ch12
Student: ___________________________________________________________________________
1. MRP works best if the inventory items have dependent demand.
True False
2. Low level coding represents items less than $18 per unit.
True False
3. Independent demand tends to be more 'lumpy' than dependent demand meaning that we need large quantities
followed by periods of no demand.
True False
4. Lumpy demand for components results primarily from the periodic scheduling of batch production.
True False
5. MRP is used within most MRP II and ERP systems.
True False
6. The master production schedule states which end items are to be produced, in addition to when and how
many.
True False
7. Net requirements equal gross requirements minus safety stock.
True False
8. The master schedule needs to be for a period long enough to cover the stacked or cumulative lead time
necessary to produce the end items.
True False
9. Initially, a master production schedule the output from MRP may not represent a feasible schedule.
True False
10. MRP, considering inventory position, bills of material, open purchase orders and lead times guarantees a
feasible production plan if the inputs to MRP are accurate.
True False
11. The bill of materials indicates how much material will be needed to produce the quantities on a given master
production schedule.
True False
12. A bill of materials contains a listing of all the assemblies, parts, and materials needed to produce one unit of
an end item.
True False
13. The bill of materials contains information on lead times and current inventory position on every component
required to produce the end item.
True False
14. The inventory records contain information on the status of each item by time period.
True False
15. An assemblytime chart indicates gross and net requirements taking into account the current available
inventory.
True False
16. MRP II did not replace or improve the basic MRP.
True False
17. The gross requirements at one level of an MRP plan determine the gross requirements at the next lower
level continuing on down to the lowest levels shown on the bill of material.
True False
18. The gross requirements value for any given component is equal to the net requirements of that component's
immediate parent multiplied by the quantity per parent.
True False
19. The term pegging refers to identifying the parent items that have generated a given set of material
requirements for a part or subassembly.
True False
20. A netchange MRP system is one that is updated periodically but not less frequently than once a week.
True False
21. One reason that accurate bills of material are important is that errors at one level become magnified at lower
levels because of the multiplication process used by MRP.
True False
22. A regenerative MRP system is one that is updated continuously every time there is a schedule change.
True False
23. One of the primary output reports of MRP concerns changes to planned orders.
True False
24. Safety time is sometimes used in MRP rather than safety stock quantities.
True False
25. Lotforlot ordering in MRP provides coverage for some predetermined number of periods using forecasted
demand to extend beyond the orders already received for those periods.
True False
26. MRP output reports are divided into two main groups daily and weekly.
True False
27. In MRP, EOQ models tend to be less useful for materials at the lowest levels than for upper level assemblies
of the bill of materials since higherlevel assemblies have larger dollar investments.
True False
28. Load reports show capacity requirements for departments or work centers which may be more or less than
the capacity available in that work center.
True False
29. ERP began in manufacturing organizations but has spread into service organizations.
True False
30. MRP II is simply an improved version of MRP that processes faster and can plan for a larger number of end
items.
True False
31. Lotforlot ordering in MRP eliminates the holding costs for parts that are carried over to other periods.
True False
32. Capacity requirements planning (CRP) is an important feature in MRP+.
True False
33. Project Management approaches can help in a conversion to an ERP system.
True False
34. As long as a forecast is plus or minus 10%, MRP works well.
True False
35. ERP represents an expanded effort to integrate standardized recordkeeping that shares information among
different areas of an organization.
True False
36. Back flushing takes place after the production has been completed.
True False
37. Before a schedule receipt can take place, and order must be placed with a vendor.
True False
38. MRP really doesn't apply to services since raw material isn't required.
True False
39. ERP implementation requires support and a direct mandate from the CEO because it impacts so many
different functional areas.
True False
40. ERP automates the tasks involved in performing a business process, such as order fulfillment and financial
reporting.
True False
41. Which of the following most closely describes dependent demand?
A. demand generated by suppliers
B. estimates of demand using regression analysis of independent variables
C. derived demand
D. demands placed on suppliers by their customers
E. net material requirements
42. ERP implementation probably won't require:
A. cross functional teams
B. just a few weeks to install
C. intensive training
D. high funding for both initial cost and maintenance
E. frequent upgrades after installation
43. A computerbased information system designed to handle ordering and scheduling of dependentdemand
inventories is:
A. computer aided manufacturing (CAM)
B. computer integrated manufacturing (CIM)
C. economic order quantity (EOQ)
D. material requirements planning (MRP)
E. economic run size (ERS)
44. The development and application of MRP depended upon two developments: (1) the recognition of the
difference between independent and dependent demand, and (2):
