15
C 35 20
D 45 20
Which of the following statement means the CR of order
5-2 B?
A) The order B is behind schedule.
B) The order B is an schedule.
C) The order B is ahead of schedule.
D) The order B is already late.
Correct Answer : A)
As the number of distribution centers increase, the safety stock
A company manufactures stoves. It has one distribution in each decreased. However, the total
center, the average demand is 2000 units and safety safety stock in all distribution centers increased.
stock is 50 units normally. If two distribution center is
added to the company, we can expect which
of the following except ?
A) The safety stock in each distribution center will be
6-3 about 40 units.
B) As the number of distribution centers increases, the
demand in each will decreases.
C) As the number of distribution centers increases, the
safety stock in each will decrease.
D) The total safety stock in all distribution centers will
increase.
9-1
What is the primary consideration used in selecting a new The correct answer is C)
supplier ? In order for the supplier to meet your ongoing needs, they
A) Cleanliness of their facility must have the right manufacturing capabilty and reliability. No
B) Proximity to your factory matter what other attributes they may have, if they cannot
C) Manufacturing capability and reliability meet your needs on a consistent basis, then the supplier
D) ISO certification should not be chosen.
9-3 (Arnold, Introduction to Materials Management, Chapter 7)
9-5
What is the correct step in the purchasing cycle ?
. Follow up and expedite as necessary. Correct Answer : B)
The purchasing department receives purchase requisition from
. Receiving purchase requisition.
two different sources depending on whether they are using
. Issue purchase order. an MRP or an EOQ production planning system. In the case
. Selecting suppliers. where they are running an MRP-based system, they get
their current purchase requisitions from the order release
10-1 report. Once the purchasing department has received the
A) , , , B) , , ,
purchase requisitions, then, identify and select suppliers.
C) , , , D) , , ,
Which of the following are strategies to use in developing a The correct answer is B)
production plan ? The chase strategy means production will vary with demand
I. Chase strategy (inventory stays level). The level strategy establishes
II. Delphi strategy production at the average demand. Fluctuations in demand
III. Level strategy are absorbed by inventory. The third strategy is
subcontracting. Production is kept at the minimum demand
11-2 IV. Backlog strategy
level. Variations in the demand level are absorbed by
subcontracting production.
A) I and II (Arnold, Introduction to Materials Management, Chapter 2)
B) I and III
C) II and IV
D) III and IV
In using exponential smoothing, the old forecast for June Correct Answer : B)
was 100, and the actual demand for June was 150. If a is New forecast = a latest demand + (1 - a) previous forecast
0.1. Which of the following is the forecast for July ? = 0.1150 + 0.9100 = 105.
A) 100 B) 105 C) 110 D) 115
11-3
According to the EOQ formula, if the ordering costs for an The correct answer is D)
item are greatly reduced, what is the likely impact on the According to the EOQ formula, if ordering costs are reduced,
quantity ordered ? then the quantity ordered will decrease. The EOQ formula
A) Order multiples will increase finds the lowest total cost by balancing ordering costs with
B) Order quantities will increase the cost of carrying inventory. If the cost of ordering is
C) Order multiples will decrease reduced, then the quantity needed to balance the order cost
11-5 D) Order quantities will decrease could also be reduced.
(Arnold, Introduction to Materials Management, Chapter 10)
A functional specification tells Purchasing :
The correct answer is D)
A) When to buy
A functional specification tells Purchasing what to buy.
B) How much to buy
Functional specifications are concerned with the use of the
C) Where to buy
product and what performance characteristics the product
D) What to buy
needs to have. Functional specifications are the most difficult
to define for a buyer.
12-1 (Arnold, Introduction to Materials Management, Chapter 7)
14-1
What is the required monthly production to achieve level
production ?
A) 220 units
B) 240 units
C) 280 units
D) 340 units
Production plans have all of the following except : The correct answer is D)
A) Shipment plan Production plans are generally monthly statements of
B) Product families shipments, production, and inventory (or backlog), broken
C) Inventory plan down by product families, not end items.
D) Weekly production (Arnold, Introduction to Materials Management, Chapter 2)
14-2
Correct Answer : B)
Which of the following statement is the bet definition
Order qualifiers are competitive characteristics that a firm
about order qualifier ?
must exhibit to be a viable competitor.
A) Competitive characteristics that a firm must exhibit to
For example, a firm may seek to compete on characteristics
be the best competitor.
other than price, but in order to "qualify" to compete., its
B) Competitive characteristics that a firm must exhibit to
cost and the related price must be within a certain range to
14-3 be a viable competitor.
be considered by its customers. Therefore it should be a
C) Competitive characteristics that cause customers to
minimum standard in market.
choose that firm's product.
D) Competitive characteristics that a firm has the best
qualified product.
A work center has 300 available hours, a utilization rate The correct answer is A)
of 80% and an efficiency rate of 90%. What is the rated The rated capacity is calculated by multiplying the available
capacity of the work center ? hours (300) by the utilization percentage (80%) by the
A) 216 hours efficiency rating of the work center (90%): 300 x .80 x .90 =
B) 240 hours 216.
C) 270 hours (Arnold, Introduction to Materials Management, Chapter 5).
14-5 D) Not enough information to determine
The correct answer is D)
A work center has 4 machines operating 6 days for 8
Available time is the total number of hours a work center can be
hours per day. What is the available time ?
used. Therefore, 8 x 6 x 4 = 192 hours.
