Krajewski TIF Chapter 15

Chapter 15  Resource Planning
Chapter
15 Resource Planning
TRUE/FALSE
1. An ERP system revolves around a single comprehensive database that is made available
across the entire organization.
Answer: True
Reference: Enterprise Resource Planning
Difficulty: Easy
Keywords: enterprise, resource, planning, ERP
2. Companies that fully customize their ERP implementation reap the greatest rewards from
such systems since they can continue to use the same processes to which all employees are
accustomed.
Answer: False
Difficulty: Moderate
Keywords: enterprise, resource, planning, ERP, implementation
3. Material requirements planning (MRP) is a computerized information system developed

specifically to aid in managing dependent demand inventory and scheduling replenishment
orders.
Answer: True
Reference: Material Requirements Planning
Difficulty: Easy
Keywords: material, requirements, planning, MRP
4. A parent is any item manufactured from one or more components.

Answer: True
Reference: Planning and Control Systems for Manufacturers
Difficulty: Easy
Keywords: parent, component
5. Dependent demand occurs because the quantity required is a function of the demand for other
items held in inventory.
Answer: True
Difficulty: Easy
Keywords: dependent, demand, inventory
513
6. A component is an item that may go through one or more operations to be transformed into or
become part of one or more parents.
Answer: True
Difficulty: Easy
Keywords: component, parent, transform
7. Lumpy dependent demand can result even from continuous independent demand.
Answer: True
Keywords: lumpy, dependent, demand, continuous
8. Part commonality refers to the degree to which a component has more than one immediate
parent.
Answer: True
Keywords: part, commonality, component, parent
9. Part commonality tends to increase inventory costs.

Answer: False
Keywords: part, commonality, inventory
10. Gross requirements are the total demand derived from all parent production plans.
Answer: True
Keywords: gross, requirements, demand, parent
11. A bill of materials (BOM) shows all of the components of an item, the parent–component
relationships, usage quantities, and lot size derived from engineering and process designs.
Answer: False
Keywords: BOM, bill, materials, parent, component
12. An intermediate item must have at least one parent and at least one component.
Answer: True
Keywords: intermediate, parent, component
514
13. The master production schedule (MPS) is the part of the material-requirements plan that
specifies when components must be ordered or assembled.
Answer: False
Keywords: master, production, schedule, MPS, material, requirements, plan
14. Available to promise inventory is the amount of end items that marketing can promise to
customers by a certain date.
Answer: True
Difficulty: Easy
Keywords: ATP, available, promise, inventory, MPS
15. The portion of the master production schedule furthest in the future is often frozen to reduce
forecasting requirements.
Answer: False
Keywords: MPS, master, production, schedule, freezing
16. Planned receipts are estimates of the amount of inventory available each week after gross
requirements have been satisfied.
Answer: False
Keywords: planned, receipts, projected, on-hand, inventory
17. A planned order release provides an indication of when an order for a specified quantity of an
item is to be issued.
Answer: True
Keywords: planned, order, release
18. For items manufactured in-house, one component of lead-time is waiting time.
Answer: True
Keywords: lead, time, waiting
19. Periodic order quantity (POQ) is a rule that tends to keep more inventory on hand than lot-
for-lot quantity, but less inventory on hand than fixed-order quantity.
Answer: True
Keywords: periodic, fixed, order, quantity, lot, POQ, FOQ, L4L
515
20. Lot-for-lot (L4L) is a rule that maintains the same order quantity each time an order is issued.
Answer: False
Keywords: lot, L4L, order, quantity
21. Data integrity is not vital to successful MRP implementation.

Answer: False
Keywords: data, integrity, MRP, material, requirements, planning
22. MRP II ties MRP to the company’s financial system.

Answer: True
Keywords: MRP, MRP II, material, requirements, manufacturing, resource
23. The process with the least capacity is called a capacity constrained resource if its output is
less than market demand.
Answer: False
Reference: Drum-Buffer-Rope System
Keywords: DBR, drum, buffer, rope, CCR, capacity, constrained, resource
24. A transfer batch combined with a constraint buffer makes a full process batch at a capacity
constrained resource.
Answer: True
Keywords: DBR, CCR, capacity, constrained, resource, process, transfer, batch
25. The bill of resources (BOR) is a record of all the required material, equipment time, staff, and
other resources needed, the parent–component relationships, and the usage quantities.
Answer: True
Reference: Resource Planning for Service Providers
Keywords: BOR, bill, resources
516
MULTIPLE CHOICE
26. A companywide process that cuts across traditional functional areas, business units,
geographic regions, and product lines is a(n):
a. enterprise process.
b. drum-buffer-rope process.
c. kinetic process.
d. full-business process.
Answer: a
Difficulty: Easy
Keywords: enterprise, resource
27. New information entered in the database of an ERP system is a(n):

a. data packet.
b. transaction.
c. record.
d. file.
Answer: b
Difficulty: Easy
Keywords: enterprise, resource, planning, transaction, ERP
28. A front-office module for an ERP system includes the:

a. manufacturing component.
b. accounting and finance component.
c. sales and marketing component.
d. human resources component.
Answer: c
Difficulty: Easy
Keywords: enterprise, resource, planning, ERP, front, office
29. Which of the following is a back-office module in a typical ERP system?

a. Customer service
b. Sales
c. Marketing
d. Human resources
Answer: d
Difficulty: Easy
Keywords: enterprise, resource, planning, ERP, front, office
517
30. Which of the following statements about ERP systems is best?