A. computers
B. development of the EOQ model
C. inventory control systems
D. blanket purchase orders
E. the internet
45. The output of MRP is:
A. gross requirements
B. net requirements
C. a schedule of requirements for all parts and end items
D. inventory reorder points
E. economic order quantities and reorder points
46. Which one of the following is not an input in an MRP system?
A. plannedorder schedules
B. bill of materials
C. master production schedule
D. inventory records
E. All are inputs.
47. The MRP input stating which end items are to be produced, when they are needed, and what quantities are
needed, is the:
A. master schedule
B. billofmaterials
C. inventoryrecords
D. assemblytime chart
E. netrequirements chart
48. In an MRP master schedule, the planning horizon is often separated into a series of times periods called:
A. pegging
B. lead times
C. stacked lead times
D. time buckets
E. firm, fixed and frozen
49. The MRP input listing the assemblies, subassemblies, parts, and raw materials needed to produce one unit of
finished product is the:
A. master production schedule
B. billofmaterials
C. inventoryrecords
D. assemblytime chart
E. netrequirements chart
50. A visual depiction of the subassemblies and components that are needed to produce and/or assemble a
product is called a(n):
A. assembly time chart
B. product structure tree
C. MRP II
D. pegging
E. Gantt chart
51. The MRP input storing information on the status of each item by time period (e.g., scheduled receipts, lead
time, lot size) is the:
A. master production schedule
B. billofmaterials
C. inventoryrecords
D. assemblytime chart
E. netrequirements chart
52. Which one of the following most closely describes net material requirements?
A. gross requirements amount onhand scheduled receipts
B. gross requirements planned receipts
C. gross requirements order releases + amount onhand
D. gross requirements planned order releases
E. gross requirements amount onhand + planned order releases
53. In MRP, "scheduled receipts" are:
A. identical to "plannedorder receipts"
B. identical to "plannedorder releases"
C. open orders (that is, ordered before the first time bucket, but not delivered yet)
D. "net requirements"
E. available to promise inventory
54. In MRP, under lotforlot ordering, "plannedorder receipts" are:
A. identical to "scheduled receipts"
B. identical to "plannedorder releases"
C. open orders (that is, ordered before the first time bucket, but not delivered yet)
D. "gross requirements"
E. available to promise inventory
55. Under lotforlot, order sizes for component parts are essentially determined directly from which one of the
following?
A. gross requirements
B. net requirements
C. economic order quantity
D. gross requirements net requirements
E. net requirements amount onhand
56. In MRP, the gross requirements of a given component part are calculated from:
A. net requirements + amount onhand.
B. gross requirements of the immediate parent.
C. planned orders of the end item.
D. net requirements of end item.
E. planned orders of the immediate parent.
57. The identification of parent items is called:
A. Paternity
B. Pegging
C. Requirement I.D.
D. Relationship tracking
E. Master Scheduling
58. Periodic updating of an MRP system to account for all changes which have occurred within a given time
interval is called:
A. pegging
B. planned order release
C. net change
D. regenerative
E. exception report
59. An MRP system whose records are updated continuously is referred to as a(n):
A. regenerative system
B. batchtype system
C. PlosslWright system
D. netchange system
E. grosschange system
60. Which is true of a netchange system?
A. It is a batchtype system which is updated periodically.
B. It is usually run at the beginning of each month.
C. The basic production plan is modified to reflect changes as they occur.
D. It is used to authorize the execution of planned orders.
E. It indicates the amount and timing of future changes.
61. Which one of the following most closely describes the MRP approach that is used for components or
subassemblies to compensate for variations in lead time?
A. pegging
B. safety stock
C. increased order sizes
D. safety time
E. lowlevel coding
62. Which of the following lot sizing methods does not attempt to balance ordering (or setup) and holding
costs?
A. economic order quantity
B. economic run size
C. lotforlot
D. partperiod
E. all of the above
63. When MRP II systems include feedback, they are known as:
A. MRPIII
B. Enterprise resource planning
C. Circular MRP
D. Feasible MRP
E. Closed Loop MRP
64. The multiplication process used by MRP to determine lower level requirements is called:
A. timephasing
B. pegging
C. netting
D. projecting
E. exploding
65. _______ is choosing how many to order or make.
