Test Questions Flashcards by Lindsey Strosnider

Customer relationship management supports lean principles because:

A. on-time delivery relies on production simplification.
B. both address equal service to all customers.
C. it creates the demand for lean supplies.
D. it encompasses quality at the source.

D. it encompasses quality at the source.

Overall explanation
Both customer relationship management and lean focus on the elimination of waste through quality at the source

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Supply chain variation frequently occurs when:

A. customers place larger orders than necessary.
B. a valley and a peak exist in product demand history.
C. product shortages are followed by price increases.
D. variation in historical demand skews the quantitative forecast.

A. customers place larger orders than necessary.

Overall explanation
Supply chain distortion may occur when customers place larger orders than necessary

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Which of the following forms the basis for simple regression equations?

A. Finding a line of least squares on a chart that shows how one variable actually behaved in the past versus one that is predicted to behave in a particular way
B. Building a normal distribution or bell curve to indicate the magnitude and frequency of the deviation from the average
C. Using exponential smoothing to weigh the information one wants to predict against the information that is used to predict it
D. Finding the line of best fit through a set of data on a chart that interrelates two types of variables and shows their actual historical values

D. Finding the line of best fit through a set of data on a chart that interrelates two types of variables and shows their actual historical values

Overall explanation
Simple regression (also called linear regression) uses the least-squares method. As defined in the Dictionary, the least squares method is a “method of curve fitting that selects a line of
best fit through a plot of data to minimize the sum of squares of the deviations of the given points from the line.”

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What does scheduling a constraint involve?

A. Finding methods to maximize utilization of the constraint
B. Getting rid of the bottleneck
C. Allowing the process to stabilize after optimization
D. Subordinating the constraint to the other processes

A. Finding methods to maximize utilization of the constraint

Overall explanation
The second of the five focusing steps in the theory of constraints, deciding how to exploit the constraint to the system, is key. The other answers are not directly related to scheduling a constraint.

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A product can be produced at a rate of two per minute. This is known as:

A. delivery time.
B. cycle time.
C. lead time.
D. cumulative lead time.

B. cycle time.

Overall explanation
Cycle time is the time between the completion of two units

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Which of the following functions is responsible for paying an invoice once it is approved?

A. Accounts receivable department
B. Warehouse
C. Cost accounting department
D. Accounts payable department

D. Accounts payable department

Overall explanation
The accounts payable department is responsible for processing the payment once an invoice is approved.

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What is the key to reducing the organization’s overall terminal handling costs for a time period?

A. Use the air transportation mode more often.
B. Maximize the number of shipments handled by the same carrier.
C. maximize the weight of individual shipments.
D. Use a customs broker.

C. maximize the weight of individual shipments.

Overall explanation
By increasing the weight of individual shipments and creating more TL shipments, there will be fewer shipments during a particular time period and, therefore, lower terminal handling,
pickup and delivery, and billing and collecting costs.

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Records for a part dimension over time show that it has a single mean and that values tend to cluster around the mean. This type of distribution is likely to be referred to as:

A. binomial.
B. Pareto.
C. z-bar.
D. normal.

D. normal.

Overall explanation
The APICS Dictionary describes a normal distribution as a “statistical distribution where most of the observations fall fairly close to one mean.” In addition, the “deviation from the mean is as likely to be plus as it is to be minus. When graphed, the normal distribution takes the form of a bell-shaped curve.”

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Based on the information provided below, what is the total capacity requirement for the work center in hours?

Run time 15 min per piece
Setup time 1 hour
Queue time 8 hours
Move time 8 hours
Quantity to order 28 pieces

A. 8 hours
B. 16 hours
C. 7 hours
D. 24 hours

A. 8 hours

Overall explanation
To answer this question, first convert the run time in minutes to run time in hours: 15 minutes/60 minutes = 0.25 hours Then calculate the total capacity requirement as follows:(28 pieces x 0.25 hours per piece) + 1-hour setup = 8 hours Setup and run-time are included; move and queue time are not included.

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Using the information provided below, what is the forecast error for the previous week?

*12 tubes per case
*50 cases per pallet
*Current mean absolute deviation (MAD) = 100
*Previous week:
*Forecast = 5,000 cases
*Sales = 100 pallets
*Scrap loss = 500

A. 0
B. -500
C. 5
D. 500

A. 0

Overall explanation
100 pallets x 50 cases = 5,000, so the error is 0.

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Responding to the customer with the price and availability, promise and confirmation, and advance ship notices best define which of the following terms?

A. Order fulfillment cycle
B. Continuous improvement
C. Order qualifier
D. Focus on quality

A. Order fulfillment cycle

Overall explanation
The order fulfillment process is defined as a series of customer interactions with an organization through the order-filling process, which includes price and availability, promise and confirmation, and advance shipping information.

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What is the purpose of the inventory investment report as part of the logistics resource requirements plan (LRRP)?

A. States actual item-level inventory costs for a past period based in part on shipping costs and inventory balances
B. Determines product family storage profiles for inventory based on product dimensions
C. Projects item-level inventory costs for a weekly planning horizon based in part on shipping costs and inventory balances
D. Projects aggregate inventory levels and related supply chain costs over a planning horizon based in part on product-family level replenishment

D. Projects aggregate inventory levels and related supply chain costs over a planning horizon based in part on product-family level replenishment

Overall explanation
The inventory investment report portion of the LRRP projects aggregate inventory levels and the related supply chain costs over a planning horizon based on product-family level replenishment, shipping costs, and inventory balances.

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When a buyer asks a supplier to design a product according to the buyer’s specifications, the buyer is not responsible for which of the following steps?

A. Detailed product requirements
B. Analysis of test results
C. Production of samples
D. Approval of test procedure

C. Production of samples

Overall explanation
The production of samples is the supplier’s responsibility, who will eventually make the product if tests are successful. The other three actions are all the responsibility of the buyer

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Which of the following actions is likely to improve the accuracy of a sales forecast?

A. Informing sales representatives about the company’s business outlook
B. Increasing the sales quotas to match the sales forecast
C. Adjusting the sales forecast up or down by a certain percentage to offset errors
D. Basing territorial advertising on sales estimates

A. Informing sales representatives about the company’s business outlook

Overall explanation
Using business information would help sales personnel to better determine potential forecasts

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Why does distribution requirements planning have characteristics of a push system?

A. Customer orders push demand to the distribution centers.
B. Inventory is pushed to distribution centers from a central location.
C. Distribution centers push demand to a master production schedule.
D. Inventory transit systems push the material between docks.

B. Inventory is pushed to distribution centers from a central location.

Overall explanation
Inventory is pushed to where it is needed from a central location

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What are the two different types of performance targets that should be used to achieve organizational stretch objectives?

A. Financial and strategic
B. Strategic and tactical
C. Operational and personal
D. Tactical and Financial

A. Financial and strategic

Overall explanation
To achieve organizational stretch objectives, a company must develop two types of performance targets: financial and strategic

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Which of the following processes employs a finite scheduling model of a company’s manufacturing system to determine when an item can be delivered?

A. Engineer-to-order
B. Make-to-order
C. Available-to-promise
D. Capable-to-promise

D. Capable-to-promise

Overall explanation
Capable-to-promise employs a finite scheduling model of the manufacturing system to determine when a new or unscheduled customer order can be delivered. It includes any constraints that might restrict production, such as resource availability, lead times for raw materials or purchased parts, and requirements for lower-level components or subassemblies

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When an organization identifies a supply disruption, what is the first step it should take, according to Accenture?

A. Mobilizing
B. Sensing
C. Operation
D. Analyzing

A. Mobilizing

Overall explanation
According to Accenture, the first step in responding to a supply disruption is mobilizing, which involves enacting the initial response plan and establishing rules for responding to further disruptions.

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A company has decided to locate a new distribution center in an area currently serviced only by the manufacturing warehouse to improve customer service levels with faster deliveries and fewer item stockouts. Which of the following results should they expect?

A. Delivery time to existing distribution centers will increase because of the delay in delivering to the new distribution center.
B. Total distribution network safety stock will decrease because there is more inventory in the distribution network.
C. Faster customer deliveries from all locations will enable inventory turns to increase.
D. Total distribution network inventory will increase because of the additional location, though demand will be unchanged.

D. Total distribution network inventory will increase because of the additional location, though demand will be unchanged.

Overall explanation
Any additional facility will introduce extra inventory into the network, given that faster customer deliveries and fewer stockouts are desired.

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Adding a distributor as a channel between manufacturers and retailers will result in all of the following except

A. a decrease in transportation costs.
B. a reduction in the number of shipments from manufacturers.
C. a decrease in the number of transactions for retailers.
D. an increase in the number of transactions for manufacturers.

D. an increase in the number of transactions for manufacturers.

Overall explanation
Natural results of reducing the complexity of transactions between manufacturers and customers include a decrease in the number of transactions for retailers, a decrease in transportation costs, and a reduction in the number of shipments from manufacturers. Transportation costs will also decrease as manufacturers ship to fewer customers (the distributor) and retailers buy from fewer suppliers.

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What data items are included in a manufacturing routing?

A. Average run and queue times
B. Standard setup time and run time per piece
C. Material cost per unit and lead time
D. Sequence of operations and standard move times

B. Standard setup time and run time per piece

Overall explanation
The routing for producing a particular item typically includes standard setup and run times. The average queue time would depend on the work center rather than the routing.

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When measuring shop floor performance, which method will encourage not producing unwanted products?

A. Schedule completion
B. Utilization
C. Efficiency
D. Productivity

A. Schedule completion

Overall explanation
Schedule completion encourages performance to plan.

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Efficiency is defined as the ratio of:

A. standard hours earned to hours per shift per day.
B. hours per shift per day to standard hours earned.
C. standard hours earned to actual production hours.
D. actual production hours consumed to standard hours earned.

C. standard hours earned to actual production hours.

Overall explanation
Efficiency is the ratio of the standard hours earned to the production hours worked

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The following information is available for a work center on day 8. The start workdays and end workdays are based solely on internal setup and run time. Using the critical ratio, which of the following jobs is the next to be started?
Job Start workday End workday
W 11 14
X 10 15
Y 8 12
Z 9 12

A. X
B. W
C. Z
D. Y

D. Y

Overall explanation
The critical ratio (CR) is the time remaining divided by the work remaining. The time remaining and the work remaining are calculated as follows:
Time Remaining = End Workday - Current Day + 1 Work Remaining = End Workday - Start Workday + 1 Note that the +1 is needed in each of these cases because the current workday in
the first case and the start workday in the second case are counted as a full day of work. The critical ratio calculations for each job are shown below:
W * Time Remaining = 14-8 + 1 =7 days * Work Remaining = 14-11 +1 =4 days * Critical Ratio = 7/4 = 1.75
X * Time Remaining = 15-8 + 1 =8 days * Work Remaining = 15-10 + 1 =6 days * Critical Ratio = 8/6 = 1.33
Y * Time Remaining = 12-8 + 1 =5 days * Work Remaining = 12-8 + 1 =5 days * Critical Ratio = 5/5 = 1
Z * Time Remaining = 12-8 + 1 =5 days * Work Remaining = 12-9 + 1 =4 days * Critical Ratio = 5/4 = 1.25
The CR shows the relative priority of the orders at the work center. The rule is to sequence the order with the lowest ratio first. Y has the smallest CR, 1, which means it is on schedule, but
it has the lowest CR and should be started first.
The other
*Time Remaining = 12-8 + 1 =5 days
*Work Remaining = 12-9 + 1 =4 days
*Critical Ratio = 5/4 = 1.25 The CR shows the relative priority of the orders at the work center. The rule is to sequence the order with the lowest ratio first. Y has the smallest CR, 1, which
means it is on schedule, but it has the lowest CR and should be started first. The other jobs are ahead of schedule.

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25. If suppliers and customers seek to reduce inventories and retain service, they will likely find success with: A. increased customer involvement in the supplier's day-to-day planning and control. B. the use of open bid auctions. C. statistically calculating product lead time. D. long-term purchase agreements.

A. increased customer involvement in the supplier's day-to-day planning and control. Overall explanation Inventories may be reduced in a supplier/customer partnership by increased customer involvement in the supplier's day-to- day planning and control.

26. Which of the following relationships are most mutually exclusive? A. Make-to-order and flow manufacturing B. Engineer-to-order and intermittent production C. Make-to-stock and line production D. Assemble-to-order and repetitive manufacturing

A. Make-to-order and flow manufacturing Overall explanation Make-to-order will have some custom-engineered parts, while flow is continuous with no design required.

27. Which of the following roles of a finished goods warehouse deals with the grouping of different items into an order? A. Product mixing B. Service C. Kitting D. Transportation consolidation

A. Product mixing Overall explanation Product mixing deals with the grouping of different items into an order and the economies that warehouses can provide in doing this. Without a distribution center, customers would have to order and pay LTL transport from each source. Using a distribution center, orders can be placed and delivered from a central location.

28. Which is the best way listed to reduce material-handling costs for B2B customers who normally sell one to three pallets of units in a given order cycle? A. Use cross-docking to immediately build unit loads for all B2B customers upon receipt of finished goods. B. Change the unit load size and order increment requirement to equal the number of units that can fit on a single pallet. C. Change the minimum order size to be the number of units to fill one pallet and allow any number of units to be ordered above this amount. D. Set the unit load size and order increment requirement to equal one full truckload of pallets.

B. Change the unit load size and order increment requirement to equal the number of units that can fit on a single pallet. Overall explanation If B2B customers can order only in full pallet increments, this will reduce the amount of material handling for you and for them. For example, the customer will be able to unload the delivery using a forklift rather than manual labor, which would be the case if they ordered, say, a pallet and a half of goods, which is what could occur if only the minimum order size were specified. Since the customers generally sell between one and three pallets per order period, requiring orders of full truckloads would necessitate that some of these pallets being moved into storage and then moved out over time, so this would increase their material-handling costs. Cross-docking may reduce the organization's material-handling costs, but it would not affect the customer's material-handling costs.

29. The primary objective of a floating-location storage system is to improve: A. cross-docking. B. distribution. C. cube utilization. D. kitting.

C. cube utilization. Overall explanation Since a floating-location storage system enables the storage of goods wherever there is appropriate space for them, it maximizes warehouse space cube utilization.

30. In which of the following processes are qualitative techniques appropriately used? A. Pyramid forecasting B. Determination of a seasonal index C. Extrapolation of essentially level data D. Detection of a demand increase or decrease

Overall explanation Pyramid forecasting is correct because, at the conclusion of the roll-up process, a qualitative decision can be made before forcing the result down. The other answers are incorrect because seasonal indexing is a quantitative technique

31. Increased flexibility in order to meet customer demand changes can be achieved by: A. reducing lead times. B. increasing component inventory. C. increasing lot sizes. D. reducing scrap.

Overall explanation Reducing lead times—specifically setup times—allows for more frequent changes to adapt to changes in demand.

32. A job shop has an 8-hour workday. If an order in the job shop for 100 pieces starts on the beginning of day 1, when would it be finished? Cycle Time Queue (days) Per Piece (hours) Setup (hours) 10 Saw 1 0.1 2 20 Face 2 0.1 2 30 Turn 2 0.5 5 40 Drill 2 0.3 2 50 Grind 2 0.4 1 A. Day 20 B. Day 23 C. Day 30 D. Day 28

Overall explanation To calculate the answer, convert everything to hours. The calculation is as follows: *10 = 8 hrs. of queue + (100 pieces/10 pieces per hour = 10 hours) + 2 hrs. = 20 hrs./8-hr. day = 2.5 days * 20 = 16 hrs. of queue + (100 pieces/10 pieces per hour = 10 hours) + 2 hrs. = 28 hrs./8-hr. day = 3.5 days * 30 = 16 hrs. of queue + (100 pieces/2 pieces per hour = 50 hours) + 5 hrs. = 71 hrs./8-hr. day = 8.875 days * 40 = 16 hrs. of queue + (100 pieces/3.33 pieces per hour = 30 hours) + 2 hrs. = 48 hrs./8-hr. day = 6 days * 50 = 16 hrs. of queue + (100 pieces/2.5 pieces per hour = 40 hours) + 1 hr. = 57 hrs./8-hr. day = 7.125 days *2.5 + 3.5 + 8.875 + 6 + 7.125 = 28

33. What is a likely role for a planning and inventory management professional during the order processing stage of the order cycle? A. Administratively process the order. B. Check inventory levels and planned production schedules to determine availability and location. C. Validate that the customer performed the order processing correctly. D. Assess whether the most efficient equipment is being used to assemble the order.

Overall explanation Other functional areas will perform the administrative functions of processing an order. Planning and inventory management professionals can be involved in a support function by checking inventory levels and planned production schedules to determine availability and location.

34. Which of the following is a key element of customer relationship management? A. Differentiating the company's customer experience from rivals by superior anticipation and responsiveness B. Handling customer requests for changes to due dates outside the system C. Setting filter limits at multiples of MAD D. Promising from on-hand inventory and future supply

Overall explanation Differentiating the company's customer experience from rivals by superior anticipation and responsiveness is one of three important elements of customer relationship management. The others are to increase customer retention and loyalty and to provide insight into the timing and quantity of impending customer orders. Setting filter limits is incorrect because it is an element of demand filters, not customer relationship management. Handling customer change requests is incorrect because changes made by the customer for delivery must be entered into the system. Promising on-hand inventory and future supply is incorrect because this is a characteristic of ATP, not customer relationship management.

35. Forecasters and users of forecasts use information on forecast accuracy to understand the reliability and relevance of the data as they are used to determine demand characteristics, variation, and: A. stability. B. reliability of the sales and operations planning process. C. sustainability. D. customer predictability. .

Overall explanation Forecasters and users of forecasts use information on forecast accuracy to understand the reliability and relevance of the data as they are used to determine demand characteristics, variation, and stability

36. A supplier produces for countries around the globe. If only domestic customers are considered in demand management, what will the resulting outcome likely be? A. Demand will be unaffected. B. Demand will be overstated. C. Demand will be understated. D. Not enough information exists to comment.

Overall explanation When both domestic and international demand are present, ignoring international demand will result in understated requirements.

37. The term for a forecasting technique that uses an average of a certain number of observations, with each new observation added and the oldest observation dropped, is: A. seasonality. B. exponential smoothing. C. moving average. D. trend.

Overall explanation A moving average is an arithmetic average of a certain number (n) of the most recent observations. As each new observation is added, the oldest observation is dropped.

38. In its narrowest sense, an organization that provides only an intangible product is in the: A. healthcare industry. B. service industry. C. real estate industry. D. hospitality industry.

Overall explanation The APICS Dictionary, 16th edition, the definition of the service industry is as follows, "1) In its narrowest sense, an organization that provides an intangible product (e.g., medical or legal advice). 2) In its broadest sense, all organizations except farming, mining, and manufacturing. Includes retail trade

39. Which of the following features is characteristic of continuous process manufacturing? A. Large batches B. Low-cost production C. Wide product range D. Responsiveness as an order-winning criterion

Overall explanation Continuous manufacturing is a type of manufacturing process dedicated to the production of a very narrow range of standard products. The rate of product change and new product information is very low. Significant investment in highly specialized equipment allows for a high volume of production at the lowest manufacturing cost. Thus, unit sales volumes are very large, and price is almost always a key order-winning criterion.