a. Recent studies have shown that the most successful ERP implementations use
standardized systems.
b. ERP systems written in XML require complete replacements of a company’s legacy
systems.
c. A company must adapt their ERP system to their existing processes in order for all
employees to gain a benefit from the new system.
d. An ERP system requires a regular synchronization of all of the module databases, which
is usually accomplished automatically when the business is not conducting business.
Answer: a
Keywords: enterprise, resource, planning, ERP
31. Which of the following is NOT an example of dependent demand items?

a. Shoelaces, shoes
b. Wheels, car
c. Carafes, coffeemakers
d. Ice skates, roller skates
Answer: d
Keywords: dependent, demand
32. Any item manufactured from one or more components is a(n):

a. parent.
b. component.
c. intermediate item.
d. purchased item.
Answer: a
33. Which best defines the gross requirements for a component item?
a. The forecasted customer demand for the component
b. The amount of safety stock needed to buffer against uncertainties
c. The sum of gross requirements for all parents of the component
d. The total demand for the component derived from all immediate parents
Answer: d
Keywords: component, parent
518
34. MRP can be used to best advantage under which one of the following circumstances?
a. When the item’s demand depends only on customer demand
b. When the item’s demand is uniform
c. When the item’s demand is constant
d. When the item’s demand depends on its parent’s demand
Answer: d
Keywords: MRP, material, requirements, planning
35. Which of the following statements about MRP is TRUE?

a. To be classified as a successful MRP user, a company must use either the L4L or POQ
rules for lot sizing.
b. MRP gross requirements for a parent item are equal to the planned order releases of its
components.
c. MRP logic is based on the logic of uniform, continuous demand, and item independence.
d. MRP gross requirements for a component depend on the planned order releases of its
immediate parents.
Answer: d
Keywords: MRP, material, requirements, planning, component
36. Which one of the following systems is an input to the MRP system?
a. Shop-floor scheduling system
b. Financial reporting system
c. Master production-scheduling system
d. Purchasing system
Answer: c
Keywords: MRP, material, requirements, planning, input
37. If a planned receipt for an item is due in week 6 and the item’s lead-time is two weeks, in
which week will the corresponding planned order release occur?
a. Week 2
b. Week 4
c. Week 6
d. Week 8
Answer: b
Keywords: planned, order, receipt, release
519
38. Which one of the following statements about lot-sizing rules is TRUE?
a. The periodic order quantity (POQ) rule seeks to create inventory remnants.
b. If the POQ rule is used, an item’s lot size can vary each time an order is placed.
c. The lot-for-lot (L4L) rule is a special case of the fixed-order quantity (FOQ) rule.
d. All lot-sizing rules seek to minimize inventory levels.

Answer: b
Keywords: lot, sizing, POQ, periodic, order
39. Which one of the following is an MRP lot-sizing rule that attempts to minimize the amount of
average inventory?
a. Periodic order quantity (POQ), with P = 2
b. Fixed order quantity (FOQ)
c. Economic order quantity (EOQ)
d. Lot for lot (L4L)
Answer: d
Keywords: MRP, material, requirements, planning, L4L, lot
40. MRP explosion means estimating the total number of:

a. subassemblies, components, and raw materials needed for each parent item.
b. raw materials to be purchased from all suppliers.
c. parts to be produced for each parent item.
d. parts needed to be produced less the number of parts on hand for each parent item.
Answer: a
Keywords: MRP, material, requirements, planning, explosion
41. Which of the following statements concerning MRP is TRUE?

a. Dependent-demand items tend to experience relatively constant demand rates.
b. MRP systems use independent demands for each component item.
c. Capacity requirements planning (CRP) uses open orders (scheduled receipts) and planned
order releases to estimate capacity requirements for critical workstations.
d. The most accurate way to forecast dependent demand is to examine past usage rates.
Answer: c
Keywords: MRP, material, requirements, planning, capacity
520
42. Which one of the following is a feature of MRP II, but not available in basic MRP systems?
a. Financial reporting
b. Action notices
c. Dispatch lists
d. Capacity reporting
Answer: a
Keywords: MRP, material, requirements, planning, MRP II, resource
43. Which of the following statements about MRP II is TRUE?

a. It is computationally faster than regular MRP.
b. It is limited only to aiding order-launching decisions.
c. It incorporates informal systems through the use of expert systems technology.
d. It provides more extensive information than MRP because it is tied to the company’s
financial system.
Answer: d
Keywords: MRP II, manufacturing, resource, planning
44. The Big Mistake Company uses an MRP system. However, the company’s database contains
many inaccuracies. Which type of inaccuracy is most likely to result in incorrect planned
order release quantities for its dependent demand items?
a. Incorrect routings
b. Incorrect bills of materials
c. Incorrect cost and pricing data
d. Incorrect machine capacity data
Answer: b
Keywords: dependent, demand
45. Which one of the following conditions enhances the effectiveness or success in implementing
MRP?
a. Accurate inventory records
b. Small lot sizes
c. Few BOM levels
d. A volatile manufacturing environment
Answer: a
Keywords: MRP, material, requirements, planning, implementation
521
46. Which of the following statements on MRP is TRUE?

a. The payoffs from MRP tend to be greater when there are more BOM levels and larger lot
sizes.
b. When MRP systems are enhanced to include financial reporting, they are called basic MRP
systems, or “little mrps.”
c. The fixed-order quantity (FOQ) eliminates remnants.
d. MRP is an inventory control system that derives the gross requirements of the end items
from purchase commitments with vendors.
Answer: a
Keywords: MRP, material, requirements, planning
47. Use the following MRP record to answer the question.
ITEM: ABC Lot Size P = 2