A. Quantity determination
B. Package sizing
C. Lot sizing
D. Grouping
E. Aggregation
66. Which of the following is not usually necessary in order to have an effective MRP system?
A. a computer and software
B. an accurate bill of materials
C. lotforlot ordering
D. an uptodate master schedule
E. integrity of file data
67. The _________ of ERP makes it valuable as a strategic planning tool.
A. Internet base
B. Rapid Batch capability
C. Employee focus
D. Realtime aspect
E. Database structure
68. A recent effort to expand the scope of production resource planning by involving other functional areas in
the planning process has been:
A. material requirements planning
B. capacity requirements planning
C. manufacturing resources planning
D. JustInTime planning
E. multifunctional relationships planning
69. Which statement concerning MRP II is false?
A. It is basically a computerized system.
B. It can handle complex planning and scheduling quickly.
C. It involves other functional areas in the production planning process.
D. It involves capacity planning.
E. It produces a production plan which includes all resources required.
70. Which of these items would be most likely to have dependent demand?
A. Xbox batteries
B. toy trains
C. flowers
D. chocolate chip cookies
E. wrist watches
71. Which of these products would be most likely to have dependent demand?
A. refrigerators
B. automobile engines
C. televisions
D. brownies
E. automobiles
72. Using the product tree shown, determine the following:
(A) the quantity of component K that will be needed to assemble 80 units of P, assuming no onhand inventory
of any components exists.
(B) the quantity of component K needed to assemble 80 units of P, given onhand inventory of 30 A's, 50 B's
and 20 C's.
73. The following is a list of components required to produce one unit of end item P:
P: 2 A's, 3 B's, 3 C's
A: 5 M's, 2 R's
B: 1 D, 3 N's.
C: 1 T, 4 N's
M: 1 N
Determine the number of N's that will be needed to make 60 P's in each of these cases:
(A) There are currently 10 P's on hand.
(B) Onhand inventory consists of 15 P's, 10A's, 20 B's, 10 C's, 100 N's, 300 T's, and 200 M's.
74. Given the following information, construct a product tree diagram and develop a material requirements plan
that will lead to 400 units of product P being available at the start of week 7.
75. Develop a material requirements plan for end item P and its components, given the tree below. Assume that
all lead times are one week, and that lotforlot ordering is used except for item F, which is ordered in multiples
of 400 units.
One hundred units of P should be available at the start of week 4 and at the start of week 8. Beginning
inventories are: 20 P, 100 A, and 200 F.
Scheduled receipts are: 800 F at the start of week 1.
76. Given the following data, construct a material requirements plan which will result in 100 units of Parent #1
(P1) at the beginning of week 6, and 200 units of Parent #2 (P2) at the beginning of week 8:
77. End item Alpha's product structure tree and inventory information are as follows:
(A) If 50 units of Alpha are to be assembled, how many additional units of S will be needed? All parts can be
ordered using lotforlot ordering, except M, which must be ordered in multiples of 40 units. [Hint: You don't
need to do an MRP plan.]
(B) An order for 100 units of Alpha is scheduled to be shipped at the start of week 9. When is the earliest that
any particular component must be started so that the order for Alpha will be ready to ship? [Hint: You don't
need to do an MRP plan.]
Refer to this producttree:
78. If 17 Ps are needed, and no onhand inventory exists for any items, how many Cs will be needed?
A. 8
B. 16
C. 136
D. 204
E. 272
79. If 17 Ps are needed, and onhand inventory consists of 10 As, 15 Bs, 20 Cs, 12 Ms, and 5 Ns, how many Cs
are needed?
A. 48
B. 144
C. 192
D. 212
E. 272
80. If 40 Ps are needed, and onhand inventory consists of 15 Ps and 10 each of all other components and
subassemblies, how many Cs are needed?
A. 340
B. 350
C. 380
D. 400
E. 590
Bunny Helpers, Inc. has just received an order for 100 Deluxe Easter Baskets, which must be ready for delivery
at the start of week six. An MRP planner has prepared the following table showing product structure, lead times
(orders are lotforlot), and quantities on hand:
Each Deluxe Basket contains two dark chocolate truffles and four carved chocolate eggs; additionally one bottle
of AlkaSelzer is included for those who overindulge.
81. What is the net requirement for Dark Chocolate Truffles to fill this order?
A. 100
B. 140
C. 150
D. 180
E. 200
82. When should an order for Carved Chocolate Eggs be released?
A. at the start of week 2
B. at the start of week 3
C. at the start of week 4
D. at the start of week 5
E. at the start of week 6
83. How many Dark Chocolate Eggs should be ordered?
A. 310
B. 450
C. 500
D. 550
E. 600
84. If the firm is using a fixed period lot size of two periods, what is the order size for the first order?
A. 120
B. 200
C. 280
D. 160
E. 150
85. Which of the following represents an attempt to balance the benefits of stability against the benefits of
responding to new information?