40. Using the partially completed back schedule simulation below, what is the start date for operation 10 at work center 13? Order Number: 808 Order Number 808 Operation no. Work Center Start Date (am) Queue (days) Operation (days) Finish Date (pm) Wait (days) Move (days) 10 13 3 4 0 1 20 16 2 3 1 1 30 14 2 2 0 1 50 11 1 2 1 1 60 Stores 76 A. Day 50 B. Day 51 C. Day 49 D. Day 52

Overall explanation Order Number 808 Operation no. Work Center Start Date (am) Queue (days) Operation (days) Finish Date (pm) Wait (days) Move (days) 10 13 51 3 4 58 0 1 20 16 59 2 3 64 1 1 30 14 66 2 2 70 0 1 50 11 71 1 2 74 1 1 60 Stores 76

41. What is the amount of bias for the forecast for the three-month period displayed? Sales Forecast Month 1 1100 1050 Month 2 1200 1250 Month 3 1125 1146 A. 21 B. 3,425 C. 3,446 D. 7

Overall explanation The amount of bias is figured by comparing the forecast demand with the actual demand. In this example, the cumulative forecast demand is 3,446 and the cumulative actual demand is 3,425. The difference between the two values is +21, which is the amount of bias for the given period, which is in the direction of an overstock.

42. Which factor favors use of the road mode of transport over other modes? A. Low variable costs B. Lowest carrying cost C. High capital cost D. Dispersed market

Overall explanation Road is best suited for moving goods to a dispersed market because they can provide door-to-door service so long as there is a suitable road.

43. Which scheduling technique considers slack time to increase or decrease the calculated lead time of an order? A. Constraint-based scheduling B. Forward-flow scheduling C. Probable scheduling D. Mixed-flow scheduling

Overall explanation Probable scheduling considers slack time to increase or decrease the calculated lead time of an order.

44. A scheduling system sends part of a lot on to the next stage in processing before it has completed working on all materials it has received. What is the name given to this useful expediting tool? A. Infinite loading B. Manufacturing order C. Split scheduling D. Overlapped scheduling

Overall explanation Overlapping occurs when the completed portion of an order at one work center is processed at one or more succeeding work centers before the pieces left behind are finished at the preceding work centers.

45. Packing products on incoming shipments so they can be easily sorted at intermediate warehouses or for outgoing shipments based on destination is known as: A. load-sorting. B. break-pointing. C. cross-docking. D. load-splitting.

Overall explanation Cross-docking involves packing products on incoming shipments so they can be easily sorted at intermediate warehouses or for outgoing shipments based on the destination.

46. The actual queue time of a job at a work center is most impacted by the: A. lot size of the job. B. efficiency of the work center. C. utilization of the work center. D. priority of the job.

Overall explanation If dispatching rules push a job to the end of the sequence, the queue time will possibly be longer than planned. The inverse is true if an order is moved up in the sequence.

47. If a manufacturer typically produces 80 orders of a given product per year and calculates that three stockouts are acceptable, what is its customer service level? A. 96% B. 83% C. 77% D. 97%

Overall explanation Customer Service Level = (Orders per Period - Stockout Chances per Period)/Orders per Period

48. Which of the following techniques encourages suppliers to adopt lean principles? A. Random storage B. Dedicated storage C. Kanban D. Point-of-use

Overall explanation Kanban is the only response that would impact suppliers

49. Which of the following is unaffected by data timeliness in an assemble-to-order environment using backflushing? A. Notification of rejected receipt B. Customer order completion C. Inventory turns calculations D. Inventory accuracy level

Overall explanation Inventory turns are calculated monthly and are unaffected by data timeliness.

50. Distribution planning plans logistics capacity at the product family and end-item level at which of the following planning levels? A. Master scheduling and MRP B. Business planning and MRP C. Strategic planning and MRP D. S&OP and master scheduling

Overall explanation Material requirements planning (MRP), strategic planning, business planning, and master scheduling are all incorrect because strategic planning and MRP are too early and too late to plan distribution logistics at the product family or end-item level, respectively. Distribution logistics planning at the product family and end-item levels occurs during S&OP and master scheduling.

51. Which example is the most sustainable according to the waste hierarchy? A. Sending recyclable plastics to a recycling center and responsibly disposing of non-recyclable plastics B. Burning waste oil in an incinerator that produces electricity C. Sending batteries to a processing center that specializes in the disposal of batteries D. Disposing of both recyclable and non-recyclable plastic rather than wasting energy cleaning them

Overall explanation Recycling is higher on the waste hierarchy than recovery or disposal.

53. Which scheduling technique assumes that there will always be sufficient capacity and computes the schedule starting with the due date for the order? A. Finite forward scheduling B. Finite backward scheduling C. Infinite backward scheduling D. Infinite forward scheduling

Overall explanation Most systems attempt to backward schedule first, using infinite planning.

54. A cash register manufacturer and distributor have a network of dealers. Despite the organization's return policy, the dealers have been returning too many units for insufficient reasons. What can be done to enforce the policy while ensuring good customer service? A. Start using a supplier relationship management (SRM) form. B. Start implementing a warranty policy and accept only warranty returns. C. Start requiring a return material authorization (RMA) form. D. Start implementing a waste hierarchy policy and welcome higher returns.

Overall explanation An RMA is an official request to return products that need to be approved by the responsible party. It will enable the organization to better enforce its existing return policy.

55. Trend extrapolation is used in forecasting in which of the following ways? A. For easier graphing of the forecast B. For identifying cyclical patterns C. For identifying the presence of seasonality in product demand D. For projecting long-range movement

Overall explanation Extrapolation refers to the process of extending a forecast out a certain number of periods into the future.

56. A company operating in a volatile industry, in which demand, and events can frequently throw off predictions, has become frustrated with the unreliability of and its dependence on forecasts. What step could it take to generate better and quicker information about customer demand? A. Increase inventory. B. Focus more closely on key competencies. C. Improve order winners. D. Collaborate more closely with downstream customers.

Overall explanation Closer collaboration will mean that upstream partners get downstream customer information directly and immediately. A key benefit of communicating demand rather than only orders is that you can see the reason for certain orders (e.g., to stockpile in advance of a plant shutdown versus a trend of higher sales), and this helps eliminate the bullwhip effect where variability in orders (both high and low) is magnified at each upstream supply chain node.

57. The maximum of the output capabilities of a resource is known as: A. maximum capacity. B. protective capacity. C. productive capacity. D. rated capacity.

Overall explanation Productive capacity is the maximum of the output capabilities of a resource or the market demand for that output for a given time period.

58. A product family is experiencing an upward trend in demand that is adversely affecting customer service. Which of the following forecasting techniques is most applicable? A. Low alpha factor B. Trending with bias C. Single smoothing D. Double smoothing

Overall explanation Double smoothing adjusts a single smoothed forecast for an upward or downward trend. The other responses do not weigh the current month enough to pick up trends.

59. Which of the following statements defines required capacity? A. Capacity of a system or resource needed to produce a desired output in a given time period B. Amount of released or planned work assigned to a specific operation C. Limits or levels of capacity in order to execute all manufacturing schedules D. Output in comparison to the capacity plans and adjusted for corrective action

Overall explanation Required capacity is the capacity of a system or resource needed to produce a desired output in a particular time period.

60. What term is used for the distribution route, from raw materials through consumption, along which products travel? A. Logistics channel B. Transaction channel C. Marketing channel D. Distribution channel

Overall explanation A distribution channel is the distribution route, from raw materials through consumption, along which products travel.

61. Which of the following is a valuable forecast evaluation activity? A. Tracking actual demand against projected demand B. Balancing bias in a forecast with the opposite bias C. Using standard hours to track variation D. Involvement of users in the process of developing forecast tools

62. If a company implements the time-phased order point (TPOP) technique rather than the order point technique, which of the following benefits is likely to be achieved? A. Historical data to determine the optimum time to reorder B. Availability of future planned orders for current capacity planning C. Assistance in maintaining true dates of need for open orders D. Planning of end items but not the capacity for future lumpy demand Overall explanation The TPOP technique allows planners to view supply and demand within a user-defined planning horizon. By simulating possible future supply and demand for an item, TPOP enables the planner to maintain the true dates of need for all orders, use future supply requirements to plan for future capacities, and see component demand requirements and capacity for future lumpy demand.

Overall explanation Tracking actual demand against projected demand is the basic process of evaluating forecast performance. User involvement might ensure that they can effectively use the data from a forecasting system, but it is not an evaluation activity.

63. What is one method for improving transportation responsiveness within the supply chain? A. Minimize transportation costs by using common carriers. B. Maintain a private fleet for all deliveries. C. Create transportation partnerships with carriers. D. Increase lead times so shipments will not be late.

Overall explanation Creating transportation partnerships increases operational flexibility and enables long-term contracts and closer control.

64. When altering operations schedules to accommodate an exception, what is the scheduler's priority? A. Making decisions that help maintain valid plans B. Assuming infinite capacity when rescheduling C. Influencing decision-makers to stop allowing exceptions D. Getting the expedited job done immediately regardless of the schedule impact

Overall explanation An exception management process needs to prioritize making and implementing decisions that help maintain valid plans.

65. What term is used for the supplier's responsibility to dispose of packaging materials or environmentally sensitive materials? A. Environmental stewardship B. Green reverse logistics C. Recycling D. Sustainability

Overall explanation Green reverse logistics places the responsibility on the supplier to dispose of packaging materials or environmentally sensitive materials such as heavy metals and other restricted materials.

66. The forecast technique for a particular product has recently changed to second order smoothing. Which of the following product life cycle stages is the product most likely entering? A. Growth B. Maturity C. Saturation D. Introduction

Overall explanation Second order smoothing accounts for trends, which would be applicable during a growth phase.

67. Which option would be most likely to result in a realistic and achievable schedule while also taking advantage of excess capacity? A. Infinite forward scheduling B. Finite forward scheduling C. Infinite backward scheduling D. Finite backward scheduling

Overall explanation Finite loading is used to generate a realistic and achievable schedule because it takes available capacity into account and forces scheduling of the promise date to reflect capacity constraints. Forward scheduling allows taking advantage of excess capacity and helps with load leveling.

68. What is the distinction between the distribution channel and the transaction channel? A. There is no distinction. B. The distribution channel is concerned with the route of goods, the transaction channel is concerned with the transfer of ownership. C. The distribution channel is concerned with warehouses, the transaction channel is concerned with transportation nodes. D. The distribution channel is concerned with the route of goods; the transaction channel is concerned with the costs.

Overall explanation The distribution channel is the distribution route, from raw materials through consumption, along which products travel. The transaction channel deals with the change of ownership of goods and services.

69. Which of the following is a downside associated with linking corporate financial incentives to specific performance objectives? A. While achieving their goals, executives may not communicate deep enough into the organization. B. If the objectives are not long-term, executives may follow risky strategies, hoping to increase short-term earnings. C. Executives always prioritize financial goal achievement over sustainability goals. D. Since executives always focus on long-term strategies, there are typically few downsides.

Overall explanation Compensation packages at many companies have increasingly rewarded executives for short-term performance improvements—most noticeably achieving quarterly and annual earnings targets and boosting stock prices by specified percentages. This can motivate the executives to take unwise business risks to boost short-term earnings. The focus on short-term performance has proved damaging to long-term company performance and shareholder interests.

70. Which of the following warehouse activities involves bringing goods together and checking for omissions or errors in the order? A. Picking goods B. Dispatching the shipment C. Dispatching goods to storage D. Marshalling the shipment

Overall explanation When marshaling a shipment, goods making up a single order are brought together and checked for omissions or errors, and order records are updated accordingly. Picking is the process of selecting items from storage and bringing them to a marshaling area. Dispatching goods to storage is the process of sorting goods upon receipt and placing them in a storage area. Dispatching the shipment is the process of order packing, preparing shipping documents, and loading items on the correct transport vehicles.

71. Distribution requirements planning (DRP) provides transportation planners with: A. locations for scheduling deliveries. B. backhauling information. C. load optimization information. D. current and future shipping requirements.

Overall explanation DRP can convert the schedule of planned orders into transportation data elements such as weight, volume, and number of pallets.

72. Which factor favors air transport? A. Dense goods B. Highly perishable goods C. Inexpensive goods D. Normal operating conditions

Overall explanation Highly perishable goods with a short shelf life are often shipped by air, for example, fresh seafood. Air is also best for light, non-bulky, valuable goods and for emergency shipments.

73. If supply and demand are not in balance at the aggregate supply level, what should be the priority to resolve the issue? A. Adjusting supply even if it is difficult B. Adjusting how supply and demand are measured so imbalances are less frequent C. Adjusting supply and demand at the strategic level so it is not needed at the aggregate supply level D. Adjusting demand if it is less difficult than adjusting supply

Overall explanation Supply and demand balancing both occur regularly at a well-functioning organization, but the more difficult and costly efforts that may be required are typically attempted on the supply side before resorting to greater efforts on the demand side. This is because supply adjustments require internal changes while demand adjustments involve influencing external customers to accept changes.

74. A company monitors production by knowing what is in process and what the queue time is. Average run time is one hour, and queue times are kept fairly uniform by the planning and scheduling process. Jobs are produced in first in, first out sequence. Which of the following information is easiest for monitoring purposes in this scenario? A. Number of jobs in queue, running and waiting B. Number of days a job is in queue C. Sequence of jobs based on input/output control D. Priority of jobs based on required date

Overall explanation Knowing the number of days a job is in queue is essentially the monitoring required by the company.

75. A press is used to stamp left- and right-hand door panels simultaneously from a roll of sheet metal. What is the relationship between the two parts? A. Co-stamped B. Co-product C. Co-produced D. By-product

Overall explanation According to the APICS Dictionary, co-products are those that are "usually manufactured together or sequentially because of product or process similarities."

76. Which of the following is an example of variable transportation costs? A. Billing B. Line haul C. Pickup and delivery D. Terminal handling

Overall explanation Line haul costs are variable, depending on the distance traveled.

77. The result of single exponential smoothing is most like which of the following? A. Data decomposition B. Moving average C. Seasonal index technique D. Linear programming

Overall explanation Exponential smoothing is a type of weighted moving average forecasting. The heaviest weight is assigned to the most recent data. The technique makes use of a smoothing constant to apply to the difference between the most recent forecast and the critical sales data, thus avoiding the necessity of carrying historical sales data.

78. A new work center crew is consistently getting work done faster than standards predict. In due time, what should be done for this work center? A. Use the crew's output rate increase to tighten the standards for all other work centers. B. Conduct a new engineering study using time-study techniques. C. Nothing needs to be done other than to praise the crew. D. Adjust the standard hours to reflect the crew's latest output results.

Overall explanation Standard hours per unit are determined using engineering studies based on time-study techniques, so this would be the best way to adjust the standard among the options shown.

79. Improvement programs at a manufacturing company have increased efficiency 10% and utilization 5%. What is the effect on the theoretical capacity? A. It has decreased. B. It varies with work in process. C. It has increased. D. It remains constant.

Overall explanation Theoretical capacity is defined as "the maximum output capability, allowing no adjustments for preventive maintenance, unplanned downtime, shutdown, and so forth." As such, efficiency and utilization have no impact on the capacity calculation.

80. Before workers can begin operations, they are issued a shop order packet. What does this contain? A. Inventory location B. Manufacturing orders C. Planned orders D. Manufacturing calendar

Overall explanation Manufacturing orders have already gone through the validation process in capacity requirements planning. The shop order packet is made up of all the manufacturing orders that are waiting to start operations or are works in progress.

81. Which channel of distribution is concerned with the transfer of ownership, specifically negotiation, selling, and contracting? A. Logistics B. Transaction C. Transportation D. Distribution

Overall explanation The transaction channel is concerned with the transfer of ownership including the activities of negotiation, selling, and contracting.

82. What is the main difference between the logistics resource requirements plan (LRRP) and the logistics capacity plan? A. The logistics capacity plan uses a monthly planning horizon. B. The logistics capacity plan is concerned with labor force changes. C. The logistics capacity plan is at the item level. D. The logistics capacity plan addresses the number and size of distribution centers.

Overall explanation Logistics capacity plans are more detailed and address a shorter planning horizon than the LRRP. The logistics capacity plan is at the item level while the LRRP is at the product-family level.

83. Which type of capacity is the best indicator that the material plan is infeasible if it equals the required capacity at a particular work center? A. Rated B. Demonstrated C. Theoretical D. Bottleneck

Overall explanation Theoretical capacity is an ideal and is usually not attainable. If it is equal to the required capacity, the work center is overloaded.

84. The average of the absolute values of the deviations from some expected value best defines which of the following terms? A. Standard deviation B. Mean absolute deviation C. Mean average deviation D. Forecast error

Overall explanation The MAD averages the absolute values of deviations from expected values. Standard deviation is incorrect because it is a statistical measure of difference between a measure and the mean or average of all deviations. Forecast error is incorrect because it is the difference between the actual demand and the forecast demand. Mean average deviation is incorrect, because it is an inaccurate use of the acronym MAD.

85. Distribution requirements planning (DRP) is most beneficial in environments that possess which of the following product and distribution network characteristics? A. Make-to-stock product, multilevel distribution network B. Make-to-order product, single-level distribution network C. Make-to-order product, multilevel distribution network D. Make-to-stock product, single-level distribution network

Overall explanation DRP is most beneficial in a make-to-stock environment and where the distribution network is more complex.

86. Which of the following is information outside of the closed-loop process between production planning and capacity planning for determining work center loading? A. Available work center capacity B. Released order quantities C. Available and allocated inventory D. Planned order required dates

Overall explanation An assumption that inventory is available is already made.

87. What technique best determines production and inventory quantities for goods and services with independent demand? A. Material requirements planning B. Capacity requirements planning C. Safety stock D. Forecast

Overall explanation Since demand for independent demand items is unknown, it will need to be forecasted.

88. What is the minimum that should be done prior to there being an exception in production activity control (PAC)? A. Identify responsible parties and communication paths. B. Expedite faster-to-complete orders to get them out of the way. C. Nothing can be done, as this is the nature of an exception. D. De-expedite less-important orders to create available capacity.

Overall explanation While expediting and de-expediting need to wait until after an exception occurs, the organization can do some contingency planning. The minimum amount of contingency planning is to identify responsible parties and communication paths.

89. Which of the following forecasting techniques uses internal historical data? A. Intrinsic B. Extrinsic C. Economic indicators D. Qualitative

Overall explanation Intrinsic data is accumulated from historical events occurring within a company. The other forecasting methods use non- historical or external data outside of the company's control.

90. A large multinational retailer allows suppliers to see point-of-sales data using proprietary software. What does this facilitate? A. Complex shipment route planning B. Wide variety of low-cost supplier-based IT systems being capable of capturing and using this point-of-sales data C. Accurate forecasting for the suppliers' products D. Use of experienced consultants at each of the suppliers to help manage all the detail

Overall explanation A secret to picking the right strategic framework is assessing how your resources relate to each other. For example, a U.S.- based market-dominating big-box retailer's low-cost strategy in the U.S. depends heavily on its physical resources (often rural locations) and sophisticated IT, which helps them maximize selling space and quickly replenish inventories. They provide point-of-sale (POS) data to all of their suppliers at a very high frequency, thus allowing suppliers to have very accurate product demand history and facilitating the suppliers' ability to "replenish today what was sold yesterday."

91. What term is used for a distribution network that deals with change of ownership of goods and services including the activities of negotiation, selling, and contracting? A. Sales channel B. Transaction channel C. Marketing channel D. Distribution channel

Overall explanation A transaction channel is a distribution network that deals with change of ownership of goods and services including the activities of negotiation, selling, and contracting.