Description: Lead Time: 2 weeks
Date 1 2 3 4 5 6 7 8
Gross 30 30 60 75 70
requirements
Scheduled 60
receipts
Projected 0
on Hand
Planned
receipts
Planned order
releases
What are the quantities of planned order releases for item ABC for the first five weeks
(weeks 1, 2, 3, 4, and 5)?
a. 30, 0, 60, 0, 145
b. 60, 0, 145, 0, 0
c. 0, 30, 60, 0, 0
d. 30, 0, 60, 145, 0
Answer: b
Keywords: MRP, material, requirements, planning, planned release
522
ITEM: XYZ Lot Size P = 1

Description: Lead Time: 1 week
Date 1 2 3 4 5 6 7 8
Gross 50 20 30 40 20
requirements
Scheduled 25
receipts
Projected
on Hand 40
Planned
receipts
Planned order
releases
What are the quantities of planned order releases for item XYZ for the first six weeks
(weeks 1, 2, 3, 4, 5, and 6)?
a. 35, 0, 0, 60, 0, 0
b. 35, 0, 60, 0, 0, 0
c. 5, 30, 0, 40, 20, 0
d. 35, 0, 0, 40, 20, 0
Answer: a
Keywords: MRP, material, requirements, planning, order, release
523
49. Use the following MRP record to answer the following question.
ITEM: XYZ Lot Size P = 2

Description: Lead Time: 1 week
Date 1 2 3 4 5 6 7 8
Gross
requirements 100 50 70 40 90 50
Scheduled 100
receipts
Projected
on Hand 20
Planned
receipts
Planned order
releases
What is the planned order release quantity in week 4?

a. 0 units
b. Greater than 0 units but fewer than or equal to 50 units
c. Greater than 50 units but fewer than or equal to 100 units
d. Greater than 100 units
Answer: d
Keywords: MRP, material, requirements, planning, planned, release
524
Table 15.1
ITEM: QRS Lot Size P = 2

Date 1 2 3 4 5 6 7 8
Gross
requirements 40 140 60 40 180 65 90
Scheduled
receipts 200
Projected
on Hand 100
Planned
receipts
Planned order
releases
50. Use the information in Table 15.1. In which week will the second planned order release
occur?
a. Week 1
b. Week 2
c. Week 3
d. Week 4, 5, 6, 7, or 8
Answer: c
Keywords: planned, release
51. Use the information in Table 15.1. If the safety stock level were 30 units instead of 0 units, in
which week would the first planned receipt occur?
a. Week 1
b. Week 2 or 3
c. Week 4 or 5
d. Week 6 or 7
Answer: c
Keywords: planned, receipt
525
What will be the projected on-hand inventory quantity in week 7

a. Fewer than or equal to 30 units
b. Greater than 30 units but fewer than or equal to 60 units
c. Greater than 60 units but fewer than or equal to 90 units
d. Greater than 90 units
Answer: a
Keywords: projected, inventory
526
ITEM: ABC Lot Size P = 2

Date 1 2 3 4 5 6 7 8
Gross
requirements 60 90 150
Scheduled
receipts 160
Projected
on Hand 0
Planned
receipts
Planned order
releases
What are the quantity and the week of the first planned order release?
a. 20 units; week 1
b. 140 units; week 2
c. 150 units; week 1
d. 150 units: week 2
Answer: b
527
ITEM: QRS Lot Size P = 2

Date 1 2 3 4 5 6 7 8
Gross
requirements 50 100 90 100
Scheduled
receipts 120
Projected
on Hand 20
Planned
receipts
Planned order
releases
Which one of the following statements about item QRS is TRUE?

a. Exactly one action notice is needed.
b. The first planned receipt occurs in week 1.
c. The second planned order release quantity is 90 units.
d. The total planned order release quantity (summing up all eight weeks) is 190 units.
Answer: a
Keywords: planned, receipt
528
How many action notices are needed for item A?

a. Zero
b. One
c. Two
d. Three or more
Answer: c
Keywords: action, notice
Table 15.2
Consider the following MPS, BOM, and inventory data. Blank MRP records are provided at
the end of this exam.
Master Production Schedule: The following table shows the MPS start quantities.
Bill of Material
-End item A uses 1 each of component C and 1 each of subassembly D.
-Subassembly D uses 2 each of component E and 2 each of component F.
-End item B uses 1 each of component C and 2 each of component F.
Selected Inventory Data
Item
Data Category C D E F
Lot-sizing rule L4L L4L FOQ-250 POQ(P = 2)
Lead-time (wks) 3 1 3 1
Beginning (on-
hand) inventory 50 80 90 30
Scheduled
receipts 80 (wk 1) None 250 (wk 3) 205 (wk 1)
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56. Use the information in Table 15.2. Which one of the following statements about item C is
TRUE?
a. It has a planned receipt of 80 units in week 3.
b. Its second planned order release is for 200 units in week 3.
c. It has a planned receipt of 180 units in week 6.
d. Its first planned order release is for 130 units in week 1.
Answer: b
Difficulty: Hard
57. Use the information in Table 15.2. Which one of the following statements on item C is
TRUE?
a. There will be no action notices for item C.
b. There will be exactly one action notice—to release a new order.
c. There will be exactly two action notices—to release a new order and to delay the scheduled
receipt.
d. There will be more than two action notices.
Answer: c
Difficulty: Hard
58. Use the information in Table 15.2. Which one of the following statements about item F is
TRUE?
a. The first planned order release is for 205 units in week 3.
b. Its first planned receipt is for 215 units in week 4.
c. There will be exactly one action notice, which calls for the release of a new order.
d. There will be exactly one action notice, which calls for the delay of the scheduled receipt
until week 2.
Answer: d
Difficulty: Hard
59. Use the information in Table 15.2. Which one of the following statements about item E is
TRUE?
a. There will be an action notice to expedite the scheduled receipt up to week 2.
b. There is a planned receipt of 250 units in week 2.
c. There is one planned receipt for the next 6 weeks.
d. There is a planned order release of 250 units in week 3.
Answer: a
Difficulty: Hard
530
Table 15.3
60. Use the information in Table 15.3. Which one of the statements concerning item RST is
TRUE?
a. The first planned receipt occurs in week 5.
b. There is an action notice needed to expedite the schedule receipt by one week.
c. The planned receipt in week 7 is 80 units.
d. There are exactly two planned order releases needed.
Answer: d
61. Use the information in Table 15.3. Which of the statements concerning item RST is TRUE?
(Examine each answer independently.)
a. If the safety stock level were 30 units instead of 0 units, the planned receipt in week 7
would be 110 units.
b. If the scheduled receipt in week 2 were delayed until week 3, there would be a planned
order release in week 1.
c. If the safety stock level were 20 units instead of 0 units, there would be a planned order
release in week 2.
d. If the gross requirements for week 8 were 100 units instead of 60 units, the projected on-
hand inventory for week 8 would be 0 units.
Answer: c
Difficulty: Hard
531
Which one of the statements concerning item LMN is TRUE?

