Capacity Management and Production Activity Control

1. A work center consists of 2 machines working 8 hours a day and 5 days a week. Historically, utilization has been 80%, and efficiency has been 90%. To the nearest hour, what is the rated capacity? A. B. C. D. 80 hours 58 hours 40 hours 30 hours

2. What term indicates the percentage of time the work center is active compared to the available time? A. B. C. D. Efficiency Effectiveness Utilization Uptime

3. What term is used for the ratio of standard hours of work produced to hours actually worked? A. B. C. D. Efficiency Effectiveness Utilization Uptime

4. What term is used for calculating (available time) (utilization) (efficiency)? A. B. C. D. Effectiveness Useful capacity. Demonstrated capacity. Rated capacity

5. Which of the following shows the capacity required at each work center based on planned and released orders for each time period of the plan? A. B. C. D. Work center profile. Load profile. Scheduled order profile. Work-to-be-done report.

6. Which of the following production activity control activities must be done when planning the flow of work? A. B. C. D. Be sure the material and tooling needed are available. Advise the plant supervisor of future orders. Refer to the production plan for what orders to run. Complete a material requisition plan.

7. Which of the following is concerned with very short-term detailed planning of the flow of orders through manufacturing? A. B. C. D. Production planning Master production scheduling Material requirements planning Production activity control.

8. Which of the following is an element of manufacturing lead time? A. B. C. D. Design time Delivery lead time Wait time Purchase lead time

9. What is the name given to a scheduling system in which the last operation on a routing is scheduled first and for completion on the due date? A. B. C. D. Forward scheduling. Backward scheduling. Infinite scheduling. Finite scheduling.

10. Which of the following statements is most accurate? A. B. C. D. Work centers located after a bottleneck should work at full capacity. A time buffer should be established after a bottleneck. Work centers feeding a bottleneck should work at full capacity. A bottleneck will control the throughput of all products processed by it.

Aggregate Inventory Management

1. Which of the following statements is most accurate about inventory management? A. B. C. D. Inventories and production must be managed together. Inventory is not important at the production planning level. Inventories are usually insignificant on the balance sheet. Inventory does not cost much to carry.

2. What is the name of materials used in the production process that do not become part of the product? A. B. C. D. Raw materials Work in process Finished goods Maintenance, repair, and operating supplies

3. What is the name given to inventories of items that are purchased or manufactured in quantities greater than needed immediately? A. B. C. D. Fluctuation inventory Lot-size inventory Transportation inventory Scheduled receipts

4. Which of the following company objectives are in conflict? A. B. C. D. Maximum customer service and low-cost plant operation Low-cost plant operation and cash flow Maximum inventory investment and customer service Cash flow and profitability

5. Which of the following costs will increase if order quantity is increased? A. B. C. D. Annual cost of carrying inventory Cost of ordering Cost of manufacturing operations Cost of customer service

6. Which of the following are costs of carrying inventory?

A. B. C. D.

Capital costs and production control costs Capital costs and storage costs Production control costs and purchase costs Storage costs and purchasing costs

7. Which of the following are considered ordering costs?

A. B. C. D.

Production control costs Capital costs Risk costs Obsolescence costs

8. Which of the following equations is correct?

A. B. C. D.

Assets = liabilities owners equity Income = revenue liabilities Owners equity = assets liabilities Revenue = cost of goods sold general and administrative expenses

9. If the annual cost of goods sold is $10 million and the average inventory is $2.5 million, what is the inventory turnover ratio? A. B. C. D. $7.5 million .25 2.5 4

10. Which of the following costs is relevant to inventory management decisions? A. B. C. D. Run costs Storage costs Marketing costs New product development costs

Item Inventory Management

1. Which of the following statements best describes stock keeping units? A. Sodas in a 6-pack and 12-pack are the same SKU because the cans are the same SKU. B. White shirts of different sizes but in the same size box are the same SKU. C. Wires of different gauges that are stocked in reels are the same SKU. D. Two white shirts in the same inventory but of different sizes or styles would be different SKUs.

2. If the order quantity is increased, which of the following occurs? A. B. C. D. The cost of carrying inventory decreases, and the cost of ordering increases. The cost of carrying inventory increases, and the cost of ordering decreases. The cost of carrying inventory increases, and the cost of ordering increases. The cost of carrying inventory decreases, and the cost of ordering decreases.

3. In developing the standard economic order quantity (EOQ) formula, which of the following assumptions are made? A. B. C. D. Demand for the item is relatively uniform. Replenishment is in lots or batches that arrive all at once. Ordering and carrying costs are constant and known. All the above are assumed.

4. Which of the following statements is best? A. B. C. D. Order point = DDLT + SS Average inventory = (Q + SS)/ 2 Safety stock is always needed. Safety stock = order point + order quantity

5. Safety stock will depend on which of the following? A. B. C. D. Variability of demand Cost of carrying inventory Cost of placing an order Product obsolescence

6. Which of the following statements is most accurate? A. About 20% of the items will usually account for about 80% of the total value. B. A items should have the loosest possible control. C. The general rule for using the ABC approach is to have plenty of everything in stock. D. C items account for about 50% of the total value. 7. Which of the following statements is best? A. B. C. D. A items usually account for about 50% of the total usage. About 50% of the items usually account for 5% of the value. C items should be given top priority in inventory management. All inventory items should be managed in the same way.