92. Product A is made from components B and C. Component B is made from parts D and E. Which items should be forecasted? A. Only B, C, D, and E B. Only D and E C. Only A D. Only A, B, and C

Overall explanation Product A should be forecasted because it is an independent demand item. As components of A or its subassemblies, the other components are dependent demand items and are planned by material requirements planning.

93. A finance manager states that the objective of physical distribution is to supply products at the lowest total cost and that the cheapest mode and carrier should be selected to reduce the budget for this. Which is the best response? A. Modes and carriers that cannot provide the highest level of customer service should never be used. B. Modes and carriers that cannot provide the targeted level of customer service cannot be used even if they are cheaper. C. The primary objective of physical distribution is to provide goods where they are needed, so the cheapest mode and carrier should be the policy going forward. D. The primary objective of physical distribution is actually to exceed the competition's level of service, and sometimes this can require budget increases.

Overall explanation The objective of distribution management is to provide the required level of customer service at the least total cost of ownership.

94. In a distribution environment, which of the following functions is generally considered a joint responsibility of the manufacturer and the distribution center? A. Distribution center site selection analysis B. Warehousing finished goods prior to shipment C. Customer order servicing and administration D. Determination of finished product packaging

Overall explanation Customer order management is handled by both the manufacturer and the distribution center, especially where demand variability causes unexpected stockouts, expediting is required, etc. Site analysis would be an issue only for the distribution center

95. A retail company has decided to focus on internet sales and open a few new stores rather than use an aggressive new store approach. All demand will be adequately served by the existing distribution centers. What is an important consideration in the development of the new strategy? A. Finished goods inventory turns B. Existing store growth rate C. Geographic location of new stores D. Capacity of current distribution centers

Overall explanation Inventory turns affect finances, distribution center capacity, and operations.

96. To "roll up" a forecast refers to the process of: A. combining salespersons' forecasts into a total forecast for an item. B. generating detailed forecasts that aggregate to the total forecast. C. combining the master production schedule quantities to meet the forecast demand. D. making sure that the resource plan validates the sales and operations plan.

Overall explanation In pyramid forecasting, detailed forecasts are aggregated to higher levels until a total number is generated.

97. Establishing standards and performance measurements for warehousing is important in order to: A. base compensation on achievement of standards. B. benchmark daily activities and guide continuous improvement. C. eliminate disagreements on what utilization and efficiency should be. D. report performance to the central supply warehouse management.

Overall explanation The objective of setting standards and measuring performance is to provide a baseline for performance and determine areas of improvement.

98. Which of the following actions best reduces work-in-process (WIP) inventory on the shop floor? A. Decide how to exploit the constraint to the system. B. Elevate the constraint to the system. C. Subordinate all else to the constraint to the system. D. Identify the constraint to the system.

Overall explanation Once a process constraint has been identified, WIP is reduced by making all loads equal to the allowable capacity found at the constrained process. Any load released to the manufacturing floor that is greater than the constrained process capacity will simply end up as excess load.

99. Utilization of assets in distribution can be measured by the ratio of: A. rack space used to rack space available. B. vehicle space used to vehicle space available. C. floor space used to floor space available. D. cubic volume used to cubic volume available.

Overall explanation The utilization of assets in distribution can be measured by the ratio of space used to space available.

100. Which of the following approaches will facilitate the smooth integration of a new product to production? A. Standardization of components B. Prototyping C. Quality function deployment D. Statistical process control

Overall explanation Standardization of components and processes shortens the prototyping time and learning curve, getting products to market faster.

101. Which of the following roles of a finished goods warehouse deals with the grouping of different items into an order? A. Service B. Transportation consolidation C. Product mixing D. Kitting

Overall explanation Product mixing deals with the grouping of different items into an order and the economies that warehouses can provide in doing this. Without a distribution center, customers would have to order and pay LTL transport from each source. Using a distribution center, orders can be placed and delivered from a central location.

102. Which of the following qualitative methods of forecasting should a company consider for a product that is replacing another? A. Panel consensus B. Historical analogy C. Expert opinion D. Focus Groups

Overall explanation Use the history from the older product Expert opinion, focus groups, and panel consensus are incorrect because none of these methods provides any greater knowledge of the future of a new product than any other method.

103. Which routing data is used by both infinite capacity requirements planning and finite scheduling for planning and scheduling? A. Sequencing rules B. External setup hours C. Direct labor hours D. Theoretical capacity

Overall explanation Both use internal setup and run time, which include direct labor hours.

104. Workloads between work centers might be redistributed by: A. an alternate routing. B. a substitution. C. subcontracting. D. a temporary routing.

Overall explanation An alternate routing is usually less preferred than the primary routing but results in an identical item.

105. For the past six months, a manufacturer has experienced monthly forecast deviations of 15, -6,12, 8, -18, and -4 units. What is the mean absolute deviation for these months? A. 10.5 B. 9.33 C. 1.16 D. 11.67

Overall explanation To calculate the mean absolute deviation, first make each deviation positive and sum these absolute values: 15 + 6 + 12 + 8 + 18 + 4 = 63 units. Next, divide by the number of periods (6): 63/6 = 10.5.

106. What is capacity requirements planning (CRP) primarily used for? A. Validating the master production schedule B. Prioritizing manufacturing orders C. Calculating available capacity D. Balancing work center capacity and load

Overall explanation The purpose of CRP is to show any imbalances between capacity and load by work center. Available capacity is calculated outside of CRP but is used as an input.

107. Which of the following inventory classifications most contributes to cycle time? A. Excess B. Obsolete C. Active D. Inactive

Overall explanation Cycle time is the time from receipt to the time of shipping.

108. The value that occurs most frequently in a group of values is known as the: A. mean. B. median. C. muda. D. mode.

Overall explanation The mode is the value that occurs most frequently in a group of values.

109. Which of the following is typically a significant benefit of using bar-coded labels to identify parts and storage locations? A. Stockroom employee morale is improved. B. Product identification errors are reduced. C. The data entered is more complete. D. The cost of labeling is transferred to the supplier.

Overall explanation Bar codes are a series of alternating bars and spaces printed on parts, containers, and labels, representing encoded information that can be read by electronic readers. Bar coding facilitates timely and accurate input of data to a computer system, reducing errors.

110. An electronic manufacturer is launching a new product line that is unlike anything else in the marketplace. Which of the following forecasting methods would the company most likely use? A. Seasonality B. Qualitative C. Focus D. Trend

Overall explanation Qualitative forecasting is based on intuitive or judgmental evaluation. It is used generally when data are scarce, not available, or no longer relevant.

111. What is a challenge associated with the process of implementing collaborative planning, forecasting, and replenishment (CPFR)? A. Decreased sales revenue B. Decreased levels of customer service C. Supply chain fragmentation across organizational boundaries D. Discontinuation of business practices that may be seen as successful

Overall explanation One of the challenges is the discontinuation of businesses practices that may be seen as successful. CPFR typically results in increased sales revenue, supply chain integration across organizational boundaries, and improved customer service levels.

112. Which of the following terms applies to a suggested order quantity, release date, and due date created by the planning system's logic when it encounters net requirements in processing material requirements planning (MRP)? A. Planned order release B. Planned order receipt C. Planned order D. Reschedule recommendation

Overall explanation A planned order includes a suggested order quantity, release date, and due date created by the planning system's logic when it encounters net requirements in processing MRP.

113. Which is the most practical way to reduce the bullwhip effect? A. Apply disintermediation. B. Improve forecasting. C. Use forward integration. D. Use point-of-sale information.

Overall explanation Improving the forecast is not as effective as having real-time information. Forward integration and disintermediation will provide better visibility to downstream demand but are not everyday solutions to the bullwhip effect.

114. Which efficiency measurement is applied to distribution for calculating capacity? A. Number of order lines picked vs. standard for number of order lines to be picked B. Number of trucks that have been loaded C. Number of pallets received vs. number of pallets shipped D. Number of trucks that have been unloaded

Overall explanation In distribution, the standard measure of order lines picked would be compared to the actual order lines picked.

115. Which of the following is a key principle of collaborative planning, forecasting, and replenishment (CPFR)? A. Integrating enterprise resources planning systems B. Joint meetings between customers and suppliers C. Exchange of information between trading partners D. Using the internet to exchange information

Overall explanation CPFR is a process where supply chain trading partners jointly plan key supply chain activities, from production and delivery of raw materials to production and delivery of final products to end customers.

116. The process of selecting and sequencing available Jobs to be run at individual workstations and the assignment of those jobs to workers is called A. dispatching. B. order release. C. input/output control. D. priority sequencing.

Overall explanation Dispatching refers to the selecting and sequencing of available Jobs to be run at individual workstations and the assignment of those Jobs to workers.

117. A work center actually produces 320, 325, 330, and 322 standard hours per week for 4 weeks. What is the demonstrated capacity? A. 332 standard hours B. 324 standard hours C. 320 standard hours D. 330 standard hours

Overall explanation Demonstrated Capacity = Sum of Standard Hours per Time Bucket/Number of Time Buckets (320 hours + 325 hours + 330 hours + 322 hours)/4 = 1,297 hours/4 = 324.25 standard hours, rounded to 324 standard hours

118. What factors are evaluated by detailed capacity planning? A. Budgeted and theoretical capacity B. Load and capacity C. Setup times and queue D. Efficiency and utilization

Overall explanation The purpose of detailed capacity planning is to use data regarding orders, efficiency, and utilization to create a comparison of load versus capacity.

119. Which of the following would have the most impact on reducing manufacturing lead time? A. Reducing setup times B. Increasing work center capacity C. Implementing input/output control D. Increasing component availability

Overall explanation Reducing the time required for setup reduces the total lead time.

120. Why is it important for an organization to consider setting waste hierarchy policies for its suppliers? A. It is worth the added expense. B. Liability risk C. Regulatory compliance risk D. Reputation risk

Overall explanation Setting policies for suppliers related to the waste hierarchy is important because the organization can be held responsible for its supply chain partners' activities in terms of public opinion. Enforcement of efficiency-related policies can also help drive unnecessary costs out of the supply chain. Liability and regulatory compliance are risks for the supplier, not the buyer.

121. A synchronous pull system controls the velocity of flow through processes by using takt time. What does this result in? A. Volatile changes to lead time B. Overall increase of lead time C. Overall reduction of lead time D. No change to lead time

Overall explanation A synchronous pull system controls the velocity of flow through processes by using takt time, which results in an overall reduction of lead time.

122. Forecasts are more accurate for: A. new products. B. the long term. C. individual products. D. families or groups.

Overall explanation Forecasts are always more accurate for groups of products versus individual items. Forecasts tend to be more accurate when historical data is available (so forecasting for new products is difficult), and they are more accurate in the short term than in the long term.

123. Which of the following costs will be influenced by the number of times a shipment must be loaded, handled, and unloaded? A. Pickup and handling B. Billing and collecting C. Terminal handling D. Line haul

Overall explanation Terminal handling costs are charges based on the number of times a package is loaded or unloaded.

124. Which of the following is a benefit of distribution requirements planning? A. Decreased planning time fences B. Increased customer service levels C. Increased transportation costs D. Decreased safety stock

Overall explanation Distribution requirements planning allows for the stocking of inventory at multiple locations for servicing customers.

125. In a linear sequence of operations A, B, C, D, and E, each operation receives one unit from raw materials or the prior operation and outputs one unit. Operation A produces 11 units a day, operation B produces 6 units a day, operation C produces 10 units per day, operation D produces 9 units a day and operation E, final assembly, produces 8 units a day. Operation E receives inputs from other parts of the process that do not pass through the constraint, and it sends its output to shipping. Demand is for 8 units a day. Where else might inventory be stored in this production system? A. Before and after operation E only. B. At the raw materials before operation A and after operation E only. C. At the raw materials before operation A and before and after operation E. D. At the raw materials before operation A and before operation E only.

Overall explanation In addition to the constraint buffer before operation B, there will also be an assembly buffer before the final assembly point E because there are materials made in processes that do not pass through the constraint but are assembled here. There will also be a shipping buffer after operation E and prior to shipping. Finally, there will be stores of raw materials before operation A to ensure that this gateway operation is not starved for materials.

126. Which is a function of physical distribution? A. Protective packaging B. Purchasing C. Production control D. Physical supply

Overall explanation The activities of physical distribution include transportation, distribution inventory, warehousing, material handling, and protective packaging.

127. The removal of outliers from demand data in order to provide a reasonable historical base from which to forecast is called: A. smoothing. B. demand filtering. C. time series decomposition. D. regression.

Overall explanation Demand filtering is a method of controlling variations by providing a check that limits the amount of variation from one period to the next. A demand filter typically is a ratio of the new demand to the average of the old demand.

128. Which technique facilitates scheduling equipment in economic run lengths and the use of low-cost production sequences? A. Mixed-flow scheduling B. Material-dominated scheduling C. Processor-dominated scheduling D. Mixed-model scheduling

Overall explanation Processor-dominated scheduling is a technique that schedules equipment (processor) before materials.

129. When updating the sales forecasting reports, what information must be used? A. Changes to the manufacturing environment type B. Actual sales data from the period that most recently ended C. Updated gross domestic product (GDP) data for the country and region D. Updated data on manufacturing defects per million opportunities

Overall explanation The sales forecasting reports must be updated with data from the period that most recently ended. This data may include actual sales, production, inventory levels, and other information. The manufacturing environment type and manufacturing defects would not impact the sales plan unless they altered projected inventory levels substantially, and GDP data would be too broad to be applicable to sales forecasts.

130. To detect when a work center's output might vary from the plan, the planner should compare: A. planned output to planned input. B. actual input to planned input. C. actual input to actual output. D. actual output to planned output.

Overall explanation Actual input is compared to planned input to identify when a work center's output might vary from the plan.

131. Which result is indicated in the information provided below regarding customer service levels? December January February March Sales plan 40 50 50 60 Actual sales 38 51 47 64 Difference -2 1 -3 Cumulative difference -2 -1 -4 Production plan 50 50 60 60 Actual production 40 48 60 60 Difference -10 -2 0 Cumulative difference -10 -12 -12 Backlog 40 30 30 20 20 Actual backlog 38 41 28 Difference 8 11 8 A. Production is back on schedule. B. The backlog plan needs to be increased by eight in March. C. New customer order delivery lead times have increased. D. Extra backlog improves the ability to ship complete orders on time.

Overall explanation Actual backlog is greater than plan, which will extend lead times.

132. What is the best approach for managing planning vs. execution in capacity management? A. Backlog monitoring B. Input/output control C. Critical ratio D. Capacity requirements planning

Overall explanation Input/output control is a technique for capacity control where planned and actual inputs and planned and actual outputs of a work center are monitored.

133. Which of the following capacity management techniques calculates the capacity required at a work center in a time period without considering the capacity available? A. Input/output control B. Forward scheduling C. Infinite loading D. Finite loading

Overall explanation Infinite loading is the calculation of the capacity required at work centers in the time periods required regardless of the capacity available to perform this work.

134. The ratio of hours worked to the hours available is: A. productivity. B. efficiency. C. standard hours. D. utilization.

Overall explanation Utilization compares actual time used to available time. Traditionally, utilization is the ratio of direct time charged (run time plus setup time) to the clock time available.

135. A company has few products but highly variable order quantities, and it uses forward scheduling. Why is it beneficial to use standard run hours as a basis for calculating completion dates? A. It provides start times knowing queue and setup times. B. It automatically balances the load across operations. C. It helps to prioritize orders in key work centers. D. It provides a more realistic completion date than using fixed lead times.

Overall explanation Run time can be used to load operations based on standard hours per part times order quantity.

136. Distribution planning plans logistics capacity at the product family and end-item level at which of the following planning levels? A. S&OP and master scheduling B. Master scheduling and MRP C. Business planning and MRP D. Strategic planning and MRP

Overall explanation Material requirements planning (MRP), strategic planning, business planning, and master scheduling are all incorrect because strategic planning and MRP are too early and too late, respectively, to plan distribution logistics at the product family or end-item level. Distribution logistics planning at the product family and end-item levels occurs during S&OP and master scheduling.

137. Unlike the forward supply chain, a reverse supply chain typically has A. fewer echelons. B. little impact on costs. C. simple planning requirements. D. more warehouses.

Overall explanation The products in the reverse supply chain won't necessarily move through the same echelons as products in the forward supply chain because fewer, and different, warehouses may be required.

138. In a job shop with intermittent production, which of the following elements of lead time usually consumes the most time? A. Queue B. Move C. Run D. Setup

Overall explanation Queue time in job shops is frequently estimated at 90 percent or more of total job time. There can be exceptions

139. What form of transportation is most useful for moving low-value, bulky cargo over long distances? A. Pipelines B. Water C. Air D. Truck

Overall explanation The main advantage of water transport is cost. It is most useful for moving low-value bulky cargo over relatively long distances.

140. The function of recognizing all demands for goods and services to support the marketplace is called: A. demand chain management. B. demand forecasting. C. demand planning. D. demand management.

Overall explanation Demand management is the function of recognizing all demands for goods and services to support the marketplace.

141. Corrective actions are defined as: A. the implementation of solutions to reduce or eliminate problems. B. the discipline of employees for nonconformance. C. adjustments to inventory balances based on cycle counts. D. changes to the general ledger to fix incorrect entries.

Overall explanation Corrective action is the implementation of solutions resulting in the reduction or elimination of an identified problem.

142. A company purchases almost 30% of its raw material directly from farmers, cutting out wholesalers and distributors. What does this allow the company to do? A. See that the true suppliers of raw material realize a higher price for their efforts. B. Reduce the costs associated with an entire echelon, thus driving its profit margins up. C. Promote the farmers to tier one suppliers, facilitating tighter controls. D. Increase its hold on the farmers by eliminating an echelon.

Overall explanation A popular coffee roasting company purchases about 29% of its coffee directly from farmers, cutting out the intermediaries. This has allowed the company to see that farmers realize a higher price for their efforts.

143. Analysis shows that the top 22 percent of an organization's customers provide over 75 percent of the organization's revenues. What should be the top priority? A. Focusing marketing on top customers to cross-sell and up-sell to them B. Continually trying to acquire new customers C. Shedding approximately the bottom 20 percent of customers D. Providing excellent service to top customers to increase their loyalty

Overall explanation Customer value usually starts out as negative and then grows over time as customers make repeat purchases. Customer lifetime value analysis can help show that maintaining customer loyalty is far cheaper than continually trying to acquire new customers. Therefore, rather than just using the knowledge of which customers are more valuable to market more things to these segments, it is important to determine how to develop greater loyalty from these segments.

144. Which of the following types of demand benefits from the aggregation process? A. Distribution B. Forecasted C. Service parts D. Customer

145. Which of the following identifies all of the components of a physical distribution system? A. Material handling, transportation, warehouses, protective packaging, order processing and communication, and services B. Material handling, transportation, warehouses, distribution inventory, protective packaging, and order processing and communication C. Material handling, transportation, warehouses, distribution inventory, order processing and communication, and reverse logistics D. Material handling, transportation, warehouses, distribution inventory, protective packaging, and reverse logistics Overall explanation Reverse logistics and services are not considered to be parts of a physical distribution system.