a. There will be exactly two action notices needed.
b. The planned order release quantity in week 4 is 80 units.
c. The planned receipt quantity in week 6 is 30 units.
d. The projected on-hand inventory in week 8 is 70 units.
Answer: d
Keywords: projected, inventory, on-hand
532
Table 15.4
Item XYZ Lot Size

Description Lead Time: 2 weeks
Date 1 2 3 4 5 6 7 8 9 10
Gross
requirements 25 75 100 75 50
Scheduled
receipts
Projected
on Hand 40
Planned
receipts
Planned order
releases
63. Use the information from Table 15.4. If an FOQ of 100 units is used, how many planned
order releases are there for item XYZ?
a. Zero or one
b. Two or three
c. Four or five
d. More than five
Answer: b
64. Use the information from Table 15.4. If an FOQ of 75 units is used, how many planned order
releases are there for item XYZ?
a. Zero or one
b. Two or three
c. Four or five
d. More than five
Answer: c
533
65. Use the information from Table 15.4. If an L4L lot-sizing rule is used, how many planned
order releases are there for item XYZ?
a. Zero or one
b. Two or three
c. Four or five
d. More than five
Answer: c
66. Use the information from Table 15.4. If a POQ lot-sizing rule is used, where P = 3, how
many planned order releases are there for item XYZ?
a. Zero or one
b. Two or three
c. Four or five
d. More than five
Answer: b
67. Use the information from Table 15.4. Which lot-sizing rule results in the highest average
inventory?
a. FOQ = 100
b. FOQ = 75
c. L4L
d. POQ, P = 3
Answer: a
Keywords: lot, sizing
68. Management wishes to use a POQ lot-sizing rule for an item that experiences an average
demand of 30 units per week. If the desired average lot size is 120 units, what should P be?
a. Zero or one weeks
b. Two or three weeks
c. Four or five weeks
d. More than five weeks
Answer: c
Keywords: lot, sizing, POQ
534
69. Management wishes to use an FOQ lot-sizing rule for an item based on the economic order
quantity. If the annual demand is 1,200 units, the holding cost is $10 per unit per year, and
the setup cost is $50 per lot, which one of the following fixed-order quantities is most
appropriate?
a. 90 units
b. 110 units
c. 130 units
d. 150 units
Answer: b
Keywords: lot, sizing, FOQ
Case Study 15.1

Sunshine Manufacture produces three products: X, Y, and Z. The production of these end
items is controlled by an MRP system. Each end item X is assembled with two components of
A and one component of B. Each end item of Y is assembled with two components of C and
one component of A. End item Z is assembled from one unit of D and one unit of C; D is
manufactured from one unit of A; and C is manufactured from one unit of B.
70. Use the information in Case Study 15.1. If level-by-level processing is used, what is a correct
order for processing components A, B, C, and D?
a. A B C D
b. D A B C
c. B A D C
d. C B A D
Answer: c
Keywords: order, processing
71. Use the information in Case Study 15.1. If item C has a manufacturing lead-time of two
weeks, and a planned receipt of 65 units is needed in week 4, which of the following
statements is TRUE?
a. The planned order release in week 2 for item C is 130 units.
b. The gross requirements for item B in week 4 is 65 units.
c. The gross requirements for item B in week 2 is 130 units.
d. The gross requirements for item B in week 2 is 65 units.
Answer: d
Keywords: gross, requirements
535
Table 15.5
Viola Products produces one item with the following bill of materials.
End Item
Item C (2) Item A (3) Item B (5)
Item G (2) Item D (3) Item E (2) Item J (2) Item F (3) Item H (5)
A recent check of their inventory reveals the following quantities on hand.