A) 24 hours
(Arnold, Introduction to Materials Management, Chapter 5).
B) 32 hours
C) 48 hours
D) 192 hours
15-1
An income statement of a company will show which of the The correct answer is C)
following ? Income statements reflect the revenues and expenses of a
A) Inventory levels company generating either a profit or loss. Cost of products
B) Long term debt sold is subtracted from the revenue to obtain a gross profit.
C) Cost of products sold From the gross profit, expenses are deducted to arrive at a net
D) Net cash available income or loss.
15-5
The correct answer is C)
A company needs to produce 4000 units over the next The calculation would be as follows:
two months. There are 21 working days in the first 4000 units/40 work days = 100 units per day
month and 19 working days in the second month. What (Arnold, Introduction to Materials Management, Chapter 2).
must the daily rate be with a level strategy ?
A) 50
B) 75
16-1 C) 100
D) 125
A) only B) , only
C) , only D) , , only
The correct answer is B)
A manufactured component is going to be late. Which of
A pegging report or screen would show the source of
the following would a planner review to ensure a
demand for a part up the bill of materials to the customer
customer will not be affected ?
order.
A) Indented bill of materials
(Arnold, Introduction to Materials Management, Chapter 4).
B) Pegging inquiry screen
C) Open purchase order report
16-3 D) Work order routing
Correct Answer : B)
A manufacturing company produces a particular Overhead = $ 1,000, variable unit cost = $ 6/unit,
component. This component requires an overhead cost break-even point = 300 units. Total cost = $ 1,000 +
$ 1000 and a variable unit cost of $ 6 per unit, so the $ 6 300 = $ 2,800. New break even point = 250 unit.
break-even point occurs when 300 units are sold. New selling price = $ 2,800 / 250 = $ 11.2/unit.
If the firm is willing to decrease the break-even point at
250 units, which of the following should be the selling
17-5
price per unit ?
A) $ 10 B) $ 11.2
C) $ 8.5 D) $ 12.5
In a JIT manufacturing environment, waste can be The correct answer is C)
described as : In Just-in-time manufacturing, waste can be best described
A) Component scrap as any process which does not add value. The processes
B) Overtime can be overtime, scrap, paperwork, approvals, etc. which do
C) Any process which does not add value not add any value to the product for the customer.
D) Any overhead process (Arnold, Introduction to Materials Management, Chapter 14)
18-1
A company has its warehouse divided so order pickers only The correct answer is A)
pick in their area. This warehouse is operating under which In a zone system, the warehouse is divided into zones and
of the following systems ? the order pickers only pick the items in their zone. The
A) Zone system items are sent to the marshalling area to be combined with
B) Area system other items from other zones for that customer. An area
C) Consolidated pick system system allows the picker to pick a complete order by moving
18-5 D) Modified pick system through the warehouse.
(Arnold, Introduction to Materials Management, Chapter 12)
The forecast for a part is 200 units per week. The actual The correct answer is C)
shipments for the last 5 weeks have been 250, 260, 210, Tracking signals measure the bias in a forecast. The above
240, and 220. If the MAD is 20, what would the tracking demand would reflect a negative bias in the forecast, as the
signal equal ? forecast is consistently less than the actual demand. To
A) 3 calculate a tracking signal, divide the sum of the forecast
B) 6 errors by the MAD. Therefore, 50+60+10+40+20 = 180,
19-1 C) 9 divided by 20 = 9.
D) 12 (Arnold, Introduction to Materials Management, Chapter 8)
Which of the following best describes the term capacity ? The correct answer is B)
A) The quantity of work done Capacity is concerned with the rate of doing work. According
B) The rate of doing work to the APICS dictionary, capacity is defined as "the capability
C) The amount of inventory produced of a worker, machine, work center, plan, or organization to
D) The number of standard hours produced produce output per period of time".
(Arnold, Introduction to Materials Management, Chapter 5)
19-2
Correct Answer : C)
All of the following statements are true regarding For any given shipment, the line-haul costs vary with the
transportation cost except ? distance shipped. However, the pickup and delivery,
A) For any given shipment, the line-haul cost per cwt terminal-handling, and billing costs are fixed. In case of the
varies with the cost per mile. pickup and delivery cost, it will be less expensive if the
B) For any given shipment, the line-haul cost per cwt shipment is consolidated into fewer parcels.
19-5
varies with the weight moved.
C) For any given shipment, the pickup and delivery cast
varies the distance shipped.
D) The terminal-handling costs decrease by reducing
the number of parcel by consolidating shipments.
The correct answer is A)
An important measure of an effective quality measure should
be which of the following ?
A) Easy for the user to understand
B) Based on accounting information
C) Developed by the Quality Department
D) Used to evaluate individual performance
20-1
If the ratio is less than one it means that the actual time left
is less than the leadtime left. This causes the order to be
behind schedule. A ratio of 1 means the time remaining
equals the remaining leadtime.
(Arnold, Introduction to Materials Management, Chapter 6)
All of the following would be reasons for anticipation The correct answer is D)
inventory except : Inventory accumulated due to price breaks would be
A) Inventory built ahead of the peak season considered lot size inventory. Anticipation inventory is
B) A potential strike accumulated in "anticipation" of an event (future demand).
C) Vacation shutdown (Arnold, Introduction to Materials Management, Chapter 9).