146. Using backward scheduling, when should the order arrive at work center A? Backward scheduling work center A Move time between operations = 1 day Wait time after each operation = 1 day Due date is day 100 Operation Work Center Operations (days) Queue time (days) 10 A 2 5 20 B 4 3 30 C 2 1 A. 79 B. 81 C. 8 D. 77 Overall explanation * Due date = 100 * Move date after operation 30 = 99 * Wait date after operation 30 = 98 * Run time at operation 30 = 96 * Queue time at operation 30 = 95 * Move date after operation 20 = 94 * Wait date after operation 20 = 93 * Run time at operation 20 = 89 * Queue time at operation 20 = 86 * Move date after operation 10 = 85 * Wait date after operation 10 = 84 * Run time at operation 10 = 82 * Queue time at operation 10 = 77

147. Under which of the following conditions is it most necessary to perform bottom-up replanning of an overloaded key work center? A. When the overload exceeds standard hours B. When the overload is due to utilization C. When the overload exceeds rated capacity D. When the overload is due to efficiency Overall explanation If load exceeds rated capacity, the work center cannot produce the desired load.

148. What is one method for improving transportation responsiveness within the supply chain? A. Increase lead times so shipments will not be late. B. Create transportation partnerships with carriers. C. Maintain a private fleet for all deliveries. D. Minimize transportation costs by using common carriers. Overall explanation Creating transportation partnerships increases operational flexibility and enables long-term contracts and closer control.

149. Which of the following approaches to forecasting is based on intuitive or judgmental evaluation? A. Seasonality B. Moving average C. Qualitative D. Trend Overall explanation Qualitative forecasting is based on intuitive or judgmental evaluation. It is generally used when data are scarce, not available, or no longer relevant.

150. Which of the following may be used as a measure of flexibility? A. Machine efficiency B. Skills per employee C. Reduction of burden rate D. Output per employee Overall explanation The skills possessed by employees can be used to measure their flexibility to work on other tasks.

151. A store orders and receives weekly shipments, made up of 20 line items, from a distributor. Which customer service measure is of most value to the store? A. Correct items shipped B. On-time shipment C. Transportation costs D. Line items shipped complete Overall explanation Because it is getting only one shipment each week, the store is concerned that all the items are included.

152. What action by a company would indicate that it is conducting a green reverse logistics operation? A. Purchasing carbon offsets to compensate for emissions produced by its manufacturing process B. Accepting dead batteries and ensuring that they are properly disposed of at manufacturing facilities C. Using vehicles and machinery with electric motors instead of combustion engines D. Purchasing all electricity from green sources, such as solar or wind energy Overall explanation Accepting dead batteries and ensuring that they are properly disposed of at manufacturing facilities is the best example of a green reverse logistics operation. The other options include green initiatives but don't feature reverse logistics.

153. To deal with excess inventory in one period and shortages in another period in a multi-node supply chain, a company implements point-of-sale reporting. What has this solution helped to eliminate? A. Stress of stockouts B. Tendency to add bias to forecasts C. Excessive costs of enterprise resources planning system changes D. Bullwhip effect Overall explanation The bullwhip effect is an extreme change in the supply upstream generated by a small change in demand downstream. Inventory can quickly move from being backordered to being in excess. This is due to the serial nature of communicating orders up the chain with the inherent transportation delays of moving product down the chain.

154. Which of the following benefits is the most likely reason for reducing internal setup time when implementing continuous improvement? A. Shorter cycle times can be quoted to the end customer. B. The number of kanbans in the process can be reduced. C. The lot quantity per kanban can be reduced. D. There are fewer activities where a mistake can be made Overall explanation The lot quantity can be reduced due to being able to perform more frequent setups.

155. What is a company that uses the theory of constraints trying to achieve? A. Resource leveling B. Schedules that adapt to restrictions C. Mixed-flow scheduling D. Increased capacity utilization Overall explanation The theory of constraints manages the constraints, or restrictions, that exist in the process.

156. What technique aims to increase employee engagement by varying a worker’s tasks and giving the worker more control over those tasks? A. Job rotation B. Job enlargement C. Job commitment D. Job enrichment Overall explanation Job enlargement provides challenge by assigning additional tasks. Job rotation periodically changes a worker's assignment to expand the worker's perspective of the work. Job commitment is the expected outcome of these employee management techniques.

157. In which transportation methodology do suppliers pack products so they can be easily sorted at intermediate warehouses or for outgoing shipments? A. Dock-to-stock B. Cross-shipping C. Cross-docking D. Package-to-order Overall explanation Cross-docking is the concept of packing products on incoming shipments so they can be easily sorted at intermediate warehouses or for outgoing shipments.

158. Assuming demand is stable and continuous, approximately what percentage of storage space will be occupied by goods in a distribution center at any given time if it uses a fixed-location system? A. 90 percent B. 80 percent C. 100 percent D. 50 percent Overall explanation If demand for items is stable and continuous, then stock level will draw down steadily and the average level will only be 50 percent. Because its space is reserved, other items cannot be stored there.

159. Using the information provided below, which warehouses will be placing orders if the forecast is consumed by orders at the warehouses? Warehouse X-Warehouse Y-Warehouse Z-Central Warehouse Warehouse X Warehouse Y Warehouse Z Central Warehouse On hand 110 90 160 525 Forecast per week 75 50 100 225 Order point 50 35 75 225 Order quantity 150 100 200 500 Lead times in days 5 4 6 15 A. X, Y, Z B. X, Y, Z, Central C. X, Z, Central D. X, Z Overall explanation X and Z will have reached their reorder point, so orders will be placed on the central warehouse. This will cause the central warehouse to reach its reorder point.

160. Considering the service desired and the relative cost of the items, which would most likely be shipped by road for a fairly long line haul portion of a trip? A. Regular shipments of iron ore direct to a foundry. B. Regular shipment of cut flowers direct to a florist shop. C. Regular shipments of grain direct to a mill. D. Emergency maintenance parts direct to an auto plant. Overall explanation Regularly shipments of cut flowers direct to a florist shop would be appropriate to ship by truck because road transportation offers door-to-door service and fast service. Regular shipments of iron or to a foundry and grain to a mill would be better shipped by rail due to their high weight and bulk. Emergency maintenance parts would be better shipped by air for a faster response, depending on distance.

161. Which disposition process decision will promote policy, cost, sustainability, quality, and supply goals? A. Adding reverse logistics to the existing forward supply chain without modifying either process B. Empowering the echelon closest to the customer to do disposition C. Centralizing returned products in a single location D. Providing refunds to customers and having them dispose of the products themselves Overall explanation When handling returns, the organization must first assess and categorize returned items based on their condition and status. To do so, returned products are first centralized in a single location. This helps meet disposition goals because the items can be consolidated. For example, shipments for recycling could be consolidated into a full truckload to save money.

162. First come, first served and shortest process time are examples of which of the following techniques? A. Dispatching rules B. Bottleneck management C. Input/output rules D. Operation splitting Overall explanation Both are methods of sequencing work within a work center.

163. Which of the following is the best solution for coordinating the flow of goods through a network consisting of warehouses, distribution centers, and a production facility? A. Transportation management systems B. Distribution requirements planning C. Advanced planning and scheduling D. Material requirements planning Overall explanation Distribution requirements planning is the function of determining the need to replenish inventory at branch warehouses.

164. Which of the following flows is most likely used in a flow environment that is supply-constrained by the availability of a seasonal vegetable? A. Backward B. Forward C. Finite D. Mixed Overall explanation Forward flow is used when there is a defined starting point or when work can only begin upon receipt of supply.

165. A firm that produces a wide variety of goods to order for commercial and industrial customers is implementing customer relationship management (CRM). The most likely benefit the firm will realize from effective implementation is that it will be able to: A. capture a great deal of information about competitors. B. increase the markets it serves. C. make more realistic delivery commitments. D. recognize shifts in customer preferences. Overall explanation CRM is a marketing philosophy based on putting the customer first. Information is collected and analyzed to understand and support existing and potential customer needs. Collection of such information can provide early warnings of shifts in design and mix preferences.

166. A make-to-stock company produces a standard product sold through its own warehouses. Which of the following capacity planning techniques would most likely be used to validate the material plan? A. Load leveling B. Infinite C. Finite D. Load balancing Overall explanation Infinite capacity planning is the most common technique. Finite capacity would not be required where capacity is very predictable.

167. Which observation about forecasting is most accurate? A. Product family forecasts are built up from individual product forecasts. B. Bias is normal and expected in a forecast. C. Forecasted historical data equals the actual units shipped in the period. D. One should forecast only independent demand items. Overall explanation Only independent demand items are forecasted, not dependent demand items. In addition, a normal property of a good forecast is that it is not biased

168. Reducing the number of times a package is handled in distribution can be achieved through: A. aggregation. B. unitization. C. reverse logistics. D. palletization. Overall explanation Unitization is the consolidation of several units into larger units for fewer handlings.

169. Use the information on the planned order releases from distribution centers (DCs) A and B in the figure below to complete the abbreviated central supply planning distribution requirements planning grid. What is Central Supply's projected available balance for week 3? Week 0 1 2 3 DC A planned order release 100 100 100 DC B planned order release 200 100 Central Supply Lead time 2 weeks Order quantity: 500 units Week 0 1 2 3 Gross requirements Projected available 500 Planned order receipts Planned order releases A. 400 units B. -100 units C. 500 units D. 100 units Overall explanation Week 0 1 2 3 DC A planned order release 100 100 100 DC B planned order release 200 100 Central Supply Lead time 2 weeks Order quantity: 500 units Week 0 1 2 3 Gross requirements 100 300 200 Projected available 500 400 100 400 Planned order receipts 500 Planned order releases 500 Since the DC information shows planned order releases already, the offsetting from the planned order receipts is not shown for these DCs and the orders can be directly summed as the gross requirements for each week for central supply. After that, calculate the projected available per week. Projected Available = Prior Period Projected Available + Planned Order Receipts - Gross Requirements. Week 1: 500 units + 0 units - 100 units = 400 units. Week 2: 400 units + 0 units - 300 units = 100 units. Week 3:100 units + 0 units - 200 units = -100 units. Whenever the projected available would go negative, schedule a planned order receipt in that week for the order quantity amount. Therefore add 500 units in the planned order receipt for week 3 and using offsetting of 2 weeks, also add a planned order release for 500 units in week 1. Finally recalculate the week 3 projected available: 100 units + 500 units - 200 units = 400 units.

170. The day 56 log for a work center shows planned input of 14 hours, actual input of 16 hours, and a cumulative input variance of -2 hours. For the same day the planned output was 15 hours, the actual output was 14 hours, and the cumulative output variance was -5 hours. The day 55 log showed the planned backlog was 7 hours and the actual backlog was 6 hours. What is the planned backlog for day 56? A. -7 hours B. 8 hours C. 6 hours D. 0 hours Overall explanation Planned Backlog = Previous Planned Backlog + Planned Input - Planned Output = 7 hours + 14 hours -15 hours = 6 hours.

171. The following information about jobs in a work center is available. It is now day 150. Using the priority rule of critical ratio, what is the desired job sequence? Job Sequence Time (hours) Date Due workday Remaining A 1 5 156 4 B 3 3 153 3 C 2 2 152 1 D 4 4 152 3 E 5 1 155 2 A. E, C, B, D, A B. D, B, A, C, E C. C, E, B, D, A D. A, B, C, D, E Overall explanation The critical ratio is the time remaining divided by the work remaining; the time remaining is the date due minus the current day. * Job A time remaining = 156 - 150 = 6 days; critical ratio = 6/4 = 1.5 * Job B time remaining = 153 - 150 = 3 days; critical ratio = 3/3 = 1 * Job C time remaining = 152 - 150 = 2 days; critical ratio = 2/1=2 * Job D time remaining = 152 - 150 = 2 days; critical ratio = 2/3 = 0.7 (rounded) * Job E time remaining = 155 - 150 = 5 days; critical ratio = 5/2 = 2.5 Sorted in order from lowest to highest critical ratios: D (0.7), B (1), A (1.5), C (2), E (2.5)

172. A highly engineered product was introduced a few years ago, with standards defined, bills of material and routings finalized, and work centers set up to minimize material handling. Major improvements in cycle time have been made. What information is most likely to need to be changed? A. Routings and work center capacity B. Engineering standards and work center output C. Bills of material and routings D. Cycle time and bills of material Overall explanation If cycle time has improved, lead times and output are most likely to have changed.

173. When a service element is perceived as poor but also unimportant by customers, what is the most that should be done? A. Changes that are inexpensive to make B. Nothing C. Whatever is required for the service element to be considered value-added D. Whatever is required to raise the service element to the level of a "slight irritation" Overall explanation Per the service gap analysis matrix, a service that is perceived as low quality but is also relatively unimportant to customers falls into the "slight irritations" category. Slight irritations could be addressed, but only if the response is inexpensive to implement.

174. What is the term for the volume/mix of throughput on which overhead absorption rates are established? A. Budgeted capacity B. Cost center C. Overhead capacity D. Cost pool Overall explanation Budgeted capacity is the volume/mix of throughput on which financial budgets were set and overhead/burden absorption rates established.

175. Which of the following activities is part of the physical distribution system? A. Ordering components for production B. Handling material between work centers C. Receiving goods from suppliers D. Performing work at an alternate work center Overall explanation The activity that is part of the physical distribution system is: Receiving goods from suppliers.

176. At one time, a high-end automobile subcomponent had 97 components. After an out-of-the-box evaluation, the number has been reduced to 30 parts. This part reduction is a key goal of: A. supplier rationalization. B. design for manufacturability. C. concurrent engineering. D. benchmarking. Overall explanation Simplification of parts, products, and processes to improve quality and reduce manufacturing costs is known as design for manufacturability.

177. Distribution replenishment requirements enter a manufacturer's planning hierarchy at which of the following levels? A. Demand management B. Distribution schedule C. Production plan D. Master production schedule Overall explanation Distribution orders have the same level of importance as a customer order.

178. Once a returned item is received at the return's facility, what is the first decision point? A. Determine if it is a recall, a defective item, or is acceptable. B. Determine returns processing cost versus disposal cost. C. Determine whether to return to stock or to donate, liquidate, recycle, or dispose. D. Determine whether to approve or reject the return authorization. Overall explanation Recall items, acceptable condition items, and defective items each have their own decision process after items are received. The decision to accept or reject a return authorization should have occurred before the return was initiated.

179. The ability of manufacturing to respond quickly to external or internal changes is: A. adaptability. B. configurability. C. agility. D. flexibility. Overall explanation Agility is the ability of the manufacturing system to respond quickly, in terms of range and time, to external or internal changes.

180. What term is used to show the result of calculating available time x utilization x efficiency? A. Demonstrated capacity B. Standard hours C. Efficiency D. Rated capacity Overall explanation Rated Capacity = Available Time x Utilization x Efficiency.

181. Collaborating with customers to provide forecast information results in: A. higher customer ratings. B. elimination of safety stock. C. improved forecast accuracy. D. shorter lead times. Overall explanation Collaborating with customers to get their schedules eliminates the need for some of the forecast, which in turn improves accuracy.

182. A logistics company surveying customers asks how well the company performs against a set of important/non-important attributes. Assuming that appropriate action is taken in response to the survey, this is an example of putting a system in place to: A. identify poor-performing groups or services for discipline. B. justify price adjustments for superior performance. C. increase value in product delivery. D. use in future marketing promotions. Overall explanation After plotting the results of a survey like this, a company would be able to see where their improvement emphasis should be applied.

183. Which of the following is an indication that the current manufacturing lead time is longer than that used by rough-cut capacity planning to check the feasibility of the master schedule? A. Resource planning determines that the production plan was infeasible to begin with. B. A tour of the production area indicates that there is too much work in process. C. Load attributed to past due orders is remaining stable from period to period. D. Customer orders are being shipped, but a high percentage are late. Overall explanation Late customer orders are a potential indicator that there is sufficient capacity, so lead time may be the problem.

184. What is the mean absolute deviation given the following sales performance data: Month Forecast Actual 1 200 200 2 200 193 3 200 198 4 200 204 5 200 207 6 200 196 A. 6 B. 5 C. 7 D. 4 Overall explanation The answer is solved using the following equation: MAD = Sum of Absolute Deviations/Number of Observations In this case, that is 24/6 = 4.

185. Reducing lead time has which of the following results? A. Increased responsiveness to customer demand B. Shorter planning cycles C. Increased fixed manufacturing costs D. Decreased fixed manufacturing costs Overall explanation Reducing lead times, specifically setup times, allows for more frequent changes to adapt to changes in demand.

186. When seeking long-term stability in market share, a company has many alternatives, such as deciding features and functions, keeping costs stable, or reducing costs and functionality. Each alternative has pros and cons. This type of company has likely: A. increased product features with hopes of spreading higher costs over more products. B. adopted overcoming tradeoffs as an operations strategy. C. considered whether its products are candidates for outsourcing. D. accepted a lower margin with hopes for a future price increase. Overall explanation A company seeking market stability would likely adopt overcoming tradeoffs as an operations strategy.

187. Which of the following is the most necessary component of an efficient backflushing system? A. Accurate forecasts B. Accurate bill of material C. Regular sales and operations planning meetings D. Accurate inventory lead times Overall explanation Back-flushing requires very accurate bills of material because when work is completed, the system removes the number of parts that should have been used by the number of units produced. For example, say that a table requires one tabletop, four leg assemblies, and 28 hardware packets and 100 tables are produced in a batch. Upon completion of production, 100 tabletops, 400 hundred leg assemblies, and 2,800 hardware packets will be removed from inventory. Inaccurate bills of material will create inventory inaccuracies.

188. Which of the following elements of lead time is ignored by capacity requirements planning? A. External setup B. Move C. Wait D. Internal setup Overall explanation External setup is performed while the previous job is being run.

189. The simple average of a group of values is the: A. middle. B. mean. C. mode. D. median. Overall explanation The mean is the arithmetic average of a group of values.

190. A company that manufactures roofing material uses housing start statistics to develop its sales forecast. Using this data is an example of what type of forecasting? A. Adaptive B. Intrinsic C. Exponential D. Extrinsic Overall explanation Extrinsic forecasting models use historical data occurring outside the organization to help determine the best forecast.

191. Which component control strategy can help mitigate the bullwhip effect? A. Imposing strict territorial boundaries between retailers B. Using vendor-managed inventory processes C. Using backward horizontal integration D. Extending the forecast horizon Overall explanation A supply chain coordination activity that can help mitigate supply chain instability is to increase channel alignment via vendor-managed inventory (VMI) processes.

192. Which of the following situations is indicated if efficiency is consistently above 110%? A. The standard was set too high due to not using an "average" operator. B. Setup improvements have reduced actual total setup times by approximately 80%. C. The work center is further on the learning curve than it was when the standard was established. D. The operators have become more efficient at setting up and running orders. Overall explanation Efficiency varies based on experience.

193. In the theory of constraints (TOC), which of the following terms refers to materials awaiting further processing? A. Move B. Buffer C. Queuing D. Waiting Overall explanation A process buffer consists of raw materials, components, or subassemblies that are waiting to be used in production when the demand pull occurs. There are no queues in a TOC system

194. A retail company has decided to focus on internet sales and open a few new stores rather than use an aggressive new store approach. All demand will be adequately served by the existing distribution centers. What is an important consideration in the development of the new strategy? A. Finished goods inventory turns B. Existing store growth rate C. Capacity of current distribution centers D. Geographic location of new stores Overall explanation Inventory turns affect finances, distribution center capacity, and operations.

195. A work center has a utilization of 90% and an efficiency of 95%. Over the past months, it has produced quantities of 600, 610, 640, and 630 per week. What is the demonstrated capacity of the work center? A. 620 B. 558 C. 589 D. 530 Overall explanation Demonstrated capacity is based on number of units/hours that are being produced. Utilization and efficiency are not included in the calculation.