Item Quantity Item Quantity Item Quantity
A 7 D 3 G 22
B 6 E 4 H 15
C 3 F 5 J 11
72. Use Table 15.5 to answer this question. How many additional units of D are needed to
produce 20 end items?
a. Fewer than 75
b. More than 75 but fewer than 95
c. More than 95 but fewer than 115
d. More than 115
Answer: c
Keywords: bill, materials, BOM
73. Use Table 15.5 to answer this question. How many additional units of J are needed to
a. Fewer than 175
d. More than 245
Answer: b
536
74. Use Table 15.5 to answer this question. How many additional units of H are needed to
a. Fewer than 250
d. More than 450
Answer: d
75. Use Table 15.5 to answer this question. How many additional units of G are needed to
a. Fewer than 50
d. More than 70
Answer: b
76. Use Table 15.5 to answer this question. How many additional units of G are needed to
produce seven end items?
a. 0
b. 11
c. 22
d. 33
Answer: a
77. Use Table 15.5 to answer this question. How many additional units of H are needed to
a. 130
b. 145
c. 160
d. 175
Answer: a
537
78. Use Table 15.5 to answer this question. How many additional units of J are needed to
a. 25
b. 36
c. 47
d. 58
Answer: c
79. Use Table 15.5 to answer this question. How many additional units of D are needed to
a. 33
b. 30
c. 27
d. 24
Answer: b
80. Which of the following is NOT used to derive an item’s gross requirements?
a. The MPS for immediate parents that are end items
b. The planned order releases for parents below the MPS level
c. The MPS components that are not purchased items
d. Any other requirements not originating in the MPS, such as the demand for replacement
parts
Answer: c
Keywords: gross, requirements, MRP, explosion, material, planning
81. A computer-generated memo used by inventory planners to make decisions about releasing
new orders and adjusting due dates of scheduled receipts is a(n):
a. enterprise report.
b. infinite capacity.
c. action notice.
d. input–output report.
Answer: c
538
82. A technique used for projecting time-phased capacity requirements for workstations is called:
a. capacity requirements planning.
b. time-adjusted output control.
c. input–output control.
d. work center planning.
Answer: a
Keywords: capacity, requirements, planning
83. Which of the following capabilities would be found in a typical MRP II system?
a. Simulation
b. Counseling
c. Hiring
d. Marketing
Answer: a
Difficulty: Easy
Keywords: MRP II, manufacturing, resource, planning
84. Which of the following uses of MRP in promoting a healthy environment is NOT used?
a. An MRP system can track waste in a bill of materials as a component of an item.
b. When the master production schedule is developed for a product, reports can be generated
that project the quantity of waste.
c. When the master production schedule is developed for a product, reports can be generated
that project the timing of waste.
d. The MRP system can be used to communicate directly with the International Organization
for Standardization to file ISO 9000 documentation.
Answer: d
Difficulty: Easy
Keywords: MRP, environment
85. The capacity constrained resource schedule is called the:

a. rope.
b. drum.
c. buffer.
d. TOC.
Answer: b
Reference: Drum-Buffer-Rope
Difficulty: Easy
Keywords: DBR, drum, buffer, rope, CCR, capacity, constrained, constraint
539
86. The purpose of the drum-buffer-rope system is to:

a. maximize the use of every productive resource in the system.
b. balance the capacity of every productive resource in the system.
c. regulate the flow of materials at the capacity constrained resource.
d. increase the flow of materials through the entire system in excess of market demand.
Answer: c
87. The buffer in a drum-buffer-rope system is placed immediately:

a. before materials are released to the production floor.
b. after the capacity constrained resource.
c. after materials are shipped to the customer.
d. before the capacity constrained resource.
Answer: d
88. The rope in a drum-buffer-rope system serves to tie the release of:
a. materials directly to the processing rate of the CCR.
b. finished goods directly to the processing rate of the CCR.
c. materials directly to the release of finished goods to the customer.
d. finished goods directly to the shipping buffer.
Answer: a
89. Which of these statements comparing DBR and MRP is best?

a. The master production scheduling and component scheduling processes take place
simultaneously in both systems.
b. Both MRP and DBR can use lot-for-lot batch sizes everywhere but at the bottleneck.
c. Both MRP and DBR focus their scheduling efforts on one resource, the bottleneck.
d. Factories managed with DBR have a bottleneck or capacity constrained resource but
factories managed with MRP do not.
Answer: b
Difficulty: Hard
Keywords: DBR, drum, buffer, rope, lot-for-lot, L4L, bottleneck, MRP
540
90. In a drum-buffer-rope system, the lot size that moves from one work center to another for
additional processing is a(n):
a. process batch.
b. operations batch.
c. transfer batch.
d. rope batch.
Answer: c
Difficulty: Easy
Keywords: DBR, drum, buffer, rope, transfer, batch
91. The process batch at the constraint in a drum-buffer-rope system should:

a. be the same size as that at any non-constraint.
b. be the same size as the transfer batch.
c. be of such a size as to maximize the number of setups for the constraint
d. be of such a size as to improve utilization of the constraint.
Answer: d
Difficulty: Easy
Keywords: DBR, drum, buffer, rope, process, batch, size
92. In terms of resource planning, service goods must focus on maintaining:

a. dependent demand levels at a maximum.
b. capacity to serve customers.
c. off-line resources in order to serve customers.
d. independent demand resources at a maximum.
Answer: b
Keywords: service, resource, capacity, planning
93. Which of the following statements about service resource planning is TRUE?
a. The service analogy to the BOM in a manufacturing company is a bill of lading (BOL).
b. One resource that every service provider manages is cash.
c. There is no such thing as dependent demand in the service sector.
d. As services are completed, the accounts receivable decrease.
Answer: b
Keywords: service, resource
94. An example of a dependent demand item in a service is a:

a. menu in a restaurant.
b. jukebox in a club.
c. operating suite at a hospital.
d. a pilot’s checklist for an airline.
Answer: c
Keywords: dependent, demand, service
541
95. Facilitating goods in a hotel’s bill of resources would include:

a. a housekeeper.
b. a fax machine.
c. a towel.
d. a front-desk clerk.
Answer: c
Keywords: facilitating, goods, BOR, bill, resources
96. The service analogy to the bill of materials in a manufacturing company is the:
a. bill of resources.
b. bill of services.
c. bill of sub-services.
d. bill of tender.
Answer: a
Keywords: BOR, bill, resources
FILL IN THE BLANK