D) Price breaks
20-5
Why would a supplier want a long term customer The correct answer is B)
relationship ? A long term supply agreement with a customer allows the
A) Reduced transportation costs supplier to properly plan raw materials, labor, capacity, and
B) Improved ability to plan other resources.
C) Reduced packaging cost (Arnold, Introduction to Materials Management, Chapter 7)
D) Less material handling
21-1
21-2
21-4
The material requirements system receives direct input The correct answer is C)
from : The master production schedule, once established, is
A) Production planning submitted to the MRP system for use in calculating demand
B) Capacity requirements planning for the components.
C) Master production scheduling (Arnold, Introduction to Materials Management, Chapter 4)
D) Purchasing
21-5
When the MRP requirements change frequently and by
small amounts, this is referred to as : The correct answer is B)
A) Replanning System nervousness occurs when the requirements change
B) Nervousness rapidly and by small amounts. This causes the system to
C) Explosion create messages to reschedule orders. Following these
D) Netting orders would cause chaos on the manufacturing floor and at
22-1
the suppliers.
The most effective ways to reduce system nervousness are
to : 1) use filters to reduce the messages or, 2) use firm
orders which cause the system to minimize the replanning.
(Arnold, Introduction to Materials Management, Chapter 4)
Which of the following best describes MRO inventory ? The correct answer is D)
A) Raw materials used in production MRO's are items used in production but are not part of the
B) Office supplies used in administrative functions product. These items would include hand tools, spare parts,
C) Inventory in the distribution network grease, and supplies.
D) Items used in production but are not part of the (Arnold, Introduction to Materials Management, Chapter 9)
product
22-5
Which of the following best defines the term break even The correct answer is D)
point ? The break-even point occurs when revenues equal total
A) The point at which a product fails costs. When volume is less than the break even-point, a
B) Current assets = current liabilities loss occurs. Conversely, when volume exceeds the break
C) Required capacity = available capacity even point, a profit occurs.
D) Revenues = total costs (Arnold, Introduction to Materials Management, Chapter 7)
23-1
A) $25
B) $50
C) $75
D) $100
If priority plans have to be adjusted at any of the Correct Answer : D)
planning levels because of capacity problems, those Closed-loop MRP is a system built around MRP that
should be reflected in the levels above. Thus, there must includes the additional planning functions of SOP, MPS,
be feedback throughout the system so that the planning CRP, purchasing, PAC. The term closed loop implies not only
can be dept valid at all times. This so called ? that each of these elements is included in the overall system,
A) Feedback system. B) Auditing system. but also that feedback is provided by the execution functions so
24-1 C) Backflush. D) Closed loop MRP. that the plant.
A closed loop MRP system can be best defined as The correct answer is C)
A) Action taken by a planner to approve planned orders Closed loop MRP systems operate from the top down with
B) Re-planning of capacity to accomodate restraints feedback throughout the system. These feedback
C) Integrated planning and control system with feedback mechanisms allow changes to occur in the top level
from the bottom-up planning.
D) Integrated systems which include financial software, (Arnold, Introduction to Materials Management, Chapter 2)
24-2 finite capacity, and logistics
24-3
24-5
The correct answer is B)
Which of the following are inputs to a realistic MPS ?
The production plan, forecasts, and capacity constraints are
I. Production plan
all inputs to the MPS. While costs are nice to have, they
II. Forecasts for end items
are not a necessary input.
III. Product costs for end items
(Arnold, Introduction to Materials Management, Chapter 3)
IV. Capacity contraints
25-1
A) I, II, and III B) I, II, and IV
C) II, III, and IV D) I, III, and IV
Before a supplier's invoice can be paid, which of the The correct answer is D)
following data must match ? Before a supplier's invoice can be paid, there must be a
I. Quantity must match the purchase order three-way match (computer systems can do this
II. Price must match the purchase order automatically). The price on the purchase order must match
III. Quantity must match the receipt the price on the invoice. The quantity received must match
the purchase order and the invoice must match the quantity
25-5
received. Therefore, the price and quantity on all three
A) I and II
documents (transactions) must match in order to be paid.
B) I and III
(Arnold, Introduction to Materials Management, Chapter 7).
C) II and III
D) I, II, and III
In price negotiation, which of the following statement is Correct Answer : D)
correct about items of small value ? One important factor in the approach to negotiation is the
A) Price is set by market supply and demand and can type of product. There are four types of product :
fluctuate widely. commodities, standard products, items of small value,
B) There is not much room for negotiation usually. made-to-order items. A is a characteristics of commodities,
C) These can generally be negotiated. B is a characteristics of standard product, C is a
26-1 D) The prime objective should be to keep the cost of characteristics of made-to-order items. In items of small
ordering low. value, firm will negotiate a contact with a supplier widely.
26-3
26-4
Correct Answer : A)
In buyer-planner concept, which of the following is not
To improve the effectiveness of the buyer-planner, many
true ?
companies have combined the two functions of buying and
A) The person who has the responsibilities of buyer's
planning. The planner's job and the buyer's job are
job and planner's job handles more components than
combined into a single job done by one person. However,
either a buyer or a planner.
this person handles fewer components than either a buyer or
B) The planner/buyer is responsible for determining
26-5 a planner, and the buyer/planner has a keener with
material requirements.
suppliers.
C) The planner/buyer is responsible for handling all the
(J. R. Arnold. Introduction to Material Management, Chapter
activities associated with the buying and production
7).
planning functions.