196. What is the term for an extreme change in the supply position upstream in a supply chain generated by a small change in demand downstream? A. Supply chain variation B. Forecast disconnects C. Market response effect D. Bullwhip effect Overall explanation The bullwhip effect is a situation in which a small change in demand downstream in the supply chain - for example, by failing to communicate demand or promotion information - generates an extreme change in the supply position upstream.

197. Managing consignment inventory is an essential function in which of the following processes? A. Sales and operations planning (S&OP) B. Forecasting C. Demand management D. Capacity management Overall explanation Demand management is the function of recognizing and managing all demands for products, including managing consigned inventory in customers' locations.

198. An assemble-to-order company produces subassemblies based on actual customer orders and stocks the most commonly sold configurations. Planning occurs on a weekly basis. What would safety capacity be used for? A. To minimize the need to provide safety stock for late deliveries B. To buffer against emergency replenishment subassemblies C. To provide for orders received between material planning cycles that exceed current load D. To provide an opportunity to replenish finished goods stock Overall explanation Safety capacity is used to provide extra capacity for unplanned activities.

199. Which of the following is an input to capacity requirements planning (CRP)? A. Material requirements plan B. Sales and operations plan C. Resource requirements plan D. Master production schedule Overall explanation CRP uses planned and firm planned orders from the material requirements plan to calculate requirements.

200. What can customers do to facilitate reducing the bullwhip effect? A. Manipulate demand by managing promotions and discounts. B. Share demand information using point-of-sale data. C. Implement the drum-buffer-rope theory in manufacturing. D. Lock retailers into long-term commitments. Overall explanation To assist in reducing dynamic instability in the supply chain, customers can share demand information using point-of-sale (POS) data.

201. Rated capacity is more essential for which of the following techniques? A. Rough-cut capacity planning (RCCP) B. Capacity requirements planning (CRP) C. Material requirements planning (MRP) D. Master production scheduling (MPS) Overall explanation CRP uses rated capacity.

202. Material produced as a residual of or incidental to the production process is a: A. co-design. B. by-product. C. co-product. D. residual item. Overall explanation A by-product is material of value produced as a residual of or incidental to the production process.

203. Which of the following can be considered a customer service measurement? A. Throughput percentage B. Inventory turns C. Order fill percentage D. Percentage of orders completely satisfied Overall explanation Percent of orders completely satisfied is the. Throughput and order fill percentages are incorrect because they are warehouse operations measurements. Inventory turns is incorrect because they are an inventory management measurement.

204. Which of the following best describes the participative design/engineering approach? A. Development of products or services, productive processes, marketing plans, and packaging/shipping processes is simultaneous. B. A team is formed to evaluate the impact of an engineering design on the plant's capabilities. C. Engineering initiates product design, operations initiate methods development, and logistics ships product. D. Marketing, purchasing, operations, and customer service prepare for a new product by jointly establishing performance measures. Overall explanation The goal of participative design/engineering is to remove time and cost from the design process while ensuring higher quality levels by simultaneously performing all the steps for product design and rollout instead of doing them in a serial progression.

205. An operator can assemble a product at a rate of 30 units per hour. What is the throughput time? A. 0-5 minutes B. 1 hour C. 2 minutes D. 1 minute Overall explanation 60 minutes/30 units = 2 minutes per unit. Throughput time is also called cycle time.

206. Customer relationship management supports total quality management because: A. both philosophies are focused on customer satisfaction. B. they are both part of the manufacturing/customer supply chain. C. between the two, all external and internal customers are included. D. each philosophy focuses on the strategic supply/demand relationship. Overall explanation Both customer relationship management and total quality management are customer-satisfaction-oriented.

207. What is the key to reducing costs, improving quality, reducing delivery lead time, and improving due-date performance for organizations conducting business-to-business (B2B) commerce? A. Vertical integration B. Backward integration C. Connectivity D. Also engaging in B2C for the same products Overall explanation The APICS Dictionary, 16th edition, defines B2B as follows, "Business conducted over the internet between businesses. The implication is that this connectivity will cause businesses to transform themselves via supply chain management to become virtual organizations—reducing costs, improving quality, reducing delivery lead time, and improving due-date performance."

208. When multiple products are produced using the same resources over the same time horizon, what must an organization do prior to checking capacity? A. Set up new resources so the production processes do not conflict. B. Aggregate master schedules for all related items. C. Prioritize production of one product over the others. D. Remove the competing products from production. Overall explanation When multiple products use the same resources over the same time horizon, the organization must aggregate the schedules before performing capacity checks.

209. Which of the following is a planning logic for independent demand items where the planned order releases are input to the master schedule? A. Distribution resources planning B. Distribution planning C. Time-phased order point D. Final assembly scheduling

210. If safety stock is 1,000 units, the unit cost is $2, the lead time is 12 weeks, the service level is 90%, and the demand is 3,000 units per week, what is the reorder point? A. 6,000 units B. 73,000 units C. 37,000 units D. 36,000 units Overall explanation DDLT (demand during lead time) + SS (safety stock) = (3,000 units per week x 12 weeks) + 1,000 units = 37,000 units

211. A shop order packet contains the authorization for a particular item or number of items to be made. Which of the following authorizations may also need to be issued as part of the order packet? A. Maintenance schedule B. Pick lists C. Shop calendar D. Inventory list Overall explanation The shop order packet will include what the shop floor needs to successfully produce the items.

212. In which qualitative forecasting technique are the opinions of experts combined in a series of iterations? A. Deming method B. Taguchi method C. Shewhart method D. Delphi method Overall explanation The Delphi method is a qualitative forecasting technique where the opinions of experts are combined in a series of iterations.

213. Based on the information below, what would the rated capacity available be closest to? Available Time (Hours)- 40 -Utilization - 94.4% -Efficiency - 90% A. 34 hours B. 38 hours C. 36 hours D. 40 hours Overall explanation Rated capacity is the expected output capability of a resource. It is equal to the hours available (40 hours) times efficiency (0.90) times utilization (0.944)

214. Which of the following targets for effective scheduling does a dispatcher have the most control over with respect to improving performance? A. Planned versus actual work in process B. Planned versus actual completion date C. Planned versus actual direct labor hours D. Planned versus actual start date Overall explanation Start dates are based on priority and job sequence, which are the responsibility of the dispatcher.

215. A warehouse works 5 days per week, with 8 hours available for order processing by 3 individuals. If utilization last week was 85%, what was the amount of time spent processing orders? A. 120 hours B. 102 hours C. 20 hours D. 34 hours Overall explanation Available time = 8 hours per day x 5 days x 3 individuals = 120 hours. Time spent processing = 120 hours x 0.85 utilization rate = 102 hours. Note that information on efficiency (how much time should have been spent processing orders) was not provided so this is not a calculation of rated capacity.

216. What change has resulted from the acceptance of computer systems in delivering products and services? A. Pull systems are used, rather than push systems, in every aspect of the operation, both internally and externally. B. Monolithic, one-size-fits-all enterprise resources planning (ERP) systems are used instead of multiple smaller ERP systems. C. Computer-generated kanban reports are used rather than kanban cards. D. Performance data is distributed to a much wider audience, not just to executives. Overall explanation In his discussion of systems, Tom Kotter contrasts 20th-century organizational characteristics with 21st-century characteristics. He finds the following changes: * Dependence on a few performance information systems has changed to dependence on multiple performance systems, especially those focused on customers. * Performance data is not only distributed to executives; it is now distributed widely. * Management training and support systems are offered to many people, not just to management.

217. On average, 100 units of a product are sold per month. Last month's sales exceeded 300 units. For purposes of forecasting, the excess amount would be considered: A. a sales promotion. B. an outlier. C. a seasonal index. D. an anomaly. Overall explanation An outlier is a data point that differs significantly from other data.

218. An infinite capacity planning report would typically show what type of load profile? A. Load based on planned and existing manufacturing orders B. Load based on maximum available capacity C. Load based on rated capacity D. Load based on demonstrated available capacity Overall explanation Infinite capacity planning uses planned, and firm planned orders as well as the uncompleted operations of scheduled receipt to calculate load requirements, without regard to any kind of available capacity.

219. Neither an organization nor its suppliers have much public awareness or exposure due to the nature of the industry. What is a reason this organization may want to set waste hierarchy policies for its suppliers? A. To drive unnecessary costs out of the supply chain B. To build public awareness for the industry and the organization C. To avoid being held liable for suppliers' waste hierarchy choices D. To avoid being held responsible for suppliers' sustainability choices Overall explanation Waste hierarchy policies help organizations and their suppliers be more efficient and drive unnecessary costs out of the supply chain. While avoiding being held responsible for a supplier's sustainability choices is also a good answer, it is less important to this organization since it has no public awareness and likely does not need any to continue operating due to the nature of the industry. A buyer cannot be held legally liable for the actions of a separate legal entity.

220. A company has limited resources in some work centers and bottlenecks that move around based on product mix. Salespeople must be notified of overloads so schedule changes can be made with customers. Which of the following scheduling techniques should management consider? A. Resource requirements scheduling B. Finite master production scheduling C. Constraint-oriented finite loading D. Rough-cut capacity scheduling Overall explanation Constraint-oriented finite loading is a technique that plans orders around bottleneck work centers. The objective is to maximize total production throughput.

221. Which of the following is true if material and capacity resources are to be planned effectively? A. Only interplant demand requires attention to detail. B. Service parts do not need to be considered in the analysis. C. All sources of demand must be identified. D. All sources of demand must be identified with the exception of promotions. E. Overall explanation Demand management requires that all sources of demand be included to effectively plan materials and capacity.

222. Which of the following may cause errors in a sales forecast based solely on shipment history? A. Changes in customer demand B. Exponential smoothing C. Changes in the demand time fence D. Machine downtime Overall explanation Machine downtime may cause shipments to be missed even though they were part of customer demand.

223. Which of the following types of processes would be most appropriate to use in a production facility where the work centers are organized by the function they perform? A. Intermittent B. Repetitive C. Continuous D. Fixed position Overall explanation In intermittent manufacturing, products are made in batches using general-purpose work centers organized by function.

224. What needs to be considered during new product introductions to ensure that the reverse supply chain is as cost-effective as possible? A. How to ensure that the reverse product receiving area layout is compatible B. Whether to consider designing packaging for returns C. How to design the product for speed of returns D. Whether returns will be processed internally or through a 3PL Overall explanation Packaging for returns may need to be considered along with packaging for forward shipping. This would best be done during product design. Speed of returns is not as important as lowering the cost of returns, such as by using design for sustainability

225. A component stockout has occurred, and production has substituted a higher-priced alternate. What is the effect on cost variance? A. The alternate is charged at standard cost, so there is a total cost variance. B. The alternate is charged at standard cost, so there is no variance. C. The alternate is charged at the original part's standard cost, so there is no variance. D. There is no cost variance due to the second part being a valid alternate. Overall explanation Expected cost is based on the original lower-cost component.

226. Which of the following invalidates acceptance sampling for purchased items? A. Receipts from multiple suppliers are included in the inspection lot to speed up the process. B. The sample quantity is specified by the computer and randomly selected per the quality plan. C. The sample quantity is selected based on the lot quantity indicated on the packing slip. D. Multiple lots from the supplier are received together but inspected separately. Overall explanation Multiple suppliers have different processes, so materials from each must be inspected separately.

227. The order point and periodic review techniques are used for which of the following? A. Forecast demand B. Fixed demand C. Independent demand D. Consolidated demand Overall explanation Both are ordering techniques for independent demand that must be determined based on information on the item itself rather than calculated based on a dependency.

228. The voice of the customer refers to identifying customer wants through which two of the following mechanisms? A. Producing reliable products consistently and conducting in-depth qualitative customer interviews B. Listening to requests from potential customers and producing reliable products consist C. Listening to requests from potential customers and conducting in-depth qualitative customer interviews D. Working to resolve customer complaints and listening to requests from potential customers Overall explanation Listening to the voice of the customer refers to the information marketing and product design need when creating new products. The idea is to design new products that reflect what the customer actually wants versus what marketing thinks they should have.

229. When a company embarks on a path of major or breakthrough improvement for a specific task, the best place to start is with: A. suppliers who categorize the company as a major customer. B. benchmarking best-in-world performers. C. benchmarking best-in-class performers. D. customers who categorize the company as a major supplier. Overall explanation One of the most widely used methods for gauging how well a company is executing its strategy entails benchmarking. Benchmarking involves contrasting the company's performance of particular activities and business processes against best- in-class and best-in-world performers. Best-in-class benchmarking is best in this situation because it may show how to improve the specific task.

230. Which of the following is a voluntary initiative whereby companies embrace, support, and enact, within their sphere of influence, a set of core values in the areas of human rights, labor standards, the environment, and anti-corruption? A. United Nations Global Compact B. United Nations Global Education First Initiative C. United Nations Global Initiative to Fight Human Trafficking D. United Nations Police Overall explanation The UN Global Compact is a strategic policy initiative for businesses that are committed to aligning their operations and strategies with ten universally accepted principles in the areas of human rights, labor, the environment, and anti-corruption.

231. An organization implements a dock-to-stock program with a key supplier. How will this impact the total cost of ownership (TCO) if the program is implemented correctly? A. TCO will be higher because the costs of supplier relationship management will more than offset shorter lead times from such a program. B. TCO will initially be higher but will eventually be lower as the cost of poor quality goes down. C. TCO will not be affected because passing costs on to the supplier cannot improve costs from a total supply chain perspective. D. TCO will be lower due to no receiving and inspection without a higher average cost of poor quality. Overall explanation The total cost of ownership in supply chain management speaks to the sum of all the costs associated with every activity of the supply stream. In this case, dock-to-stock is a program through which specific quality and packaging requirements are met before the product is released. Prequalified product is shipped directly into the customer's inventory. Dock-to-stock eliminates the costly handling of components, specifically in receiving and inspection, and enables product to move directly into production. If the program is implemented correctly, the costs of poor quality should not increase. Even from a total supply chain perspective, TCO will decrease because only one party is performing these quality steps rather than both parties doing the same task.

232. Adding safety lead time when demand is relatively constant will have the same effect as A. reducing the reorder point. B. ordering from local suppliers. C. increasing the level of inventory. D. ordering in larger quantities. Overall explanation Safety lead time brings in material earlier than required. It has the effect of increasing the safety stock and the inventory level of an item.

233. When a strategy for continuous improvement is initiated, policies on which of the following areas are usually established first? A. Quality improvement B. Cost reduction C. Flexibility D. Delivery dependability Overall explanation The first objective in a continuous improvement process is to improve quality. Once quality is improved, secondary projects for cost reduction, increased delivery dependability, and process flexibility can take place.

234. In addition to customer orders, the master production schedule (MPS) might handle which of the following types of demand? A. Bill-of-material items B. Dependent demand C. Parts list items D. Interplant orders Overall explanation Interplant demand is usually handled by the master production scheduling system in a manner similar to customer orders.

235. Which of the following is the most important consideration when implementing an information system to control shop floor operations? A. Encouraging users to operate independently with a minimal amount of training B. Providing staff specialists with the information needed to control production operations C. Ensuring that shop personnel have input into the choice or the design of the new technology D. Supporting differentiation between functional areas and production operations Overall explanation An effective information system should place as much responsibility for managing production operations as possible on factory personnel. This requires then that these personnel have input into designing the system that they will be required to use.

236. What is the role of upper management in a quality organization? A. To supervise the quality functions and activities B. To facilitate the quality teams C. To hire outside resources to provide quality oversight D. To provide resources and training for quality activities Overall explanation The main role for upper management is to provide the resources for quality activities and provide training in quality methodologies.

237. What is a key up-front question concerning the viability of a process technology investment? A. What is the expected return on investment? B. Is it cloud-based or client-server-based or both? C. How will the new system improve profitability? D. Will it shorten the time between when a customer makes a request and when the product is delivered? Overall explanation When evaluating the acceptability of a process technology investment, a key question is whether it will shorten the time between when a customer makes a request and when the order is confirmed, or the product is delivered.

238. Aggregate inventory management establishes the overall level of inventory desired: A. as a percentage of revenue. B. in physical units. C. in monetary units. D. as a desired return on investment. Overall explanation Aggregate inventory management establishes the overall dollar value of inventory desired and implements controls to achieve this goal.

239. Which of the following statements is true of inventory when the final product design is continuously influenced by the customer? A. Customer influence on the product design should not affect inventory levels. B. Large safety stocks must be maintained. C. Buffer inventory should be held closer to the raw material stage. D. Lot-size inventory increases to the finished goods level. Overall explanation Because the final configured item is often not determined until the actual customer order, leaving materials and components in an unfinished state significantly reduces stocked finished goods. The materials and components are then made- or assembled-to-order based on customer specifications. Increasing the lot-size inventory to the finished goods level will only build inventory as the company waits for a customer order with pre-designed configurations. Large safety stocks further increase the amount of finished goods maintained in inventory. Unless the customer requires only off-the-shelf products, the production and inventory functions must be flexible to build any customer configuration.

240. An organization has a product end-of-life plan that focuses on using up all of the raw materials and components not used in the replacement product being planned. What else needs to be a key part of this plan? A. Selling off the old product's remaining finished goods inventory well before the new product will be released B. Building enough finished goods inventory to satisfy lifetime buy quantities for the old product C. Ensuring that the old product will still be available during a transition period D. Ensuring that the new product doesn't suffer the same decline as the product being ended Overall explanation The APICS Dictionary, 16th edition, defines end-of-life management as follows: "Planning for phase-out of one product and the phase-in of a new product to avoid both the excessive inventory of and an out-of-stock situation with the old product before the replacement product is available." While building an inventory to satisfy lifetime demand could be a strategy (such as to accommodate customers who cannot easily incorporate a new model into their existing systems), having lifetime buy quantities is not the same thing.

241. Sales and operations planning (S&OP) is typically performed at which of the following levels? A. Raw material B. End item (finished goods) C. Product family D. Semi-finished goods Overall explanation S&OP is typically performed at the product family level. End items are typically planned at the master schedule level, while raw material and semi-finished goods are typically planned at the MRP level.

242. Which of the following objectives often conflicts with providing the best customer service? A. Creating an extensive and costly distribution system B. Building special customer order configurations C. Interrupting production runs so a shortage can be manufactured D. Reducing inventory to keep inventory carrying costs at a minimum Overall explanation Production's objective of keeping inventory investment to a minimum is in conflict with marketing's objective of always having goods available for the customer. A complex distribution system assists in providing the best customer service and is not in conflict. Disrupting the production schedule for shortage runs decreases manufacturing productivity. Building special customer order configurations decreases production's objectives of making long runs of a small number of standardized products.

243. What term is used for the set of marketing tools that direct the business offering to the customer? A. Four Ps B. Market share C. Product strategies D. Market strategies Overall explanation The four Ps are a set of marketing tools—product, price, place, and promotion—that are used to direct the business offering to the customer.

244. In a linear sequence of operations A, B, C, D, and E, each operation receives one unit from raw materials or the prior operation and outputs one unit. Operation A produces 11 units a day, operation B produces 6 units a day, operation C produces 10 units per day, operation D produces 9 units a day and operation E, final assembly, produces 8 units a day. Operation E receives inputs from other parts of the process that do not pass through the constraint and it sends its output to shipping. Demand is for 8 units a day. Where is the drum? A. Before operation A B. At operation B C. Before operation B D. At operation A Overall explanation The drum is at operation B because the pace of the operation is set to match this constraint rate.