97. A companywide process that cuts across functional areas, business units, geographic regions,
and product lines is a(n) ____________.
Answer: enterprise process
Keywords: enterprise, resource, process, planning
98. XML based ERP systems have a high degree of ____________, the ability of one piece of
software to interact with others.
Answer: interoperability
Keywords: enterprise, resource, planning, ERP, software, interoperability
99. In MRP, a(n) ____________ is any item manufactured from one or more components.
Answer: parent
100. In MRP, a(n) ____________ is an item that may go through one or more operations to
be transformed into or become part of one or more parents.
Answer: component
Keywords: component, parent
542
101. ____________ is a computerized information system developed specifically to aid in

managing dependent-demand inventory and scheduling-replenishment orders.
Answer: MRP, material requirements planning
Difficulty: Easy
Keywords: MRP, material, requirements, plan, dependent, demand
102. MRP ____________ is a process that converts the requirements of various final
products into a material requirements plan that specifies the replenishment schedule of all the
subassemblies, components, and raw materials needed by the final products.
Answer: explosion
Keywords: explosion, MRP, material, requirements, plan
103. The ____________ is a record of all components of an item, the parent-component
relationships, and usage quantities derived from engineering and process design.
Answer: bill of materials, BOM
Keywords: BOM, bill, materials
104. A(n ) ____________ item has one or more parents but no components.
Answer: purchased
Keywords: purchased, item, component
105. A(n) ____________ is an intermediate item that is assembled from one or more
components.
Answer: subassembly
Keywords: subassembly, intermediate, component
106. ____________ is the degree to which a component has more than one immediate
parent.
Answer: Part commonality
Keywords: part, commonality, component, parent
107. The sums of the quantities in the master production schedule must equal those in the
____________.
Answer: sales and operations plan
Keywords: master, production, schedule, MPS, MRP, material, requirements, plan
543
108. A(n) ____________ is a record that divides the future into time periods called time
buckets.
Answer: inventory record
Keywords: inventory, record, time, bucket
109. ____________ are the total demand derived from all parent production plans.
Answer: Gross requirements
Keywords: gross, requirement, parent
110. ____________ are orders that have been placed but not yet completed.
Answer: Scheduled receipts
Keywords: planned, receipts, order
111. ____________ is an estimate of the amount of inventory available each week after
gross requirements have been satisfied.
Answer: Projected on-hand inventory
Keywords: inventory, projected, on-hand
112. Waiting time and process time are two components of ____________.
Answer: lead-time
Keywords: waiting, processing, lead, time
113. ____________ is a lot-sizing rule under which the lot size ordered covers the gross
requirements of a single week.
Answer: Lot-for-lot, L4L
Keywords: L4L, lot-for-lot, sizing
114. A(n) ____________ is inventory carried into a week but too small to prevent a
shortage.
Answer: remnant
Keywords: remnant, inventory
115. The lot-for-lot (L4L) rule minimizes inventory investment but it also maximizes the
number of ____________.
Answer: orders, orders placed
Keywords: lot, lot-for-lot, L4L, order
544
116. ____________ is a technique used for projecting time-phased capacity requirements for
workstations.
Answer: Capacity requirements planning, CRP
Keywords: CRP, capacity, requirements, planning
117. ____________ ties the basic MRP system to the company’s financial system.
Answer: Manufacturing resource planning, MRP II
Keywords: MRP, material, requirements, plan, MRP II, manufacturing, resource
118. ____________ is a planning and control system that regulates the flow of work-in-
process materials at the bottleneck or the capacity constrained resource in a productive
system.
Answer: Drum-buffer-rope (DBR)
Difficulty: Easy
Keywords: drum, buffer, rope, DBR, CCR, bottleneck
119. Every time a manufacturer uses one resource, they make a lot size of 300. Once a group
of 30 units are completed they are taken to the next step in the process. The lot of 300 is the
____________ and the group of 30 is the ____________.
Answer: production batch, transfer batch
Keywords: production, transfer, batch
120. A(n) ____________ is a record of a service firm’s parent-component relationships all of

the materials, equipment, time, staff, and other productive assets associated with them,
including usage quantities.
Answer: bill of resources
Keywords: resource, planning, service, bill
545
SHORT ANSWERS
121. What are the differences and similarities among material requirements planning,
manufacturing resource planning, and enterprise resource planning systems?
Answer: The materials requirement planning (MRP) system can be considered a subset
of the manufacturing resource planning (MRP II) system, containing all of the
production-related capabilities without the tie-in to the company’s financial and other
core and supporting process systems. The MRP II system could be considered a
subset of an enterprise resource planning (ERP) system, containing everything an
ERP system has without the single source of data, streamlined data flows, and
availability of a wealth of real-time information for all employees.
Reference: Multiple Sections
Keywords: MRP, material, requirements, plan, input
122. Compare MRP, DBR, and Lean as planning and control systems and propose a new
planning and control system that takes the best elements from each. Which elements from
each do you include and why?
Answer: The authors indicate that MRP is well-suited for products with many levels of
components and more customization. MRP has been around the longest and
explicitly deals with dependent demand, working well when demand is lumpy. DBR
excels when capacity is an important issue in an assemble-to-order or make-to-stock
operation in which volumes are higher and products more standardized. Lean systems
work well with high volumes, line flows, and either a make-to-stock or assemble-to-
order strategy where the manufacturing environment is predictable. Answers will
vary for the integration portion of the question.
123. What are the key inputs to an MRP system?
Answer: The key inputs are the bill of materials, master production schedule, and
inventory records.
124. Explain the key differences between the FOQ, POQ, and L4L lot-sizing rules.
Answer: A fixed-order-quantity (FOQ) rule maintains the same order quantity each time
an order is issued but varies the time interval between orders. A periodic-order-
quantity (POQ) rule allows a different order quantity to be specified but issues the
order at fixed time intervals. A lot-for-lot (L4L) rule covers the gross requirements of
a single week’s production. POQ and L4L systems avoid remnants and thus have
smaller average inventory than FOQ. Because their average inventory is lower, they
are less able to respond to last-minute changes in customer requests.
Keywords: fixed, periodic, order, quantity, lot, sizing
546
125. What are two key prerequisites for successful implementation of an MRP system, given
that top management supports the project?
Answer: Key prerequisites include data integrity, BOM structure, magnitude of lot sizes,
and environmental volatility.
Keywords: MRP, material, requirements, plan, implementation
126. Explain why MRP does a better job of estimating the need to replenish inventory items
than does the fixed-order quantity system in a dependent-demand environment.
Answer: MRP works better for dependent-demand environments because statistical
forecasting for components with lumpy demand results in large forecast errors. It also
provides managers with information useful for planning capacities and estimating
financial requirements, and it automatically updates the demand and inventory-
replenishment schedules of components when the production schedule of parent
items changes.
Keywords: MRP, material, requirements, plan, lumpy
127. Can MRP be adapted for use in services and, if so, how would it work?
Answer: Service providers must also plan the use of resources and facilitating goods. A
bill of resources (BOR) is a record of all the required materials, equipment, time,
staff, and other resources needed to provide a service, the parent–component
relationships, and the usage quantities. Naturally, the services themselves cannot be
inventoried but must instead be supplied on demand.
Keywords: BOR, bill, resources, facilitating, goods
PROBLEMS
128. Complete the following MRP schedule:

Periods 8
Lot Size
Item Period (P) for POQ 3 (FOQ)
Description Lead-Time 2
1 2 3 4 5 6 7 8
Gross requirements 90 20 40 60 60
Scheduled receipts 40
Projected on-hand inventory 50
Planned receipts
Planned order releases
547
Answer:
Periods 8
Lot Size
Item Period (P) for POQ 3 (FOQ)
Description Lead Time 2
1 2 3 4 5 6 7 8
Projected on-hand inventory 50 40 60 60
Planned receipts 60 120
Planned order releases 60 120

Reference: Output from Material Requirements Planning
Keywords: POQ, periodic, order, quantity
129. Complete the following MRP schedule using L4L:
Periods 8
Period (P) for Lot Size
Item POQ (FOQ)
1 2 3 4 5 6 7 8
Planned receipts
548
Answer:
Periods 8
Item POQ (FOQ)
1 2 3 4 5 6 7 8
Projected on-hand inventory 50 0 0 0
Planned receipts 20 40 60 60
Planned order releases 20 40 60 60

Keywords: POQ, periodic, order, quantity

Periods 8
Item POQ (FOQ) 100
1 2 3 4 5 6 7 8
Planned receipts
549
Answer:
Periods 8
Item POQ (FOQ) 100
1 2 3 4 5 6 7 8
Projected on-hand inventory 50 60 60 40 40 40 80

Keywords: FOQ, fixed, order, quantity

Periods 8
Item POQ (FOQ) 150
1 2 3 4 5 6 7 8
Scheduled receipts
Planned receipts
550
Answer:
Periods 8
Item POQ (FOQ) 150
1 2 3 4 5 6 7 8
Scheduled receipts
Projected on-hand inventory 60 20 20 140 110 110 60 60 20
Planned receipts 150
Planned order releases 150

Keywords: MRP, material, requirements, planning, FOQ, fixed, order, quantity
132. Use the bill of materials and inventory records to determine the quantity of
purchased items necessary to assemble 20 end items if the manufacturer uses lot-for-
lot ordering. There are no end items currently on hand.
Component On-hand Component On-hand
A 5 D 15
B 75 E 3
C 10 F 20
END ITEM
A(2) C(2)
B(2) D(2) E(1) F(2) B(3)
551
Answer:
20 End Items  40 As less 5 on hand  35 As
35 As  70 Bs
35 As  70 Ds less 15 Ds on hand  55 Ds
20 End Items  40 Cs less 10 on hand  30 Cs

30 Cs  30 Es less 3 on hand  27Es
30 Cs  60 Fs less 20 on hand  40 Fs
30 Cs  90 Bs
90 Bs + 70 Bs  160 Bs less 75 on hand  85 Bs
Purchased Qty to
Item Order
B 85
D 55
E 27
F 40

Keywords: BOM, inventory, record, bill, materials
133. A company has a standing order for 10 units every other week beginning in week
1. Complete the following MRP schedule if their minimum order is 50 units.
Periods 8
Item POQ (FOQ)
1 2 3 4 5 6 7 8
Scheduled receipts
Planned receipts
552
Answer:
Periods 8
Lot Size
Item Period (P) for POQ (FOQ)
1 2 3 4 5 6 7 8
Scheduled receipts 10 10 10 10
Projected on-hand inventory 60 30 30 10 30 40 40 50 0

Keywords: L4L, lot, MRP, material, requirements, planning
134. Consider the MPS, BOM, and inventory data shown.