D) There is a smoother flow of information and material
between the supplier and the factory.
A company needs to increase production in the current The correct answer is A)
week to meet a customer request. The quickest way to Working overtime allows skilled workers to finish the
accomplish this is to : customers job. This would be quicker than hiring workers
A) Work overtime which can take a great deal of time. Temporary workers can
B) Hire more workers be hired quickly, however, the quality would suffer, and
C) Hire temporary workers finding a short term subcontractor would not generally be
27-1 D) Subcontract the work feasible.
(Arnold, Introduction to Materials Management, Chapter 5)
28-1
The minimum planning horizon for the MPS should be : The correct answer is B)
A) Twelve months in weekly amounts The planning horizon should be equal to the longest
B) Equal to the longest cumulative lead time cumulative lead time to purchase components and
C) As long as it takes to acquire new capacity manufacture. This allows visibility for planning.
D) Twice the longest component lead time (Arnold, Introduction to Materials Management, Chapter 3)
28-2
All of the following statement are correct regarding the mixed Correct Answer : D
model production except ? With the mixed model production, inventory is reduced, and
A) The number of setup increases. the ability to respond to changes in model demand
B) The ability to respond to changes in model demand increases. The number of setups increases, but this is not a
increases. problem if setup times are small. The goal is to build every
C) Inventory can be a minimum. model every day according to daily demand.
28-3 D) The goal is to build every model every week. (J. R. Arnold. Introduction to Material Management, 4th ed,
Chapter 14)
Operations are scheduled from the date the order is The correct answer is D)
received. This would best describe : Forward scheduling begins when an order is received. The
A) Backward scheduling due date for the customer would be calculated based on
B) Master scheduling material purchases and operation scheduling. It is used for
C) Capacity scheduling developing promise dates for the customer, or determining
D) Forward scheduling whether a late order can be delivered on time.
28-5 (Arnold, Introduction to Materials Management, Chapter 6)
The correct answer is B)
Total employee involvement will result in an increase in
which of the following roles for first-line supervision ?
A) Controlling
B) Coaching
C) Disciplining
D) Reporting
29-1
29-5
The correct answer is C)
Which of the following is used to determine the feasibility
of the material requirements plan ?
A) Resource requirements planning
B) Rough-cut capacity planning
C) Capacity requirements planning
D) Work center capacity control
30-1
If an annual contract is in place with a supplier, the weekly The correct answer is B)
amount to be ordered is done via : If an annual contract is in place, the weekly amounts would
A) Purchase order be ordered with a release. Often times this is done by the
B) Release planner or supplier schedule, not a buyer. The buyer would
C) Blanket order typically be the one negotiating the contract.
D) Terms statement (Arnold, Introduction to Materials Management, Chapter 7)
30-5
A company wants to store 15,000 cartons with 20 cartons on
The correct answer is A)
each pallet. The warehouse is set up to store pallets 5
The number of pallet positions can be calculated by dividing
high. How many pallet positions are needed ?
the number of cartons of storage needed by the number of
A) 150
cartons per pallet = total number of pallets needed. Divide
B) 500
the total number of pallets needed by the number of pallets
C) 750
stacked height = the number of positions needed.
31-1 D) 3000
For this problem 15,000 divided by 20 equals 750 pallets
needed; 750 divided by 5 equals 150 positions.
(Arnold, Introduction to Materials Management, Chapter 12.)
Correct answer : D)
Which of the following statement describe best about
According to APICS dictionary 8the edition, work cell is
work cell ?
Dissimilar machines grouped together into a production unit
A) Work cell require short LT and set up time.
to produce a family of parts having similar routing. Work cell
B) Material flow smoothly from one operation to the
permit high variety, low volume manufacturing to be repetitive
next with no delay.
For work cells to be really effective, product design and
32-2 C) A specific production area consisting of one or more process design must work together so parts are designed for
people and machine with identical capacity.
manufacture in work cells.
D) Dissimilar machines grouped together into a
production unit to produce a family of parts having
similar routings
Which of the following activities is not part of physical The correct answer is D)
supply/distribution ? Physical supply/distribution is concerned with the fulfillment of a
A) Transportation customer's order. This would include transportation, order entry,
B) Warehousing and warehousing. Capacity planning, however, is considered
C) Order entry part of the manufacturing process.
D) Capacity planning (Arnold, Introduction to Materials Management, Chapter 1)
33-4
34-1
34-3
All of the following statements are correct about bottom-up Correct Answer : C)
replanning except ? In MRP, the process of using pegging data to solve matrial
A) Action to correct for charged conditions should occur availability or other problem. This process is accomplished by
as low in the product structure. the partner. Potential solutions include compressing LT, cutting
B) It use pegging data. order quantity, substituting material, and changing the master
C) This process is accomplished by the computer schedule.
34-4 system. (APICS Dictionary 8th ed.)
D) Potential solutions include compressing LT.
35-1
35-2
The projected available at the end of Week 4 is
A) Zero units
B) 100 units
C) 200 units
D) 300 units
35-4
35-5
The correct answer is C)
Part A and Part C would be considered parents since they have
In the product structure below, which of the following parts components attached.
would be considered parents ? (Arnold, Introduction to Materials Management, Chapter 4)
. A
_________|_________
| | |
. B C D
_____|_____
36-1 | |
E F
A) A, B, C, D
B) E, F
C) A, C
D) B, D, E, F
Over the past three months, the demand for a product has The correct answer is B)
been 240, 260, and 280. Calculate the three month moving The three month moving average is calculated by adding the
average forecast for month four. demand for the three months (240+260+280) and dividing by the
A) 240 number of data (3) or 780/3 = 260. This would be used as the
B) 260 forecast for the fourth month.