245. A company's high-volume products are produced on an automated manufacturing line, and its low-volume products are produced using a labor-intensive method. The use of a cost accounting system in which overheads are allocated to product cost as a percentage of direct labor hours will have which of the following results? A. Low-volume products will be under costed and cost reduction efforts will be biased in favor of labor cost reductions B. High-volume products will be under costed and cost reduction efforts will be biased in favor of labor cost reductions C. High-volume products will be under costed and cost reduction efforts will be biased in favor of material cost reductions D. Low-volume products will be under costed and cost reduction efforts will be biased in favor of material cost reductions Overall explanation Because overhead costs are allocated by a percentage of labor hours, the actual usage of production by high-volume items will be understated. In a high-volume environment, the cost of labor is very small, perhaps as low as 5%, making overheads difficult to accurately calculate. Because labor is the only cost driver, cost reduction efforts will focus on reduction of labor costs, and, because the labor content will be higher in the low-volume products, they will be over costed.

246. Referring to the cost in the table below, which is the best way to categorize this inventory cost? Quarter 0 Quarter 1 Quarter 2 Quarter 3 Quarter 4 Sum Forecast (units) 10,000 15,000 30,000 15,000 70,000 Production (units) 17,000 17,000 17,000 17,000 68,000 Ending inventory 5,000 12,000 14,000 1,000 3,000 30,000 Average inventory 8,500 13,000 7,500 2,000 Inventory cost ($) $531 $813 $469 $125 $1,938 A. Hedge inventory B. Lot-size inventory C. Safety stock D. Anticipation inventory Overall explanation Anticipation inventory includes seasonal buildups of inventory. The inventory is accumulated in anticipation of the peak selling season.

247. A retailer sells seasonal items in addition to its year-round product lines. Three distribution centers service the stores. Seasonal items are not ordered by the stores but are distributed based on the percentage of the business the store typically averages. Which of the following safety stock techniques is most appropriate for these items? A. Percentage B. Time period C. Statistical D. Fixed Overall explanation Safety stock should be fixed at zero, since these items are not regularly stocked.

248. Which of the following types of causes of process variation indicates that the process is under control and subject only to uncontrollable everyday factors such as temperature and humidity? A. Assignable cause B. Nominal cause C. Special cause D. Common cause Overall explanation Small variations are likely to occur.

249. A manufacturer places a replenishment order to replace sold or used items every two months. This is an example of what kind of inventory model? A. Fixed reorder cycle B. Two-bin inventory system C. Perpetual inventory system D. Min-max system Overall explanation A fixed reorder cycle inventory model is a form of independent demand management. An order is placed every n time units (e.g„ months, days). The quantity in each order is variable and reflects inventory used/sold. The aim is to replenish inventory to the maximum inventory desired.

250. If a make-to-stock (MTS) company shifts its manufacturing operations to make-to-order (MTO), what will be the effect on annual setup costs and delivery lead time? A. Annual setup costs will increase, and delivery lead time will decrease. B. Annual setup costs will decrease, and delivery lead time will decrease. C. Annual setup costs will increase and delivery lead time will increase. D. Annual setup costs will decrease, and delivery lead time will increase. Overall explanation Moving to an MTO environment means that smaller-volume orders will be created. This will increase the overall factory setup costs. Delivery lead times will also increase.

251. A standard cost accounting system is often tied directly to the routing and dispatching systems as well as the product structure. Which of the following cost measures are determined from this data? A. Overhead costs, job costs, and standard variances B. Job costs and standard variances C. Overhead costs and standard variances D. Overhead costs and job costs Overall explanation When a production order is created and produced, operators will report direct labor and materials for the order. Accounting is able to view all costs accumulated to the job and to contrast them with costing standards to determine variances. Overheads are normally reported indirectly as a percentage of labor reported and are not impacted by routing and dispatching systems.

252. What information can the tracking signal provide that the mean absolute deviation (MAD) and the mean squared error (MSE) cannot? A. Direction of any bias B. Magnitude of the errors C. Dispersion of data or of a variable D. Full confidence in the forecast when the results are within tolerances Overall explanation The tracking signal—the sum of the forecast deviations (not absolute) divided by the MAD—shows the direction of the bias if it is present. MAD uses absolute deviations, and MSE squares the deviations, effectively making them absolute. Therefore, neither of these methods can indicate whether the errors were overall higher or lower than the actual result on average (the bias).

253. What is the name for inventories that are purchased or manufactured in greater quantities than are immediately in demand? A. Scheduled receipts B. Lot-size inventory C. Transportation inventory D. Fluctuation inventory Overall explanation Lot-size inventory is defined as materials, either purchased or manufactured, ordered in quantities greater than needed for immediate purposes for economic or other reasons. Fluctuation inventories (safety stock) are carried to protect against forecast. Transportation inventory is in transit. Scheduled receipts are quantities of items expected to be received, or arrive, on scheduled due dates.

254. Which term refers to the electronic exchange of trading documents? A. Blockchain B. Electronic data interchange C. Master data D. Data governance Overall explanation Electronic data interchange refers to the paperless (electronic) exchange of trading documents, such as purchase orders, shipment authorizations, advanced shipment notices, and invoices, using standard document formats.

255. Which of the following shipments is most likely to be subject to governmental safety regulations related to shipping and handling through a supply chain? A. Milk B. Papayas C. Flu vaccines D. Acetylene Overall explanation Due to the flammable nature of acetylene, it may be considered a hazardous material that must comply with governmental safety regulations for shipping and handling. Perishables like milk and papayas or pharmaceuticals such as flu vaccines may require the use of cold chain shipping technology to maintain storage within an acceptable temperature range to avoid spoilage, but they are less likely to be subject to safety regulations because they do not pose similar risks during shipment.

256. In a typical manufacturing company, production costs are allocated directly to the job or product. How are the costs of engineering/maintenance departments allocated? A. The costs are divided proportionately between all major product groups. B. The costs are not be allocated among the appropriate production departments as part of factory overhead. C. The costs are allocated among the appropriate production departments as part of factory overhead. D. All job activity is tracked daily, and costs are applied to those specific jobs. Overall explanation In a manufacturing company with production (assembly/machining) and indirect service (engineering/maintenance) departments, the costs of the service departments would normally be allocated among the appropriate production departments as part of factory overhead.

257. Which of the following priority rules is used in a dedicated assembly line? A. Critical ratio B. First in, first out C. Last in, first out D. Required date Overall explanation Dedicated assembly lines are FIFO (first in, first out) by design.

258. Which plan bridges strategic and business plans with the master production schedule and execution plans? A. Sales and operations B. Sourcing and purchasing C. Expansion D. Project Overall explanation Executed properly, the sales and operations planning process links the strategic plans for the business with its execution and reviews performance measurements for continuous improvement.

259. Which financial document shows sources of revenue (sales in cash or as accounts receivable) followed by various types of expenses incurred throughout the period? A. Income statement B. Balance statement C. General ledger D. Cash flow statement Overall explanation An income statement is a summary of management's performance as reflected in the profitability of an organization over a certain period. It itemizes the revenues and expenses that led to the current profit or loss and indicates what may be done to improve the results.

260. Which would be likely to result in an inaccurate count of inventory? A. Counting category C inventory more often than required B. Moving inventory to a different work center without recording the movement C. Undertaking rework to correct manufacturing defects in a product D. Authorized overtime work at a workstation that is a bottleneck in the manufacturing process Overall explanation Inventory count inaccuracy can stem from several causes, including moving inventory and failing to record the movement. Over-counting inventory in an ABC classification may lead to wasted time but should not result in inaccurate inventory counts. As long as overtime work and rework are authorized and accounted for, they shouldn't result in inventory inaccuracy.

261. Which production environment is most likely to use actual cost? A. Engineer-to-order B. Mass customization C. Make-to-order D. Assemble-to-order Overall explanation Even though commonly used items may be valued at standard cost, many of the costs in an engineer-to-order environment are unique to the order and can be valued at actual cost.

262. Finished goods being shipped from one facility to another is considered which type of inventory? A. Hedge B. Pipeline C. In-transit D. Anticipation Overall explanation In-transit inventory is material moving between two or more locations, usually separated geographically.

263. What is the primary difference between enterprise resources planning (ERP) and manufacturing resource planning (MRP II)? A. ERP includes manufacturing information only. B. ERP provides a balance between production, marketing, and information technology. C. ERP integrates additional business functions, including human resources, research and development, logistics, and others. D. ERP is computer-based, but MRP II is not. Overall explanation ERP provides more than just manufacturing information

264. How does sales differ from demand? A. Sales often exceeds demand. B. Sales implies what is actually sold, and demand shows the need for the item. C. Demand often exceeds sales. D. There is no difference between sales and demand. Overall explanation Demand shows the need for the product

265. Which of the following tools is used to determine root causes of problems? A. Brainstorming B. Cause-and-effect diagrams C. Run charts D. Pareto charts Overall explanation Cause-and-effect diagrams illustrate the main causes and sub-causes leading to an effect (symptom).

266. Which of these terms can be described as an estimate of future demand? A. Sales quota B. Sales promotion C. Sales target D. Sales forecast Overall explanation The sales forecast is a predicted estimate of future demand.

267. An organization is designing a new product for manufacture and is prototyping different options to determine which design will function the best. Which technology would be most useful to them in this process? A. 3D printing B. Augmented reality C. Artificial intelligence D. Cloud computing Overall explanation 3D printing can be used to rapidly prototype potential designs during the design process and would be the best option for the organization.

268. Objectives of the detailed capacity requirements planning process include all of the following except: A. determination of the materials needed to make the products in the master production schedule. B. determination of the people and/or machines needed to make the products in the master production schedule. C. alteration of the master production schedule for effective use of capacity. D. adjustment of work plans for effective use of capacity. Overall explanation The role of planning the materials to build parents and subassemblies belongs to the material requirements planning process, not the capacity planning process

269. A customer service representative for an assemble-to-order manufacturer is on the phone with a customer who wants to make an immediate purchase and have it shipped as soon as possible. Which of the following values does the representative need to use to make an informed decision? A. On-hand inventory B. Available-to-promise C. Capable-to-promise D. Safety stock Overall explanation Available-to-promise (ATP) is the uncommitted portion of a company's inventory and planned production maintained in the master schedule to support customer order promising. The other answers don't help the customer service representative make an informed decision about whether a new customer request can be fulfilled.

270. Which managed inventory strategy would best suit a lean manufacturer that is unable to provide consistent order sizes due to fluctuations in demand for the various products it produces? A. Continuous replenishment B. Consignment C. Lot for lot D. Vendor-managed inventory Overall explanation Continuous replenishment uses actual sales or warehouse shipments without stockouts, resulting in lower associated costs and improved inventory turnover. It would be best suited for the manufacturer due to the manufacturer's inability to provide consistent order information and its preference to reduce waste, which would include extra inventory storage in the form of consignment or VMI.

271. Which of the following is the most likely reason for using safety lead time instead of safety stock? A. Demand variability is too biased. B. Carrying safety stock is too expensive. C. The part stocks out too frequently. D. Supply variability is the concern. Overall explanation Safety lead time is mostly used to deal with supplier variability.

272. A company is presently ordering a stock-keeping unit four times per year. It decides to change this policy and establish an EOQ. What is the EOQ? * Annual demand is 100,000 units * Each unit costs $8. * Ordering costs are $32 per order. * Inventory carrying costs are 20 percent. A. 2,000 units B. 1,000 units C. 1,789 units D. 4,000 units Overall explanation To calculate EOQ: Step 1: 2 x Annual Demand (100,000 units) x Order cost ($32 per order) = $6,400,000 Step 2: Cost per unit ($8 per unit) x Carrying cost rate (0.2) = 1.6 Step 3: $6,400,000 / 1.6 = $4,000,000 Step 4: (sqr rt of)/$4,000,000 = $2,000

273. What is a significant difference between absorption costing and variable costing? A. Variable costing assigns a portion of fixed factory overhead to the product. B. Variable costing should not be used for make-or-buy decisions. C. Variable costing captures all costs of production. D. Variable costing does not assign fixed factory overhead to the product. Overall explanation Variable costing is an inventory valuation method in which only variable production costs are assigned to the product

274. Which is a positive benefit that can be realized by implementing a new raw material ordering system that reduces the total lead time of in-transit inventory by a full day? A. Anticipation inventory levels at the plant can be reduced. B. Raw material inventory levels held at the plant for decoupling purposes can be reduced. C. Fewer raw material transportation vehicles will need to be used. D. The plant should experience lower overall setup costs and produce higher numbers of units overall. Overall explanation Inventory can decouple supply from demand at the supply chain level by, for example, allowing raw materials to be pulled from inventory rather than relying on order lead times or maintaining inventories of finished goods rather than producing based on actual orders. If the lead time for raw materials can be reduced by a full day, up to one day's worth of raw materials inventory held for decoupling purposes can be eliminated with no impact on production.

275. Storing fast-moving items together in a distribution center helps to: A. reduce picking time. B. minimize time to store received items. C. increase total inventory velocity. D. simplify cycle counting activities. Overall explanation Locating fast-moving items together reduces the travel distance and total picking time.

276. It is highly likely that when diversifying into a different market space that has solid financial opportunities, a company will: A. develop the business itself. B. acquire an established company. C. acquire a privately held firm. D. acquire a start-up company. Overall explanation Companies that diversify into an industry where good financial results exist nearly always enter new business by acquiring an established company rather than by forming or acquiring a start-up.

277. A properly implemented material requirements planning (MRP) system should result in a reduction of which of the following? A. Inventory B. Inventory, engineering changes, and expediting C. Engineering changes and expediting D. Inventory and expediting Overall explanation Inventory and expediting should be reduced as a result of implementation of an MRP system.

278. What is production activity control responsible for? A. Running capacity requirements planning B. Purchasing components C. Releasing work orders to manufacturing D. Creating the material requirements plan Overall explanation Production activity control is the function of routing and dispatching the work to be accomplished through the production facility.

279. If the order quantity is increased, which occurs? A. The cost of carrying inventory increases and the cost of ordering decreases. B. The cost of carrying inventory decreases and the cost of ordering increases. C. The cost of carrying inventory increases and the cost of ordering increases. D. The cost of carrying inventory decreases and the cost of ordering increases. Overall explanation If the order quantity is increased, inventory levels will increase and thus the cost of carrying inventory will increase. The number of times the orders are placed will decrease, resulting in decreased ordering cost.

280. In order to inspire and motivate people, successful leaders will: A. have their biography written. B. use their political connections to further their goals. C. have charisma that naturally inspires people to follow. D. create the conditions that make goals achievable. Overall explanation Motivation is one thing, but competent strategic leadership is the necessary foundation for success. The job of the leader— the strategist—is to also create the conditions that will make the push possible, to ensure that the team has the resources they need.

281. Which of these terms refers to activities that provide present benefit without compromising the needs of future generations? A. Sustainability B. Environmental consciousness C. Foreign Corrupt Practices Act D. Human activism Overall explanation Sustainability refers to activities that provide present benefit without compromising the needs of future generations.

282. What type of demand inventory ordering model includes fixed reorder cycles, fixed reorder quantities, optional replenishment, and hybrid models? A. Drum-buffer-rope B. Material requirements planning C. Kanban D. Independent Overall explanation According to the APICS Dictionary, 16th edition, definition of inventory ordering system, "independent demand inventory ordering models include fixed reorder cycle, fixed reorder quantity, optional replenishment, and hybrid models, among others." Dependent demand inventory ordering models include material requirements planning, kanban, and drum-buffer- rope.

283. Which accounting method assumes that the oldest inventory is the first to be used? A. Specific identification B. LIFO C. FIFO D. Absorption Overall explanation FIFO is a method of inventory valuation for accounting purposes that assumes that the oldest inventory (first in) is the first to be used (first out).

284. How can a digital supply network help boost profitability? A. By increasing top and bottom lines B. By lowering security costs C. By providing too much performance information D. By enhancing risk Overall explanation Digital supply networks can boost profitability by increasing top and bottom lines. They tend to reduce, not enhance, risk, and too much performance information can lead to slowed decision making and missed opportunities. Security costs may increase due to the need to invest in technological security measures in addition to traditional physical security.

285. A company that makes products with multiple options is experiencing a temporary increase in sales. Which of the following inventories should be increased? A. Work in process B. Raw materials C. Finished goods D. Subassemblies Overall explanation Increasing the subassemblies will allow flexibility to cover demand for various options and maintain lead times.

286. Which of the following cost accounting methods identifies profitable products based on cost drivers? A. Actual market B. Value-added C. Activity-based D. Standard activity Overall explanation Activity-based costing is a cost accounting system that accumulates costs based on activities performed and then uses cost drivers to allocate these costs to products.

287. According to the APICS Dictionary, which technique is most directly associated with single-minute exchange of die (SMED)? A. Internal setups performed in one minute or less B. Internal setup activities moved to external setup C. Single-minute exchange of tooling in assembly D. Scheduling the process to be down for less than ten minutes during setup Overall explanation The APICS Dictionary defines SMED as "the concept of setup times of less than 10 minutes, developed by Shigeo Shingo in 1970 at Toyota." While moving internal setup activities to external setup activities is frequently associated with SMED, it is not directly in the dictionary definition.

288. Accountants use the first-in, first-out valuation method for determining the value of inventory on the financial statements. In a period of rising costs, which will occur in relation to the recorded versus actual cost of goods sold (COGS)? A. The recorded COGS will be an average of historical and current prices, so inventory value will be close but not exact. B. The recorded COGS will be less than the current COGS, so COGS will be undervalued. C. The recorded COGS will be greater than the current COGS, so COGS will be overvalued. D. The recorded COGS will match the current COGS, so inventory will be fairly stated. Overall explanation The cost of goods made a month ago will be less than for those made today. The inventory replacement costs of these goods will be higher than their assumed costs were a month ago. Therefore, the inventory will be undervalued.

289. Which functional role is most likely to oppose increasing multiple work-in-process (WIP) buffer sizes after a series of missed customer orders? A. Marketing B. Finance C. Operations D. No one Overall explanation The goals of finance are to increase profit and cash flow and reduce investment. Increasing WIP buffer sizes will likely increase inventory investment.

290. Which of the seven new tools of quality is important for scheduling complex projects because it can help map out dependencies as well as activities that can be done simultaneously? A. Affinity diagram B. Matrix data analysis chart C. Process decision program chart D. Activity network diagram Overall explanation An activity network diagram, also called an arrow diagram or critical path method chart, is a useful project management tool that can help map out activities that are dependent upon the completion of other activities or activities that can be done simultaneously.

291. A management style of employee empowerment enables workers to: A. perform management evaluations. B. make improvements in their workplace. C. hire and fire personnel. D. authorize work orders. Overall explanation Employee empowerment is the practice of giving nonmanagerial employees the responsibility and the power to make decisions regarding their jobs or tasks

292. Storage considerations related to inventory accuracy are most likely to include: A. allowance for first in, first out usage. B. use of a temperature-controlled environment. C. use of bar codes for location identification. D. locked storage for high-value pilferable items. Overall explanation Locked storage allows for limited access.

293. Which quality tool is used to predict a variable based on a relationship with another variable? A. Control chart B. Cause-and-effect diagram C. Scatter chart D. Pareto chart Overall explanation In a scatter chart, two sets of data are plotted on a graph, with they axis used for the variable to be predicted and the x axis used for the variable to make the prediction. The graph will show possible relationships.

294. Which of the following quality aspects is a function of incoming inspection? A. Sampling a part's dimensions and rejecting the lot B. Comparing incoming receipts to previously received material C. Performing 100% inspection to ensure outgoing quality D. Confirming that the supplier's process produces acceptable quality Overall explanation Sampling is a part of incoming inspection.