Master Production Schedule: The following table shows the MPS start quantities.
Finished Item
A 1 2 3 4 5 6 7 8
Finished Item A MPS Start 20 40 30 20 40
Bill of Material:
-Item A uses 2 each of component D, 1 each of component C and 2 each of
subassembly B.
-Subassembly B uses 2 each of component E.
Selected Inventory Data:
Item Lot Size Technique Lead Time Scheduled Receipts On-Hand

B L4L 1 40 in period 1
C POQ=3 2 40
D FOQ=250 1 100
E L4L 2 160 in period 2
Construct the MRP schedule using the preceding information.
553
Answer:
Material
Requirements
Planning

Item B Descr: POQ (FOQ)
Lead Time 1
Safety Stock
Usage Quantity for Item: A 2
1 2 3 4 5 6 7 8 9 10
Projected on-hand inventory
Planned receipts 80 60 40 80
Planned order releases 80 60 40 80
554
Lot Size
Item C Descr: Period (P) for POQ 3 (FOQ)
Lead Time 2
Safety Stock
Usage Quantity for Item: A 1 B
1 2 3 4 5 6 7 8 9 10
Scheduled receipts
Projected on-hand inventory 40 20 20 30 40 40
Lot Size 250

Item D Descr: Period (P) for POQ (FOQ)
Lead Time 1
Safety Stock
Usage Quantity for Item: A 2 B 0 C
1 2 3 4 5 6 7 8 9 10
Scheduled receipts
Projected on-hand inventory 100 60 60 230 170 170 130 130 50 50 50
Planned receipts 250
555
Lot Size
Item E Descr: Period (P) for POQ (FOQ)
Lead Time 2
Safety Stock
Usage Quantity for Item: A B 2 C D
1 2 3 4 5 6 7 8 9 10
Gross requirements 160 120 80 160
Projected on-hand inventory
Planned receipts 120 80 160
Planned order releases 120 80 160

Difficulty: Hard
Keywords: MRP, material, requirements, plan, lot, L4L, FOQ, POQ, periodic, order,
fixed
135. Consider the process shown that is trying to produce to meet a market demand of 500
units per week.
a. Where should buffers be placed?
b. Which resource is the drum?
c. Where should the rope be placed?
d. Which resource is the bottleneck?
e. Which resource is the CCR?
Step 1: Material release schedule

Step 2: Drilling (capacity is 500 units/week)
Step 3: Tapping (capacity is 450 units/week)
Step 4: Grinding (capacity is 600 units/week)
Step 5: Coating (capacity is 400 units/week)
Step 6: Inspection (capacity is 1000 units/week)
Step 1 Step 2 Step 3 Step 4 Step 5 Step 6
556
Answer:
a. A constraint buffer should be placed between steps 4 and 5 to protect the bottleneck
which is Step 5, Coating. A shipping buffer should be placed at the end of the line,
after Step 6, Inspection.
b. The resource functioning as the drum is the bottleneck, Step 5.
c. The rope should connect Step 1 and Step 5.
d. The bottleneck is Step 5.
e. A CCR exists if the process with the least capacity can still meet market demand,
which is not the case in this scenario.
Keywords: drum, buffer, rope, DBR, CCR, bottleneck
Blank MRP Record
Item Lot Size

Description Lead Time:
Date 1 2 3 4 5 6 7 8 9 10
Gross
requirements
Scheduled
receipts
Projected
on Hand
Planned
receipts
Planned order
releases
557

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Krajewski TIF Chapter 15

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Chapter 15  Resource Planning

3. Material requirements planning (MRP) is a computerized information system developed

4. A parent is any item manufactured from one or more components.

9. Part commonality tends to increase inventory costs.

21. Data integrity is not vital to successful MRP implementation.

22. MRP II ties MRP to the company’s financial system.

27. New information entered in the database of an ERP system is a(n):

28. A front-office module for an ERP system includes the:

29. Which of the following is a back-office module in a typical ERP system?

30. Which of the following statements about ERP systems is best?

31. Which of the following is NOT an example of dependent demand items?

32. Any item manufactured from one or more components is a(n):

35. Which of the following statements about MRP is TRUE?

d. All lot-sizing rules seek to minimize inventory levels.

40. MRP explosion means estimating the total number of:

41. Which of the following statements concerning MRP is TRUE?

43. Which of the following statements about MRP II is TRUE?

46. Which of the following statements on MRP is TRUE?

47. Use the following MRP record to answer the question.

ITEM: ABC Lot Size P = 2

48. Use the following MRP record to answer the question.

ITEM: XYZ Lot Size P = 1

ITEM: XYZ Lot Size P = 2

What is the planned order release quantity in week 4?

ITEM: QRS Lot Size P = 2

52. Use the following MRP record to answer the question.

What will be the projected on-hand inventory quantity in week 7

53. Use the following MRP record to answer the question.

ITEM: ABC Lot Size P = 2

54. Use the following MRP record to answer the question.

ITEM: QRS Lot Size P = 2

Which one of the following statements about item QRS is TRUE?

55. Use the following MRP record to answer the question.

How many action notices are needed for item A?

62. Use the following MRP record to answer the question.

Which one of the statements concerning item LMN is TRUE?

Item XYZ Lot Size

Case Study 15.1

Item C (2) Item A (3) Item B (5)

A recent check of their inventory reveals the following quantities on hand.

85. The capacity constrained resource schedule is called the:

86. The purpose of the drum-buffer-rope system is to:

87. The buffer in a drum-buffer-rope system is placed immediately:

89. Which of these statements comparing DBR and MRP is best?

91. The process batch at the constraint in a drum-buffer-rope system should:

92. In terms of resource planning, service goods must focus on maintaining:

94. An example of a dependent demand item in a service is a:

95. Facilitating goods in a hotel’s bill of resources would include:

FILL IN THE BLANK

101. ____________ is a computerized information system developed specifically to aid in

120. A(n) ____________ is a record of a service firm’s parent-component relationships all of

128. Complete the following MRP schedule:

Projected on-hand inventory 50

Planned order releases

Projected on-hand inventory 50 40 60 60

Planned receipts 60 120

Planned order releases 60 120

129. Complete the following MRP schedule using L4L:

Projected on-hand inventory 50

Planned order releases

Projected on-hand inventory 50 0 0 0

Planned order releases 20 40 60 60

130. Complete the following MRP schedule:

Scheduled receipts 100