(Arnold, Introduction to Materials Management, Chapter 8)
36-4 C) 280
D) 300
A) 500
B) 600
C) 700
D) 800
The function of selecting and sequencing available jobs to The correct answer is C)
be run at each work center is called : Dispatching is the process of selecting and sequencing the
A) Sequencing available jobs to be run at individual work centers. It is a very
B) Prioritizing important function in that jobs need to be prioritized in order to
C) Dispatching meet customer due dates.
D) Cycling (Arnold, Introduction to Materials Management, Chapter 6)
37-3
Correct Answer : A)
Order winners are those competitive characteristics that cause a
Which of the following is the statement about order firm's customers to choose that firm's product and service over
winners ? those of its components.
A) Characteristics that cause a firm's customers to
choose that firm's products and services over
those of its competitors.
37-4 B) Product characteristics that have the highest market
share.
C) Order winners usually focus on product quality for
customer.
D) A company's characteristics that are admired by
their competitors.
37-5
The correct answer is D)
Which of the following are objectives when establishing The master scheduler, when developing the MPS, must make
the MPS ? sure labor, material, equipment, and inventory are being used
I. Efficient use of resources efficiently in order to maintain high levels of customer service.
II. Efficient final assembly Efficient final assembly would be developed by a final assembly
III. High customer service levels schedule.
38-1 IV. Efficient use of inventory (Arnold, Introduction to Materials Management, Chapter 3)
Manufacturing has primary responsibility for which of the The correct answer is C)
following dimensions of quality ?
A) Product performance
B) Aesthetics
C) Conformance
D) After rmarket service
39-5
A work center is to process a batch of 100 units of a specific Correct Answer : A)
item. The setup time is 1 hour/batch, queue time is 2 Operation time is total setup and run time for a specific task.
hours/batch, move time is 0.1 hour/batch, run time is 0.2 Therefore, operation time = 2 hour + (100 0.2 hour) = 22
hour/unit, wait time is 0.1 hour/batch. Which of the following hours.
is the operation time ? (J. R. Arnold. Introduction to Material Management, 4th ed,
A) 22 hours. B) 24 hours. Chapter 5, pp. 131 - 132)
40-1 C) 26 hours. D) 28 hours.
Correct Answer : B)
All of the following statements are in JIT environment The JIT process is not primarily a planning and control system. It
except ? is a philosophy and a set of
A) A successful JIT can only be achieved with the techniques for designing and operating a manufacturing plant.
cooperation and involvement of everyone in the Planning and control is still needed in JIT
organization. manufacturing.
40-2 B) The JIT process is primarily a planning and control (J. R. Arnold. Introduction to Material Management, 4th ed,
system. Chapter 14)
C) The JIT system emphasizes relationships with
suppliers.
D) In JIT, there is no inventory on hand, and the order
quantity logic is to make exactly what is needed.
A) 170
B) 180
C) 190
D) 200
43-2
43-4
The material requirements system receives direct input The correct answer is C)
from : The master production schedule, once established, is
A) Production planning submitted to the MRP system for use in calculating demand
B) Capacity requirements planning for the components.
C) Master production scheduling (Arnold, Introduction to Materials Management, Chapter 4)
D) Purchasing
43-5
Which of the following best describes the Master Production The correct answer is D)
Schedule ? The Master Production Schedule is the planned build schedule
A) It is the actual build schedule for manufacturing for manufacturing. A final assembly schedule is generally
B) It is the final assembly schedule separate from the MPS and the actual build schedule may vary
C) It is driven by materials requirements planning from what was planned.
D) It is the planned build schedule for manufacturing (Arnold, Introduction to Materials Management, Chapter 3)
44-1
The law which states that a small percentage of the group The correct answer is C)
usually accounts for a large percent of the results is ? Pareto was an Italian economist who developed the observation
A) Fredo's law that 80% of the Italian wealth was concentrated in 20% of the
B) Newtons first law population. This observation can apply to many areas and is
C) Pareto's law used to analyze the inventory for classifying A, B, and C items.
D) Nielsen's law Generally, 80% of the inventory dollars rest with 20% of the
44-5 parts.
(Arnold, Introduction to Materials Management, Chapter 9)
The total volume of production passing through a facility is The correct answer is D)
defined as : Throughput is the total volume passing through a facility.
A) Total output Bottlenecks control the throughput, as production can only
B) Finished goods production proceed as quickly as the slowest bottleneck.
C) Load (Arnold, Introduction to Materials Management, Chapter 6)
D) Throughput
45-1
Week 1 2 3 4 5
Customer Orders 60 30 20 40 The order for 60 can be accepted for week 3, as 70 are
MPS 110 110 available; 20 from week 1 and 50 from week 3.
ATP 20 50 (Arnold, Introduction to Materials Management, Chapter 3).
A) 250
B) 300
C) 350
D) 400
46-2 A) 1.5
B) 1.6
C) 4.0
D) 6.4
46-3
A) I, II, and III
B) II, III, and IV
C) I, III, and IV
D) I, II, III, and IV
The annual demand for a product is 1200 but during July, The correct answer is B)
the product sells 150 units. What is the seasonal index for The seasonal index is calculated by dividing the period average
the product in July ? demand by the average demand for all periods. For this
A) 1.0 problem, seasonal index would equal 150 divided by 100 (1200
B) 1.5 annual divided by 12 months) or 1.5.