295. What is an advantage of cycle counting over annual physical inventory? A. Ensures that every item is counted at least once a year B. Able to find mislocated material C. Total value of inventory established D. Timely detection of problems Overall explanation The objective of cycle counting is to determine the causes of errors so they can be corrected and prevented in the future.

296. Senior management agrees to expedite a customer order. After being notified, what should operations managers do first? A. Increase capacity to enable handling the normal schedule plus the increased load. B. Ignore the expediting if it is within the demand time fence. C. Add the expedited order to the top of the schedule and automatically reschedule everything else. D. Evaluate lateral and downstream operations for impact on schedules and costs. Overall explanation After detecting exceptions to plans, operations managers need to follow an exception management process, which includes evaluating lateral and downstream operations for their impact on schedules and costs. Since senior management has approved this expediting, it is not possible to just ignore it. Adding the expedited order to the top of the queue might be done, but it would be a later step after evaluating impact and feasibility.

297. Which of the following tools would be most appropriate to use to rank persistent quality problems? A. Pareto chart B. Process map C. Tree diagram D. Affinity diagram Overall explanation The Pareto chart is a graphical tool for ranking causes from most to least significant.

298. A preventive maintenance program is being initiated at a company. The program should first be implemented for: A. equipment that has the longest setup time. B. the most expensive equipment. C. a work enter that has only one machine. D. equipment that gates work center capacity. Overall explanation It is critical that the gating work center capacity be available to feed downstream operations.

299. What is a primary advantage of lift trucks over conveyors? A. Lift trucks do not occupy space continuously. B. Lift trucks move loads over long distances. C. Lift trucks move heavier loads than conveyors. D. Lift truck operators are indirect versus direct. Overall explanation Conveyors are fixed in place and are often installed overhead to be out of the way of lift trucks, pedestrians, and so on.

300. Analyzing capital investments by estimating future cash flows and translating them into equivalent amounts in today's terms is called: A. average return on investment analysis. B. discounted cash flow analysis. C. internal rate of return analysis. D. payback analysis. Overall explanation Discounted cash flow analysis is a method of investment analysis in which future cash flows are converted, or discounted, to their value at the present time. The net present value of an item is estimated to be the sum of all discounted future cash flows.

301. Compared to infinite capacity planning, the advanced planning and scheduling technique: A. limits the plan to critical resources only. B. bases schedules on achievable operations within a set time period. C. uses a longer planning horizon. D. validates the master production schedule. Overall explanation An advanced planning and scheduling tool use priority rules to determine what orders will be produced in what time periods, and it takes capacity constraints into account.

302. In the order point system graph below, the downward slope will differ when demand is higher or lower than expected. If demand were to suddenly increase, what would you expect to happen to the slope? A. There would be a steeper drop. B. There would be a shallower drop. C. It would plateau. D. It would remain the same. Overall explanation If demand is higher than the rate shown, the slope will fall more quickly, while demand that is slower will result in a slope falling more gradually. Safety stock is held in preparation for higher-than-average demand. If the inventory falls more quickly than the average, a stockout will not occur until the safety stock is depleted.

303. In a culturally diverse problem-solving group with varying priorities, what is a common impediment to achieving the best solution? A. Lack of technical knowledge B. Collecting support data C. Valuing expediency instead of discussion D. Adapting team leadership styles Overall explanation The basis of group discussion focused on problem solving is to consider all possible opinions and judgments before a decision is made. Solving a problem by taking the most expedient path closes discussion and can lead to a suboptimal solution.

304. Uncontrollable inventory inaccuracies are most likely to be introduced into inventory when: A. storage is non-centralized. B. the amount recorded as received is based on the packing slip. C. incoming inspection is based on the quality plan. D. material movement is based on manual means. Overall explanation Accepting the supplier's quantity can introduce inventory inaccuracies. Inside the facility, every count discrepancy is controllable.

305. In ABC classification, an item with the least complex controls and record keeping and high levels of safety stock would receive which classification? A. A B. B C. D D. C Overall explanation Category C items have the least complex controls and record keeping, for example, nuts and bolts. They will have a low inventory carrying cost, so plentiful days of supply make sense. They are ordered far less frequently but in much larger quantities.

306. Using the information provided below, what is the product cost based on process costing? Units per period 10,000 units Direct labor actual $160,000 Direct material at standard $600,000 Overhead $400,000 Margin per unit $50 Scrap units per period 100 units A. $77 B. $76 C. $116 D. $117 Overall explanation ($160,000 + $600,000 + $400,000)/10,000 units = $116 per unit

307. What are the goals of a five Ss program? A. Reduce waste and variation while improving productivity. B. Keep things clean and organized for good worker morale. C. Promote hard work and attention to detail while empowering worker variations. D. Reduce or reuse before resorting to recycling, reclaiming, or disposal. Overall explanation A five Ss program of sort, simplify, scrub, standardize, and sustain has the goals of reducing waste and variation and improving productivity.

308. A frozen foods manufacturer and distributor has a well-developed cold chain. If the organization is considering becoming a distributor for certain pharmaceuticals that are not considered controlled substances, what does it need to consider? A. Ability to provide a temperature-controlled environment for source, make, and deliver B. Ability to create chain-of-custody data that are difficult to counterfeit C. Ability to trace to the class level rather than just the batch level D. Ability to succeed in unrelated diversification in the manufacturing area Overall explanation Traceability requirements have become stricter in recent years, in part because of concerns about counterfeit and adulterated drugs in the pharmaceutical industry. Therefore, not only does the organization need a system that provides traceability, but that system needs to be secure.

309. Warranty claims and repair costs fall into which of the following categories of quality costs? A. Prevention B. Appraisal C. Internal failure D. External failure Overall explanation External failure costs include such costs as warranty claims and returns.

310. A prerequisite for effective self-directed teams typically is that the team members: A. willingly report to a team supervisor. B. have similar work experiences. C. are empowered to take responsibility for understanding and performing work. D. are at similar levels in the organization. Overall explanation A self-directed work team is an independent self-controlling group in which members plan, organize, determine, and manage their duties and actions. In self-directed teams, workers must have knowledge and responsibility for understanding and performing work.

311. The target inventory level of a periodic review system is: A. an average. B. a minimum. C. an economic order quantity. D. a maximum. Overall explanation The order quantity may vary in the periodic review system, since it is the amount of inventory that is required to bring the total inventory to a maximum or target inventory level.

312. Which is an example of a special cause as opposed to a common cause of a variation in a process? A. Poor process design B. Room temperature variations throughout the day C. Use of expired materials D. Poorly trained operators Overall explanation Special causes can be isolated and assigned to a particular source, and use of expired materials fits this description. Common causes are sources of variation that are inherent in a process such as poor process design, poor working conditions, poor operator training, or normal variations in room temperature. While both are subject to improvement, the special causes show up as spikes or dips on control charts and can be remedied quickly once the root cause is found, while common causes require more long-term process improvement activities.

313. Which type of inventories are used in production but do not end up in the final product? A. Work-in-process inventory. B. Maintenance, repair, and operating supplies. C. Raw materials. D. Finished goods. Overall explanation By definition, MRO supplies (maintenance supplies, spare parts, lubricants, and so on) are used to support operations and maintenance, and they are generally not directly incorporated into the product.

314. What is the most important objective of total quality management (TQM)? A. Improved customer satisfaction B. Product performance to specifications C. Decreased internal failures D. Product design quality Overall explanation TQM is a management approach to long-term success through customer satisfaction. It is based on the participation of all members of an organization in improving processes, goods, services, and the culture in which they work.

315. Which of the following can be identified and adjusted at the rough-cut capacity planning level? A. Overloads at all work center B. Total hours of load in excess of plant capacity C. Underloads at all work centers D. Excessive queues at suppliers Overall explanation Rough-cut capacity planning provides planners with the ability to easily identify overloads and underloads at key bottlenecks or critical work centers (not all work centers) in the plant.

316. Which organizational objectives are often tradeoffs with one another? A. Targeted level of customer service and low-cost plant operation B. High inventory investment and targeted level of customer service C. Low-cost plant operation and strong cash flows D. Cash flow and profitability Overall explanation Meeting targeted levels of customer service and lowest-cost plant operations are in conflict. The latter requires long production runs to minimize the unit costs of production. While this will increase inventory levels and maximize customer service for some products, it also will make manufacturing less flexible and not able to meet the many product needs of different customers. Lean manufacturing techniques can diminish the conflict. The objectives paired in the other answers are complementary, and, therefore, these choices are incorrect.

317. Which of the following tools is considered an important quality management tool? A. Input/output chart B. Gantt chart C. Control chart D. Capacity chart Overall explanation The primary use of control charts is to detect assignable causes of variation (as opposed to random variation) in a process. The control chart is one of the seven tools of quality. A Gantt chart is used for (1) machine loading, in which one horizontal line is used to represent capacity and another to represent load against that capacity, or (2) monitoring job progress, in which one horizontal line represents the production schedule and another parallel line represents the actual progress of the job against the schedule in time. An input/output chart is a technique for capacity control where planned and actual inputs and planned and actual outputs of a work center are monitored. A capacity chart measures production output and compares it with the capacity plan, determining if the variance exceeds pre-established limits and taking corrective action to get back on plan if the limits are exceeded.

318. In the pursuit of continuous improvement, reducing the annual ordering cost will have which of the following effects on economic order quantity (EOQ)? A. The EOQ amount will be unaffected. B. It will lower the EOQ amount. C. It will raise the EOQ amount. D. Annual ordering costs have no relation to EOQ. Overall explanation Reducing annual ordering costs will lower the EOQ amount, because orders can be made more frequently and average inventory levels are reduced.

319. A make-to-order company has typically employed the fixed-order-quantity approach for its commonly used components. This has resulted in excess inventory over time due to customer changes and new product configurations. The planner should consider which lot-sizing technique to get the problem under control? A. Minimum B. Economic order quantity C. Lot-for-lot D. Fixed period Overall explanation Lot-for-lot will minimize or eliminate any residual inventory.

320. Cause-and-effect analyses are made with the help of which of the following? A. Histogram B. Fishbone chart C. Pareto chart D. Scatter chart Overall explanation The cause-and-effect diagram is a tool for analyzing the main causes and subcauses leading to an effect. It also is referred to as the Ishikawa diagram because Kaoru Ishikawa developed it. It also is called the fishbone diagram because the complete diagram resembles a fish skeleton. Histogram, scatter chart, and pareto chart are incorrect because, although they are ways of analyzing data, they are not considered cause-and-effect diagrams.

321. Which of the following types of costs are related to problems found after the product reaches the customer? A. Prevention costs B. Internal failure costs C. Overhead costs D. External failure costs Overall explanation External failure costs are related to problems found after the product reaches the customer. This usually includes such costs as warranties and returns.

322. Which technology can assist a company in detecting and identifying potential fraud across the supply chain? A. Blockchain B. Cloud computing C. Internet of Things D. Artificial intelligence and machine learning Overall explanation Artificial intelligence and machine learning are useful at detecting patterns that may indicate fraud and that may otherwise go unnoticed within a supply chain.

323. Which is the best description of a stock keeping unit (SKU) if all examples are SKUs for a distribution system? A. Wires of different gauge that are stocked on the same reels are the same SKU. B. Sodas in a 6-pack and a 12-pack are the same SKU if the cans are the same SKU. C. White shirts of the same style and in the same box but in different locations are the same SKU. D. Televisions on display and identical boxed models at the same location are the same SKU. Overall explanation A stock keeping unit identifies the same size and type of item at a particular stock keeping location. The televisions unboxed for display and the same models still in boxes are the same units at the same location.

324. A part has an effectivity date that goes into force tomorrow. What will change at that time? A. Engineering drawings but not part ID number B. Part ID numbers at the batch/lot and instance levels only C. Part ID number at the instance level only D. Part ID number at the class level Overall explanation At the class level, a product or part ID code identifies the unique product or part class. An effectivity date is the date when a new set of engineering drawings and documents come into effect. At that time, the new part will have a new part ID number at the class level. The instance level is a unique serialized ID to identify a unique instance of a product.

325. Which of the following most likely indicates that there are two packing slip errors? A. The unit price does not match the standard cost on file. B. The part number does not match the actual material received. C. The quantity does not match the actual quantity received. D. The unit of measure does not match the inventory unit of measure. Overall explanation The incorrect part is received and the correct part is not received, constituting two errors.

326. A make-to-stock organization sells premium clothing that comes in a wide variety of sizes. What sort of inventory policy would be best for this organization? A. Postponement B. Ordering far in advance C. Risk pooling D. Placement closest to point of customer demand Overall explanation Products that have many different SKUs, such as sizes of shirts, will generate large inventories unless inventory is centralized. Risk pooling describes a method of centralizing inventory.

327. Which of the following is a planned series of actions or operations that advances a material or procedure from one stage of completion to another? A. Work-in-process B. Task C. Project D. Process Overall explanation A process is a planned series of actions or operations (e.g., mechanical, electrical, chemical, inspection, test) that advances a material or procedure from one stage of completion to another.

328. Assuming that demand levels remain the same, what happens if the order quantity increases? A. Ordering costs increase. B. Carrying costs increase. C. Economic order quantity shifts. D. Average inventory levels decrease. Overall explanation When demand remains the same but order quantity increases, carrying costs will increase, average inventory levels will increase, and ordering costs will decrease.

329. The number of exposures to stockouts is related to: A. the reorder point. B. the level of safety stock. C. the number of replenishment orders. D. the required customer service level. Overall explanation The chance of stocking out occurs when inventory is low, which occurs at the time an order is being placed.

330. Two defective inexpensive parts are discovered in a sample during incoming inspection, but the lot itself is accepted. What is done with the defective parts? A. They are identified as such and returned to the lot. B. They are removed from the lot and disposed of or scrapped. C. They are removed and sent to the material review board. D. They are removed from the lot and returned to the supplier. Overall explanation Inexpensive items are removed and scrapped through a formal process after being recorded against the lot.

331. Preventive maintenance—comprising adjustments, replacements, and basic cleanliness—is used to forestall machine breakdowns. With regular preventive maintenance, what can be expected to happen to the cost of failure and poor quality? A. It will be reduced in the short term. B. It will be reduced in the long term. C. It will increase in the long term. D. It will increase in the short term. Overall explanation Preventive maintenance ensures that production quality is maintained and that delivery schedules are met. A well-cared-for machine is also more likely to last longer and suffer fewer problems. Increased investment in prevention will initially make costs rise, because failure costs will not immediately drop. Investing in quality has a long-term positive return on investment.

332. Annual demand is 16,000 units. The economic order quantity (EOQ) is 800 units. The organization has decided it can tolerate 4 stockouts per year. The variability in demand for one standard deviation is 62 units. Using some preliminary calculations and the partial safety factor table below, what is the level of safety stock to hold for this item? Percentile Customer Service Level Standard Deviation MAD (Units x Factor Below) (Units x Factor Below) Percentile customer service level Standard deviation 75.00% 0.67 0.84 80.00% 0.84 1.05 84.13% 1.00 1.25 85.00% 1.04 1.30 89.44% 1.25 1.56 90.00% 1.28 1.60 A. 52 units B. 41 units C. 65 units D. 62 units Overall explanation The information in the question related to service levels is based on the acceptable number of stockouts per year. To convert this to a percentage service level, first calculate how many orders are made per year in total. Orders per Period = Period Demand/Order Quantity = 16,000 units/800 units = 20 orders per year. Next determine the customer service level. Customer Service Level = (Orders per Period - Stockout Chances per Period)/Orders per Period = (20 - 4)/20 = 16/20 = 0.8 = 80 percent. Use the 80 percent row of the table and the standard deviation column and multiply the standard deviation in units times the appropriate factor: 62 units x 0.84 = 52.08 units, rounded to 52 units.

333. With which of the following modes of transportation does the carrier typically have the highest fixed costs? A. Water B. Rail C. Road D. Air Overall explanation 7 In contrast to variable costs, fixed costs do not change with the volume of goods carried. Railways have large fixed costs, for example, tracks, terminals, and vehicles.

334. An organization's sales, production, and inventory plans are provided below. What is the most likely reason for the organization to have any inventory in June? Period Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Sales plan 50 50 60 60 80 90 70 50 40 40 40 40 Production plan 50 60 60 70 70 70 70 50 50 50 50 40 Inventory plan 20 30 30 40 30 10 10 10 20 30 40 40 A. Hedge inventory B. Lot-size inventory C. Safety stock D. Emergencies Overall explanation Safety stock addresses demand uncertainty by providing an incremental quantity of finished goods or components, and it is the most likely reason for having any inventory in June (or July or August).

335. In a process industry, which of the following elements decouples the scheduling of sequential stages? A. Ropes B. Inventory C. Queues D. Kanban’s Overall explanation Inventories decouple the scheduling of sequential stages within a process industry.

336. Which is true of a cold chain? A. All products in the cold chain are shipped at the same temperature and humidity. B. Some products can be damaged when temperatures dip below the ideal transportation temperature. C. They always use the fastest mode of transportation to minimize time in the cold chain. D. Time spent above the ideal transportation temperature is unlikely to result in loss of value. Overall explanation Some products, such as tropical fruits, may be damaged by overly low temperatures. The cold chain often uses slower transportation modes for certain products like produce and may handle products at different shipping temperatures and humidity. Time spent above the ideal transportation temperature may cause rapid deterioration and loss of value.

337. Implementation of electronic data interchange (EDI) will have the most impact on which of the following costs? A. Packaging B. Supplier development C. Quality D. Transactions Overall explanation EDI is the electronic exchange of trading documents, such as purchase orders, shipment authorizations, advanced shipment notices, and invoices.

338. Which of the following activities in the physical distribution system creates time value by placing the product close to the customer? A. Order processing and communication B. Materials handling C. Warehousing D. Distribution inventories Overall explanation Distribution inventory includes all finished goods inventory at any point in the distribution system. Distribution inventories create time value by placing the product close to the customer.

339. A CEO suggests some additions to the company's automated dashboard—a number of financial measures as well as information on customer complaints, manufacturing cycle time by product group, and year-to-date spend on education and training. What is this view commonly called? A. Balance sheet B. Product positioning perspective C. House of holistic perspectives D. Balanced scorecard Overall explanation A balanced scorecard is a list of financial and operational measurements used to evaluate organizational performance. It may include customer, business process, financial, and innovation and learning perspectives. It formally connects overall objectives, strategies, and measurements.

340. Which is an example of how a fixed order quantity (FOQ) inventory ordering technique could result in excess inventory? A. Demand is high until the order point, but after that it drops to low levels. B. Demand is very low, and the order point is not reached for many weeks. C. The order lead time is longer than expected. D. The organization holds no safety stock at the ordering location. Overall explanation Whenever the stock reaches a designated order point (a certain number of units left in inventory), an order is placed for a fixed quantity. If demand falls unexpectedly after this point (the demand during the lead time), the fixed order plus the units still in stock could be in excess of what is specified by policy.

341. Trying to achieve the lowest production cost possible would likely conflict with which of the following scenarios? A. Stopping production for a week to install new equipment that will increase production output B. Initiating a new project that will enable setup to be offline, increasing production line uptime C. Breaking into a production run to make product needed for a customer D. Reducing setup time by holding a kaizen event Overall explanation Breaking into a production run typically requires an additional setup, which translates to lost production time, thereby increasing expenses.