A. safety stock
B. safety time
C. bills of material
D. time fences
E. fixedperiod lot sizing
86. Comparing known and expected capacity requirements with projected capacity availability is the job of
_______.
A. planned releases
B. load reports
C. lot sizing
D. work loading
E. time fencing
87. ERP's primary value comes from applications ________.
A. deployment
B. development
C. interfaces
D. integration
E. networking
88. Net requirements for component J are as follows: 60 units in week 2, 40 units in week 3, and 60 units in
week 5. If a fixedperiod, twoperiod lotsizing method is used, what will be the quantity of the first planned
receipt?
A. 60 units
B. 120 units
C. 180 units
D. Cannot be determined
E. None of the above
89. Net requirements for component J are as follows: 60 units in week 2, 40 units in week 3, and 60 units in
week 5. If a fixedperiod, threeperiod lotsizing method is used, what will be the quantity of the first planned
receipt?
A. 60
B. 100
C. 160
D. Cannot be determined
E. None of the above
ch12 Key
1. MRP works best if the inventory items have dependent demand.
TRUE
MRP is best for dependent demand scenarios.
AACSB: Reflective Thinking
Blooms: Understand
Difficulty: Easy
Learning Objective: 1201 Describe the conditions under which MRP is most appropriate.
Stevenson Chapter 12 #1
Topic Area: An Overview of MRP
2. Low level coding represents items less than $18 per unit.
FALSE
Lowlevel coding codes items at their lowest BOM levels.
AACSB: Reflective Thinking
Blooms: Remember
Difficulty: Easy
Learning Objective: 1202 Describe the inputs; outputs; and nature of MRP processing.
Stevenson Chapter 12 #2
Topic Area: MRP Inputs
3. Independent demand tends to be more 'lumpy' than dependent demand meaning that we need large quantities
followed by periods of no demand.
FALSE
Dependent demand is more lumpy.
AACSB: Reflective Thinking
Blooms: Remember
Difficulty: Medium
Learning Objective: 1201 Describe the conditions under which MRP is most appropriate.
Stevenson Chapter 12 #3
Topic Area: Introduction
4. Lumpy demand for components results primarily from the periodic scheduling of batch production.
TRUE
Batch production leads to lumpy demand for components.
AACSB: Reflective Thinking
Blooms: Remember
Difficulty: Easy
Learning Objective: 1201 Describe the conditions under which MRP is most appropriate.
Stevenson Chapter 12 #4
Topic Area: Introduction
5. MRP is used within most MRP II and ERP systems.
TRUE
MRP II and ERP systems incorporate MRP.
AACSB: Reflective Thinking
Blooms: Remember
Difficulty: Easy
Learning Objective: 1205 Explain how an MRP system is useful in capacity requirements planning.
Stevenson Chapter 12 #5
Topic Area: MRP II
6. The master production schedule states which end items are to be produced, in addition to when and how
many.
TRUE
These are critical inputs into MRP.
AACSB: Reflective Thinking
Blooms: Remember
Difficulty: Easy
Learning Objective: 1203 Explain how requirements in a master production schedule are translated into material requirements for lowerlevel items.
Stevenson Chapter 12 #6
Topic Area: MRP Inputs
7. Net requirements equal gross requirements minus safety stock.
FALSE
If safety stock is required, net requirements will be higher.
AACSB: Reflective Thinking
Blooms: Remember
Difficulty: Easy
Learning Objective: 1203 Explain how requirements in a master production schedule are translated into material requirements for lowerlevel items.
Stevenson Chapter 12 #7
Topic Area: MRP Processing
8. The master schedule needs to be for a period long enough to cover the stacked or cumulative lead time
necessary to produce the end items.
TRUE
This ensures that materials plans can be adequately formulated.
AACSB: Reflective Thinking
Blooms: Remember
Difficulty: Easy
Learning Objective: 1203 Explain how requirements in a master production schedule are translated into material requirements for lowerlevel items.
Stevenson Chapter 12 #8
Topic Area: MRP Inputs
9. Initially, a master production schedule the output from MRP may not represent a feasible schedule.
TRUE
Management must make more detailed capacity requirements planning to determine whether these more
specific capacity requirements can be met and some adjustments in the master production schedule may be
required.
AACSB: Reflective Thinking
Blooms: Remember
Difficulty: Medium
Learning Objective: 1207 Describe MRP II and its benefits.
Stevenson Chapter 12 #9
Topic Area: MRP II
10. MRP, considering inventory position, bills of material, open purchase orders and lead times guarantees a
feasible production plan if the inputs to MRP are accurate.
FALSE
MRP may lead to an infeasible production plan if capacity requirements are not considered.