(Arnold, Introduction to Materials Management, Chapter 8).
46-5 C) 1.75
D) 2.00
A company wants to produce at a level rate. Based on the The correct answer is C)
following information, What production rate will provide a The total forecasted demand is equal to 70 for the five periods.
projected inventory of 20 at the end of period five ? In addition to the forecasted demand, the company wants to
1 2 3 4 5 raise the inventory from 10 to 20 by the end of period five,
Forecast Demand 20 10 15 15 10 therefore the total requirement is for 80 units. To produce 80
Planned Production units over five periods in a level manner, the company must
Planned Inventory 10 produce 16 units per period in order to achieve its objective.
47-1 (Arnold, Introduction to Materials Management, Chapter 1)
A) 14
B) 15
C) 16
D) 17
For the particular item, the annual demand is 5,200 units, it Correct Answer : D)
is ordered in quantities of 325, and the MAD during the Order point = demand during the leadtime + safety stock during
leadtime is 50 unit. LT is 4 weeks. Which of the following is the leadtime = (4 weeks) (5200/52) + 1.9550 = 497.5
nearest order point for this item ? (J. R. Tony Arnold, Introduction to Material Management)
(safety factor = 1.95)
47-3
MAD = 100
On hand = 200
Weekly demand = 400
47-4
A) 100
B) 300
C) 500
D) 600
Correct Answer : D)
Which of the following statement is best regarding physical The movement of materials is divided into two functions ;
distribution ? physical supply and physical distribution.
A) Physical distribution is the movement of materials Physical distribution provides a bridge between marketing and
from the distribution center to customer. production. Physical supply is the movement and storage of
B) Physical distribution is the movement of materials goods from suppliers to manufacturing.
47-5
from the suppliers to manufacturing.
C) Physical distribution is the movement of materials
from the suppliers to customer.
D) Physical distribution is the movement of materials
from the product to customer.
A supervisor's primary role in a total employee involvement
company is : The correct answer is C)
A) Controlling Total employee involvement allows employees to participate in
B) Cheerleading decision making which was previously reserved for
C) Coaching management. In this environment, the supervisor's role is to help
D) Quality control employees succeed by assisting employees in a decision
making process rather than telling employees what to do. This
48-1
coaching process helps employees improve the decisions they
make.
(Arnold, Introduction to Materials Management, Chapter 14)
Which of the following would be considered part of the The correct answer is B)
physical distribution system ? Physical distribution is defined as the physical movement of
A) Moving materials between work centers goods from suppliers to the beginning of production and from
B) Receiving goods from suppliers the end of production to the consumer. Receiving would be
C) Planning the transfer of goods to outside contractors included as part of the function of physical distribution. (Arnold,
D) Forecasting inventory levels to support manufacturing Introduction to Materials Management, Chapter 13)
48-3
Periods: .1 2 3 4 5
Forecast: 20 20 30 20 25
Actual demand: 22 18 25 20 19
A) I only
B) I and II
C) II and III
D) III
51-1
All of the following conditions will trigger an exception The correct answer is D)
message except : All of the conditions will trigger an exception message except for
A) Changes in timing of a scheduled receipt changing the planner assignment (number). This will cause the
B) Changes in the inventory on hand balance due to reports to print differently. Any records which cause a change
cycle count adjustment in the gross requirements, inventory, or scheduled receipts, will
C) Changes in the forecast trigger an exception message. (Arnold, Introduction to Materials
51-5 D) Changes in the assigned planner Management, Chapter 4)
The correct answer is D)
The setup time for an operation is two hours and the run
time is 10 minutes per piece. The scheduled operation time
for 100 units is
A) 130 minutes
B) 1,000 minutes
C) 1,100 minutes
52-1 D) 1,120 minutes
All of the following are objectives of Purchasing except : The correct answer is D)
A) Buy goods and services in the right quantity and Purchasing objectives are the three answers in A), B), and C).
quality In addition, Purchasing must make sure the company receives
B) Buy goods and services at the lowest cost the best possible service and prompt delivery by the supplier.
possible (Arnold, Introduction to Materials Management, Chapter 7)
C) Maintain good supplier relations
52-2 D) Schedule the suppliers plant so goods arrive on time
You calculate the critical ratio which is .95 for a particular The correct answer is A)
order. The order is : The critical ratio measures the priority of an order to the other
A) Behind schedule orders at a work center. It is calculated by:
B) Ahead of schedule
C) On schedule
D) Critical ratio has nothing to do with order priority Due date - Present date Actual time remaining
----------------------- = ---------------------
52-3
Lead time remaining Lead time remaining
53-1
If a variety of products are made in a factory, the most The correct answer is C)
common unit of capacity is : When factories make a variety of products, the most common
A) Machine turns unit of capacity is time or hours. In factories which make
B) Inventory turns common units, a measure of capacity will be the unit of output.
C) Time For example, beer is measured in barrels, automobiles are
D) Dollars measured in cars produced, etc.
53-5 (Arnold, Introduction to Materials Management, Chapter 2)
When the next operation is allowed to begin before the The correct answer is B)
entire lot is completed on the previous operation, this is Operation overlapping allows the next operation to begin even
called : though the whole lot has not been completed through the
A) Operation splitting previous operations. It can be used to expedite an order.