8. What type of inventory record system keeps a continuous account of transactions as they occur? A. B. C. D. Perpetual inventory system Periodic inventory system Two-bin system Safety stock system

9. If the lead time is one week, the review period one week, the average demand 100 units per week, and the safety stock 50 units, the target level will be: A. B. C. D. 150 units 200 units 250 units 300 units

10. Which of the following is an advantage of cycle counting? a. Timely detection and correction of problems b. Reduction of direct labor costs c. Use of spare labor d. Replenishment of inventory

Purchasing and Physical Distribution

1. Which of the following is an objective of purchasing? A. To keep many sources of supply available to ensure competitive pricing B. To control budgetary expenditures of all employees through sound purchase order control C. To obtain goods and services of the required quality and right cost D. To ensure that goods are always purchased at the lowest price

2. In a purchasing system, which of the following originates with the department or person who will be the ultimate user? A. B. C. D. A purchase requisition A purchase order Vendor selection A request for quotation

3. Which type of sourcing is set up when a product is unique and available from only one source? A. B. C. D. Single sourcing Sole sourcing Multiple sourcing Double sourcing

4. Which of the following is the next step in the purchasing cycle after a requisition is generated? A. B. C. D. Follow up Approve payment Receive goods Issue purchase order

5. Which of the following categories of a supplier agreement covers specifications, allowable defects, and grade? A. B. C. D. Price Term Quality Quantity

6. Which of the following is a major objective of distribution inventory management? A. B. C. D. To provide the required level of customer service To minimize the costs of warehouse space To always have enough of everything on hand so there are no stockouts To minimize labor costs

7. Which of the following is not considered a function of physical distribution? A. B. C. D. Transportation Production control Distribution inventory Warehousing

8. Which of the following four Ps influences how physical distribution planning and execution addresses product volume, location of demand, and demand fluctuations? A. B. C. D. Product Price Place Promotion

9. Considering the service desired and the relative cost of the items, which of the following would you most likely ship by truck? A. B. C. D. Regular shipment of cut flowers direct to a florist shop Regular shipments of iron ore Regular shipments of grain Emergency maintenance parts

10. Total line-haul costs will vary with which of the following? A. B. C. D. Distance moved Packaging Customer discounts Perishability of the goods

Lean/JIT and Quality Systems

1. A fishbone diagram is an example of which of the following? A. B. C. D. A cost buildup method A method to determine root cause Capability analysis Another name for Pareto analysis

2. Which of the following is most likely to improve quality at the source for manufactured parts? A. B. C. D. Applying as much automation as possible Inspecting all parts for known defectives Improving customer warranty coverage Reducing the variation in manufacturing process

3. Which of the following statements is best regarding employee empowerment? A. B. C. D. Management is relieved of the responsibility for decisions the company makes. Employees are empowered to set their wage rates and hours of work. Line employees are given more authority to make decisions. Decision-making power is concentrated in a small, upper-level management group.

4. Which of the following statements is true regarding Pareto analysis? A. B. C. D. It separates the significant few from the trivial many. It uses the six categories of quality. It is an extension of the 50-50 rule of quality. It assigns weighted costs associated with internal versus external failure costs.

5. Which of the following statements is true? A. B. C. D. Cost buildup and storage add value to a product. Value starts with the customer. Cost and value are interchangeable terms. Lean/JIT manufacturing means always having product ready for the customer.

6. Which of the following is an advantage of work cells? A. B. C. D. Maximum machine utilization Reduced material movement Larger batches and lower unit costs Reduced worker skills required

7. Which of the following statements is true regarding total productive maintenance? A. B. C. D. Skilled mechanics are used to perform routine machine maintenance. Inspectors are used to ensure that every machine is ready for work at all times. Operators regularly report maintenance productivity to management. Machine operators take responsibility for most of the routine machine maintenance.

8. Which of the following statements is true regarding the relationship with suppliers in a lean/JIT environment? A. B. C. D. All cost reductions will be awarded directly to the buyer. Short-term contracts for multiple small deliveries will be used. Planning becomes more erratic and difficult. The supplier is viewed as an upstream work center.

9. Which of the following describes the DMAIC methodology? A. B. C. D. A method for implementing plan-do-check-act A six-sigma process-improvement methodology A method for lowering manufacturing expenses A lean/JIT methodology for implementing flow

10. A control chart is primarily used to determine which of the following? A. B. C. D. The highest frequency of an event The specification limits Detect special causes of variation in a process, as opposed to random variation The cost of implementing quality systems

Theory of Constraints and Review Activity

1. Which of the following best specifies the flow of material through the production process of manufacturing an orbital satellite? A. B. C. D. V A T I

2. Refer to the graphic below. Where should the stock buffers be located?

A. B. C. D.

Before raw material, resource A and before resource C Before raw material, resource C and before resource D Before raw material, resource D and before ship Before raw material, resource A and before ship

3. In a simplified drum-buffer-rope system, what is the throughput-based constraint? A. B. C. D. Raw materials Shipping point The active bottleneck The market

4. What is the throughput if sales revenue = $250 million and true variable costs = $100 million? A. B. C. D. $350 million $150 million $100 million $2.5 million

5. Which one of these steps from the five focusing steps represents the likely point where an organization would add more resources to the capacity-constrained resource? A. B. C. D. Identify the constraint Exploit the constraint Subordinate everything else Elevate the constraint