AACSB: Reflective Thinking
Blooms: Remember
Difficulty: Hard
Learning Objective: 1207 Describe MRP II and its benefits.
Stevenson Chapter 12 #10
Topic Area: MRP II
11. The bill of materials indicates how much material will be needed to produce the quantities on a given master
production schedule.
FALSE
The bill of materials indicates how much material will be needed to produce one unit of the item in question.
AACSB: Reflective Thinking
Blooms: Remember
Difficulty: Hard
Learning Objective: 1202 Describe the inputs; outputs; and nature of MRP processing.
Stevenson Chapter 12 #11
Topic Area: MRP Inputs
12. A bill of materials contains a listing of all the assemblies, parts, and materials needed to produce one unit of
an end item.
TRUE
The bill of materials indicates how much material will be needed to produce one unit of the item in question.
AACSB: Reflective Thinking
Blooms: Remember
Difficulty: Easy
Learning Objective: 1202 Describe the inputs; outputs; and nature of MRP processing.
Stevenson Chapter 12 #12
Topic Area: MRP Inputs
13. The bill of materials contains information on lead times and current inventory position on every component
required to produce the end item.
FALSE
Inventory records contain this information.
AACSB: Reflective Thinking
Blooms: Remember
Difficulty: Medium
Learning Objective: 1202 Describe the inputs; outputs; and nature of MRP processing.
Stevenson Chapter 12 #13
Topic Area: MRP Inputs
14. The inventory records contain information on the status of each item by time period.
TRUE
Inventory records also contain information on lead times and current inventory position.
AACSB: Reflective Thinking
Blooms: Remember
Difficulty: Easy
Learning Objective: 1202 Describe the inputs; outputs; and nature of MRP processing.
Stevenson Chapter 12 #14
Topic Area: MRP Inputs
15. An assemblytime chart indicates gross and net requirements taking into account the current available
inventory.
FALSE
Assemblytime charts have to do with capacity, not inventory.
AACSB: Reflective Thinking
Blooms: Remember
Difficulty: Medium
Learning Objective: 1207 Describe MRP II and its benefits.
Stevenson Chapter 12 #15
Topic Area: MRP II
16. MRP II did not replace or improve the basic MRP.
TRUE
MRP II incorporates basic MRP.
AACSB: Reflective Thinking
Blooms: Remember
Difficulty: Medium
Learning Objective: 1207 Describe MRP II and its benefits.
Stevenson Chapter 12 #16
Topic Area: MRP II
17. The gross requirements at one level of an MRP plan determine the gross requirements at the next lower
level continuing on down to the lowest levels shown on the bill of material.
FALSE
Released order quantities at one level determine gross requirements at the next lower level.
AACSB: Reflective Thinking
Blooms: Understand
Difficulty: Hard
Learning Objective: 1203 Explain how requirements in a master production schedule are translated into material requirements for lowerlevel items.
Stevenson Chapter 12 #17
Topic Area: MRP Processing
18. The gross requirements value for any given component is equal to the net requirements of that component's
immediate parent multiplied by the quantity per parent.
FALSE
Released order quantities for the parent lead to gross requirements of the child.
AACSB: Reflective Thinking
Blooms: Remember
Difficulty: Hard
Learning Objective: 1202 Describe the inputs; outputs; and nature of MRP processing.
Stevenson Chapter 12 #18
Topic Area: MRP Processing
19. The term pegging refers to identifying the parent items that have generated a given set of material
requirements for a part or subassembly.
TRUE
Pegging ties items to their parents.
AACSB: Reflective Thinking
Blooms: Remember
Difficulty: Medium
Learning Objective: 1203 Explain how requirements in a master production schedule are translated into material requirements for lowerlevel items.
Stevenson Chapter 12 #19
Topic Area: MRP Processing
20. A netchange MRP system is one that is updated periodically but not less frequently than once a week.
FALSE
A netchange system is updated as transactions occur.
AACSB: Reflective Thinking
Blooms: Remember
Difficulty: Hard
Learning Objective: 1202 Describe the inputs; outputs; and nature of MRP processing.
Stevenson Chapter 12 #20
Topic Area: MRP Processing
21. One reason that accurate bills of material are important is that errors at one level become magnified at lower
levels because of the multiplication process used by MRP.
TRUE
Small higherlevel errors can be magnified into larger lowerlevel errors.
AACSB: Reflective Thinking
Blooms: Remember
Difficulty: Medium
Learning Objective: 1206 Outline the potential benefits and some of the difficulties users have encountered with MRP.
Stevenson Chapter 12 #21
Topic Area: Benefits and Requirements of MRP