B) Operation overlapping However, sometimes costs are increased.
C) Work center overlapping (Arnold, Introduction to Materials Management, Chapter 6)
54-1 D) Work center splitting
The annual cost of goods sold for a company is $40 million The correct answer is D)
and the average inventory is $10 million. By how much In order for a company with cost of goods sold of $40 million to
would the inventory need to be reduced to have annual turn the inventory 20 times annually, the inventory would have to
inventory turns equal 20 turns ? be valued at $2 million (40/20). Since the average inventory is
A) $2 million currently valued at $10 million, the inventory would need to be
B) $4 million reduced by $8 million.
54-2 C) $6 million (Arnold, Introduction to Materials Management, Chapter 1)
D) $8 million
Which of the following is the input needed for a CRP ? Correct Answer : C)
. MPS. The input needed for a CRP are open shop order, planned order
. Shop order. in MRP, routing, time standards, leadtimes, and workcener
. Planned order. capacities.
(J. R. Arnold. Introduction to Material Management, 4th ed ,
Chapter 5)
55-4 A) , only B) only
C) , only D) None
Correct Answer : D)
Which of the following statement is the best definition of ANSWER A is delivery leadtime definition, B is the definition of
demand lead time ? cumulative leadtime, C is the definition
A) The time from the receipt of a customer order to the of operation time. Demand leadtime is the amount of time
delivery of the product. potential customers are willing to wait for the delivery of a good
B) The longest planned length of time to accomplish the or a service. Syn : customer tolerance time.
activity in question. (APICS Dictionary 8th ed.)
C) The total setup time plus the run time for a specific
task.
56-2
D) The amount of time potential customers are willing to
wait for the delivery of a good.
All of the following are part of manufacturing lead time The correct answer is D)
except : Purchasing time is part of the overall lead time of a product;
A) Queue time however, manufacturing lead time includes queue time, setup
B) Wait time time, run time, wait time, and move time.
C) Move time (Arnold, Introduction to Materials Management, Chapter 6)
56-5 D) Purchasing time
The correct answer is D)
In projecting demand for a standard design commodity,
which of the following factors is typically most important?
A) Post-sales service
B) Product features
C) Quality controls
D) Competitive pricing
57-1
The basic elements of the supply chain include : The correct answer is A)
A) Supply, manufacture, distribution Even though different companies produce different products, the
B) Design, manufacture, inventory basic elements are the same: supply, manufacture, and
C) Engineer, design, manufacture distribution.
D) Supply, engineer, manufacture (Arnold, Introduction to Materials Management, Chapter 1).
57-3
Correct Answer : C)
All of the following is best statement regarding DRP ? DRP translate MRP logic to distribution system. It is a system
A) It translates the logic of MRP to the distribution that forecast when the various demands
system. will be made by the system on central supply. This gives central
B) It is a system that forecast when the various supply and factory the opportunity to
demands will be made by the system on local plan for the goods that will actually be needed.
57-5
supply. (J. R. Arnold. Introduction to Material Management)
C) It is the time-phased replenishment needs of branch
warehouse summed by period.
D) It is a statement of the end item configurations that
are to be assembled.
The throughput of a manufacturing process is determined The correct answer is A)
by : The factory throughput is regulated by the constraint work
A) Overloaded work centers center. The constraint work center is by definition the work
B) First work center in the process center that has no available capacity. Therefore, the overloaded
C) Underloaded work centers work center regulates the throughput.
D) Last work center in the process (Arnold, Introduction to Materials Management, Chapter 6).
58-1
Forecasts are typically more accurate for the near future The correct answer is A)
than they are for the longer future. This occurs because: The near term is more predictable than the long term. Most
A) The near term holds less uncertainty than the long companies can easily predict what they are going to do next
term week compared to next year. This allows forecasts to be more
B) More data is available in the near term accurate in the near term.
C) Aggregate data is easier to forecast (Arnold, Introduction to Materials Management, Chapter 8).
58-2 D) The future is more dynamic in the near term
The movement of finished goods from production to the The correct answer is C)
customer is : Physical distribution is the actual movement of goods from
A) Physical supply production to the customer. Physical supply is the movement
B) Supply chain of raw material from the supplier to manufacturing. (Arnold,
C) Physical distribution Introduction to Materials Management, Chapter 13).
D) Conversion cycle
58-5
The correct answer is B)
In order to back schedule, which of the following information The bill of materials sequence is not needed in order to
is necessary ? backward schedule. Backward scheduling involves machine
I. Quantity and due dates operation sequence as well as move, queue, and wait times.
II. Bill of materials sequence The quantity would directly impact the time taken at each work
III. Setup and run times for each operation center.
59-1 IV. Queue, wait, and move times (Arnold, Introduction to Materials Management, Chapter 5).
59-2
Which of the following would most likely be an independent The correct answer is D)
demand item ? Independent demand is defined as demand for an item which is
A) Inventoried subassembly for a printer unrelated to the demand for another item. Service parts would
B) Manufactured subassembly in a car typically be forecast independently from their use during the
C) Purchased component for a fork truck manufacture of the jet engine. Therefore, the jet engine might
D) Spare part for a jet engine have independent and dependent demand. (Arnold, Introduction
59-3 to Materials Management, Chapter 11).
Month 1 2 3 4 5 6 Total
Projection 100 100 100 100 100 100 600
Demand 95 102 105 98 101 103 604
A) 200
B) 250
C) 300
D) 350
The inventory turns ratio measures : The correct answer is C)
A) The amount of inventory needed to support sales The inventory turns ratio measures how effectively inventories
growth are being used. It is calculated by dividing annual cost of
B) Obsolete inventory as a percent of sales goods sold by average inventory in dollars.
C) How effectively inventory is being used (Arnold, Introduction to Materials Management, Chapter 1)
D) The amount of space needed to store inventory
62-1
63-1
Correct Answer : D)
When it comes to transportation, which of the following is Truckers, airline, and water carriers accept less than full load,
true ? but railways usually do not accept LCL(less than carload)
A) Truckers, airlines, and the railways accept less than full shipment. Transportation costs can be decreased by using
load, but usually water carriers do not accept LCL warehouses. Transportation costs be decreased by using
shipment. warehouses. This is accomplished by consolidating small
B) Transportation costs can be increased by using shipment into large shipments. It means that LTL shipments
63-2
warehouse. from several suppliers can be consolidated at warehouse before
C) TL shipments from several suppliers can be being shipped TL to the factory.
consolidated at a warehouse before being shipped
LTL to the factory.
D) Transportation consolidation in physical distribution is
sometimes called break-bulk.
63-4
64-1
All of the following are basic grouping methods to store and The correct answer is B)
locate stock in a warehouse except : The purpose of grouping items in a warehouse is to be more
A) Items related functionally productive in storage and in the picking process. Items which
B) Items in sequential SKU number have sequential SKU numbers may have nothing to do with
C) Items which are physically similar each other. As a result, this would not be a criteria for
D) Items which are fast moving grouping.
64-5 (Arnold, Introduction to Materials Management, Chapter 12)
The correct answer is D)
Which of the following would be included in demand All of the answers would be part of demand management, plus
management ? order entry and order promising.
(Arnold, Introduction to Materials Management, Chapter 8)
I. Forecasted requirements
II. Service parts requirements
65-1
III. Branch warehouse requirements
IV. Inter-plant orders
In order to reduce the number of transactions which occur in The correct answer is C)
a JIT environment, companies use a system called : Backflushing is a system for doing inventory and labor
A) Transaction prevention transactions based on the finished goods production. With this
B) Pre-deduct system, one transaction will create the many issues transactions
C) Backflushing for inventory. This process works best when the leadtime for the
D) Bar coding product is short and the product flows down a production line.
65-2
(Arnold, Introduction to Materials Management, Chapter 14)
A
__________|__________
| | |
65-4
B(1) C(2) D(1)
_____|_______
| |
E(3) F(2)
Of the following choices, which would be the preferred The correct answer is C)
method to minimize system nervousness ? Firm planned orders will reduce system nervousness, especially
A) Increase the order quantities inside the manufacturing lead time. The planner could ignore
B) Increase the lead time the exception messages, however, this could become a
C) Use firm planned orders dangerous practice.
D) Ignore the exception messages (Arnold, Introduction to Materials Management, Chapter 4)
66-3
Correct Answer : C)
All of the following include inventory carrying cost
except ?
A) Opportunity cost. B) Obsolescence.
C) Lost capacity cost. D Deterioration.
66-4
Which of the following are required factors in selecting a The correct answer is B)
supplier ? The required factors in selecting a supplier are technical ability,
manufacturing capability, reliability, service after the sale,
supplier location, and price. While having advanced systems
I. Technical capability
capability would be a plus, a supplier would not be eliminated
II. Manufacturing capability
from consideration if their systems were poor. Many good
68-2 III. Advanced systems capability suppliers do not have advanced systems.
IV. Reliability
(Arnold, Introduction to Materials Management, Chapter 7).
Correct Answer : C
Which of the following is characteristics of inventory In the periodic review system, the review period is fixed, and the
management that uses the periodic review system ? order quantity is allowed to vary. The system requires a larger
. The interval between orders varies depending on the inventory to cover the maximum expected demanding during the
actual usage. leadtime plus a review interval.
. Order quantity is allowed to vary.
. It requires a larger safety stock than continuous
69-2
review system.
A) only B) , only
C) and only D) , ,
In make to stock requirements, customer orders are satisfied The correct answer is C)
from : Make to stock companies ship customer orders from finished
A) Available capacity goods. Make to order companies ship from available capacity.
B) Work in process inventory (Arnold, Introduction to Materials Management, Chapter 3).
C) Finished goods inventory
D) Raw material inventory
69-3
In adding value, all of the following statements are correct Correct answer : B)
expect ? The most critical in achieving the goal of value-added is the
A) In the JIT, the objective is to eliminate all materials, and labor is the least important usually. Other are all
non-value-added activities in producing. correct statements. Adding value to a product does not mean
B) The most critical in achieving the goal of value-added adding cost. Many activities increase cost with out adding value.
70-3
is the labor, not materials usually. (Gerhard J. Plenert, The Plant Operations Handbook, Chapter
C) Adding value to a product does not mean adding cost. 14)
D) In manufacturing, the difference between the selling
price and cost of raw material is what value the firm
added to raw material.
Items 349 and 350 are based on the following information for
a single work center.
Which of the following is the demonstrated capacity for the The correct answer is C)
work center ?
A) 130 hours B) 144 hours
C) 150 hours D) 160 hours
70-5