342. Which quality tool can help focus improvement efforts to resolve the most common customer complaints with the least investment of time and money? A. Control chart B. Pareto chart C. Check sheet D. Cause-and-effect chart Overall explanation A Pareto chart ranks the frequency of issues or problems from most frequent to least frequent so that improvement efforts can be focused to get the most impact from time and money spent on continuous improvements.

343. Which of the following are benefits of statistical process control (SPC)? A. Fewer inspection steps, quick recognition of problems, and quick recognition of the effects of correction B. Fewer inspection steps and quick recognition of the effects of correction C. Fewer inspection steps, less preventive maintenance, quick recognition of problems, and quick recognition of the effects of correction D. Less preventive maintenance and quick recognition of problems Overall explanation By removing variance early on in the production process, SPC enables companies to have fewer downstream inspection steps, quick recognition of process problems, and ability to easily monitor the effects of a correction to the process.

344. An engineer-to-order environment produces large cabinets. One of the bulk items is used in all end items and has a limited point-of-use storage area. Which of the following ordering techniques is most likely to be used? A. Fixed B. Period C. Reorder point D. Economic Overall explanation Since the item is used in all end items, the fixed order quantity would be used.

345. A company is performing a quality audit on a supplier that is process-oriented and has an excellent reputation. The company should audit which of the following? A. Flexibility B. Repeatability C. Maintainability D. Capability Overall explanation Even if the supplier is known for quality, the customer may not know if the quality is in the process or a result of inspection.

346. In developing the standard economic order quantity formula, which assumption is made? A. Demand for the item is subject to only random variation. B. Replenishment is in split lots. C. Ordering and carrying costs are subject to normal market variation. D. Replacement occurs all at once. Overall explanation Replenishment occurs all at once, meaning that the full reorder is available at receipt. The other answers are incorrect and the actual assumptions are as follows: Demand is known and relatively constant

347. Which of the following scenarios warrants the use of economic order quantity (EOQ)? A. Finished goods with a component that limits run length B. Finished goods with demand that is independent and fairly uniform C. Finished goods with a short shelf life D. Finished goods that are made to order Overall explanation One of the assumptions for using EOQ is that demand is independent and fairly uniform. Other EOQ assumptions are that items are purchased or made in batches or lots, ordering costs and carrying costs are known and the curves are stable, and replacement occurs all at once.

348. The economic order quantity (EOQ) for a manufactured part is the quantity at which: A. the ordering costs are lowest. B. the costs of changing capacity are lowest. C. the replenishment lead time is shortest. D. the ordering and carrying costs are equal. Overall explanation The EOQ is a type of fixed order quantity model intended to minimize the combined costs of acquiring and carrying inventory. It is based on certain assumptions, including that demand is constant and known, the item is produced or purchased in batches continuously, order preparation and inventory carrying costs are constant and known, and replacement occurs all at once. Given these assumptions, the EOQ occurs when the ordering cost equals the carrying cost.

349. Certain corporations, such as Amazon and Apple, have excellent customer service operations. Which of the following is the term for an organization looking to such exemplars for inspiration on how best to improve their own operations? A. Root cause analysis B. Benchmarking C. Market research D. Corporate espionage Overall explanation Benchmarking is the process of comparing products and/or services to those of another organization thought to provide superior performance. The benchmark target does not have to be a competitor or operate in the same industry.

350. Design of experiments (DOE) is used to plan a test to determine clothes whitening by three laundry detergents on three types of washing machines. Which of the following is the dependent variable in the experiment? A. Whiteness factor B. Laundry detergent C. Person conducting the experiments D. Washing time Overall explanation Whiteness is the output or effect and is therefore the dependent variable.

351. How does advanced planning and scheduling (APS) software differ from other planning systems? A. APS runs in real time in parallel to other system processes. B. APS combines enterprise resources planning with complex spreadsheet workbooks. C. APS includes the planning processes of production planning, master production scheduling, and capacity requirements planning. D. APS simultaneously plans and schedules production based on available materials, labor, and plant capacity. Overall explanation APS simultaneously plans and schedules production based on available materials, labor, and plant capacity.

352. As part of a contract-buying improvement initiative, approved suppliers are integrated so they can use supplier scheduling. Which of the following should be implemented with these suppliers? A. Frequent price reviews of supplier materials B. Audits of individual transactions with these suppliers C. Significant reduction of purchasing fraud-related checks and balances D. Issuing of purchase orders Overall explanation An organization that is using contract buying with a supplier can use supplier scheduling. For MRP (material requirements planning) planned orders, often the supplier is given a copy or view of the material requirements plan so they can produce the units that will be needed. This is called supplier scheduling when the supplier uses the planned orders directly in its own MRP process. In this arrangement, no purchase orders are issued. However, both the purchasing process itself and the performance of individual suppliers still needs to be monitored and controlled in this situation. Since purchasing involves large amounts of money, the organization needs checks and balances and audits to safeguard against fraud. Prices will be regulated by the blanket purchase order or other long-term contract, so price reviews should not need to be more frequent in this scenario.

353. When using an order point system for inventory that is planned to have a 95 percent customer service level, what will happen first if demand during the lead time is higher than average? A. Safety stock will be sold. B. There will be a stockout. C. The order point will be reached sooner. D. There will be an overstock. Overall explanation Since the inventory has a high customer service level, this is likely supplied by holding safety stock. When demand during the lead time is higher than average, this means that cycle stock will be depleted and the first thing that will happen is that safety stock will be accessed. If sales are high enough (a 5 percent chance), the safety stock will then be depleted and a stockout will occur.

354. A supplier produces for countries around the globe. If only domestic customers are considered in demand management, what will the resulting outcome likely be? A. Demand will be unaffected. B. Not enough information exists to comment. C. Demand will be overstated. D. Demand will be understated. Overall explanation When both domestic and international demand are present, ignoring international demand will result in understated requirements.

355. Annual demand for an item that costs $9 is 14,000 units, and it has a lot size of 800 units. If the cost per order is $30 and the carrying cost is 20 percent, what is the annual ordering cost? A. $525 B. $225 C. $375 D. $105 Overall explanation Annual Ordering Cost = Number of Orders x Cost per Order. Number of Orders = Annual Demand/Lot Size = A/Q = 14,000 units/800 units = 17.5 orders per year. Annual Ordering Cost = 17.5 x $30 = $525.

356. Annual demand for an item that costs $9 is 14,000 units, and it has a lot size of 800 units. If the cost per order is $30 and the carrying cost is 20 percent, what is the annual inventory carrying cost? A. $525 B. $225 C. $375 D. $720 Overall explanation Annual Inventory Carrying Cost = Quantity/2 × Carrying Cost Rate × Unit Cost Number of Orders = Annual Demand/Lot Size = 800 units / 2 X .02 X $9 = $720

357. Which is the best way listed for an organization to encourage suppliers to avoid use of hazardous materials when feasible? A. Pricing incentives B. Supplier co-location C. Education D. Zero tolerance policy Overall explanation Pricing incentives help promote voluntary compliance. Education would also be helpful but may not be as effective without the pricing incentives. A zero tolerance policy may result in losing suppliers who are valuable in many other ways. Working with the supplier in a more flexible way could lead to buy-in and eventual compliance.

358. An organization is forming a strategic partnership with three other organizations in its supply chain. They all use different enterprise resources planning (ERP) systems, some of which are overdue for upgrade or replacement. What solution could help them get real-time visibility into demand or supply issues very quickly? A. Agreement to adopt the partner ERP system that is most in need of an upgrade B. Data analytics C. Cloud computing D. Agreement to adopt the partner ERP system that is most up to date Overall explanation Cloud computing is the only option that could be completed very quickly. With cloud computing, supply chain partners could easily sign up for the same service and participate to gain real-time visibility into demand or supply issues.

359. Which of the following activities represents reverse logistics? A. Moving incomplete material back to an earlier work center B. Returning goods to the seller due to repair, re manufacture, or recycling activity C. Rescheduling a future order to an earlier date D. Reinspecting outdated inventories to determine whether they can still be used or sold Overall explanation Reverse logistics is concerned with the management of the flow of products and materials from the customer back through the supply chain to the originating source.

360. Information for production and purchasing primarily comes from which of the following planning cycles? A. Rough-cut capacity planning B. Capacity requirements planning C. Material requirements planning D. Manufacturing resource planning Overall explanation Information for production and purchasing is predominantly derived from the MRP cycle.

361. Which category of expenses on an income statement includes the costs of general managers, computer systems, research and development, and others? A. Prepaid expenses B. General and administrative expenses C. Accrued expenses D. Operating expenses Overall explanation General and administrative expenses are the expenses required to administer a business. They are not related to the construction or sale of goods or services.

362. What is a potential risk associated with using GPS systems to track a shipment as it moves through the supply chain? A. Reader malfunction during the scanning process B. Increased risk of theft C. Incorrect data stored in the blocks D. Loss of power due to reliance on a battery Overall explanation GPS systems typically use battery power, so power loss is a potential risk. Data being stored incorrectly on blocks would apply to blockchain technology, and reader malfunction would apply to radio frequency identification (RFID) technology instead of GPS systems. GPS systems add an extra layer of security by allowing location records to be created and associated with incidents like container doors opening, thereby lowering theft risks instead of increasing them.

363. Which term refers to the securing of sensitive data and ensuring that access is restricted to role-appropriate views? A. EDI B. Master data C. ERP D. Data governance Overall explanation Data governance refers to the overall management of data's accessibility, usability, reliability, and security, which also includes securing sensitive data and ensuring that access is restricted to role-appropriate views.

364. If it is assumed that final products and lower-level subassemblies are both made-to-stock and made-to-order, which of the following final assembly schedule (FAS) practices should be adopted? A. The planning horizon of the FAS should be shorter than that of the master production schedule. B. Commitment to FAS should be made as early as possible. C. Order promising should not be tied to the FAS. D. The shipping schedule should correspond to the FAS with the required offset. Overall explanation The question describes an assemble-to-order (ATO) environment. In an ATO environment, the master schedule and the FAS are not the same thing. The MPS must produce the subassemblies and have them ready for any customer ATO order where they are brought together and finished. The FAS is said to relieve the MPS plan.

365. A manufacturer is experiencing a delay in raw materials delivery; the materials will arrive a week later than expected. As a result, the manufacturer must adjust its level of safety stock. The company needs 85 units of safety stock to meet its customer service level. If the original lead time was six weeks, what is the new level of safety stock required? A. 98 units B. 92 units C. 99 units D. 85 units Overall explanation The new level of safety stock is equal to the old level of safety stock multiplied by the square root of the new lead time divided by the old lead time—in this case, 85 units times the square root of 7 weeks/6 weeks = 85 units x 1.08 = 92 units (rounded).

366. An organization is trying to forecast how many units of replacement part XYZ to produce in the upcoming period. The part is in fairly high demand and requires a long lead time to produce. What information could help the most with this forecast? A. Mean time between failures (MTBF) B. Mean absolute deviation (MAD) C. Mean time to repair (MTTR) D. Mean time to failure (MTTF) Overall explanation The APICS Dictionary, 16th edition, defines MTBF as "the average time interval between failures for repairable product for a defined unit of measure (e.g., operating hours, cycles, miles)." MTBF can be used to generate repair part forecasts for items with sufficient demand and long lead times.

367. The benefits of cross-training will not be realized unless it is supported by A. process improvement. B. self-directed work teams. C. job rotation. D. employee empowerment. Overall explanation Job rotation is the best answer because the primary benefit of cross-training is wasted unless employees have the opportunity to apply the skills they have learned. This opportunity is provided by job rotation. Employee empowerment may be augmented by cross-training but is not the primary benefit. Process improvement and self-directed work teams are very indirect beneficiaries of cross-training.

368. What is the definition of data governance? A. Overall management of the accessibility, usability, reliability, and security of data used to ensure data record accuracy B. Science of examining raw data with the purpose of drawing conclusions about that information C. Process of ensuring that a database remains an accurate reflection of the universe of discourse it is modeling or representing D. Practice of examining large databases in order to generate new information Overall explanation Data governance is a set of processes that ensures that important data assets are formally managed throughout the enterprise.

369. What is the term for the processes of creating, producing, and delivering a good or service to the market? A. Logistics B. Business-to-business commerce C. Cumulative lead time D. Value stream Overall explanation The APICS Dictionary defines the value stream as "the processes of creating, producing, and delivering a good or service to the market."

370. A company is considering the adoption of a highly automated form of manufacturing technology that will have a major impact on its production process. Which of the following situations will most likely cause the longest delay in the implementation of this new technology? A. The company has too few skilled technicians and experienced implementers of this type of new technology. B. The proposed changes will cause a mismatch between products and processes. C. The necessary support and maintenance systems do not currently exist and must be developed. D. The technology conflicts with the company's capabilities and culture. Overall explanation All four of the possible answers may hinder the speedy implementation of a complex technology. Maintenance systems, products and processes, and new people skills will all be needed to implement the new technology, and the less the company has of each, the longer it will take to fully implement the new technology. However, technology conflict with the company's existing capabilities and culture will most likely cause the longest delay, because this has to do with changing the people side of the organization.

371. Why have standard manufacturing cost accounting methods become less applicable today? A. Material costs are a higher proportion of total costs, and indirect labor costs are a higher proportion of total costs. B. Material costs are a higher proportion of total costs. C. Material costs are a higher proportion of total costs, direct labor costs are a higher proportion of total costs, and indirect labor costs are a higher proportion of total costs. D. Direct labor costs are a higher proportion of total costs. Overall explanation The cost of materials and components has risen over time. With the rise in automation and lean manufacturing, the tracking of indirect labor costs has risen in importance, and these costs have a direct impact on total cost.

372. What are the typical effects if a quantity discount is taken on a purchase order? A. Carrying cost increases and total cost decreases. B. Carrying cost decreases and total cost increases. C. Both carrying cost and total cost decrease. D. Both carrying cost and total cost increase. Overall explanation The two key costs of inventory are carrying costs and order costs. A larger purchase order receipt will increase carrying costs but decrease ordering costs and, therefore, decrease total cost.

373. The complexity of an environment has contributed to late orders and excessive work in process. To provide a long-term solution, which of the following steps would be taken first? A. Simplify the product structure. B. Document part and assembly flows. C. Reduce work in process. D. Implement pull system logic. Overall explanation Before any changes to the production environment can be undertaken, it is essential that improvement teams understand the nature and flow of the production inventory and assembly processes. Mapping the process will enable improvement teams to identify redundancies, process gaps, and inefficiencies. With this information in hand, teams can then make informed decisions to simplify the product structure, reduce work in process, and implement a pull system.

374. The following information about a part is provided before and after a cycle count. Which of the following statements is true of inventory accuracy for the part from a financial perspective? Location Inventory before cycle count Inventory after cycle count % difference Allowed % tolerance L01 50 80 +60% 2.0% L02 50 20 -60% 2.0% A. The monetary value is inaccurate. B. The inventory count is inaccurate. C. The inventory count is accurate. D. The monetary value is accurate. Overall explanation The monetary value for the part is accurate, even though the inventory is off at each location. The question asks specifically about the financial perspective.

375. A shipment of remote-control components is delivered to a factory and immediately taken to a workstation ready to begin assembly. What is the name of this inventory management technique? A. Lot control B. Lot-for-lot C. Efficient D. Wall-to-wall inventory Overall explanation In wall-to-wall inventory management, materials enter a plant and are processed right away, as opposed to being logged in an inventory store until a later date.

376. Which correctly identifies the following examples of costs as internal failure (I), external failure (E), appraisal costs (A), and prevention costs (P)? A. Operator training= I; product recalls and loss of customers = E; scrap and machine maintenance= A; in-line inspection = P B. Scrap = I; product recalls and loss of customers = E; in-line inspections = A; machine maintenance and operator training = P C. Product recalls = I; scrap and in-line inspections = E; loss of customers = A; machine maintenance and operator training = P D. Machine maintenance and in-line inspections = I; scrap and loss of customers = E; product recalls = A; operator training = P Overall explanation Scrap is an internal failure cost because it occurs without the customer seeing it. Product recalls and loss of customers are external failure costs because the first is directly experienced by customers and the second is a direct customer reaction to poor quality. In-line inspections are an appraisal cost because this is an example of a quality control activity. Machine maintenance and operator training are examples of prevention costs because these are investments designed to reduce the chances of quality problems occurring in the first place.

377. Ensuring that all customer needs are identified in an effort to solidify the product design is an example of the: A. process flow analysis methodology. B. quality function deployment (QFD) process. C. qualitative forecast technique. D. Delphi method. Overall explanation QFD is a methodology designed to ensure that all the major requirements of the customer are identified and subsequently met or exceeded through the product design process.

378. What is the term for the necessary activities and techniques used by a corporation to ensure that they always have the desired levels of raw materials to meet demand? A. Inventory control B. ABC classification C. Wall-to-wall inventory D. Safety stock Overall explanation Inventory control includes the activities and techniques used to maintain the desired levels of items in inventory. These items can be raw materials, work-in-progress, components, or finished products.

379. A manufacturer of consumer electronics offers customers after-sale installation and maintenance. This is a way to avoid or reduce external failure costs—that is, problems found after the purchase of the product. This is known as: A. total quality management. B. customer service. C. field service. D. preventive maintenance. Overall explanation Field service may also include training and implementation assistance for larger and more complex items. Customer service involves addressing the needs, injuries, and requests of customers as they arise.

380. On the balance sheet, if owners' equity is $5,000 and liabilities are $3,000, what are the assets? A. $2,000 B. $3,000 C. $8,000 D. $5,000 Overall explanation Assets = Liabilities + Owners' Equity

381. Which is an accurate statement about ABC classification? A. A items should have the most safety stock. B. About 20 percent of the items will account for about 80 percent of the total value. C. A general rule for using ABC classification is to have plenty of everything in inventory. D. C items account for about 80 percent of the total value. Overall explanation The general rule of thumb is that about 20 percent of the items will account for about 80 percent of the total value. A items should have the tightest control over safety stock levels, not the largest amount of safety stock. Good inventory management would not have plenty of everything in stock. Also, C items account for about 5 percent, not 80 percent, of the total value.

382. Under the group technology concept, which of the following is true? A. Labor is highly specialized. B. Manufacturing departments should be laid out according to function. C. Like machines should be grouped in clusters. D. Machines should be grouped to produce parts of similar form. Overall explanation Group technologies seek to group machines to facilitate the production of like products.

383. Which is a good description of the purpose of a fishbone diagram? A. Method to determine the root cause of a symptom. B. Capability analysis C. Cost buildup method D. Synonym for a Pareto analysis Overall explanation A fishbone diagram is another name for a cause-and-effect diagram, which is used as an aid in brainstorming ideas to identify root causes of a problem and to solve the problem.

384. Which of the following issues would be of greatest concern for a company choosing to reduce its finished goods inventory? A. Product shelf life constraints B. Customer service expectations C. Product quality requirements D. Long production changeover time Overall explanation Reducing finished goods inventories increases the probability of order stockout and disappointed customer expectations. Long changeover times, quality, and shelf life constraints could also be affected by inventory reductions but not as greatly as the blow to customer expectations.

385. Accurate inventory levels are most influenced by which of the following? A. Longer forecast horizons B. Cycle counts C. Bill of material maintenance D. Annual physical inventory Overall explanation Counting inventory item balances on a regular basis enables control personnel to keep balances correct and enables them to search for the root causes of errors.

386. A company is determining how much floor space will be required for a new distribution warehouse. The plan is to store 15,000 cartons stacked on pallets three high. Each pallet will contain approximately 40 cartons. How many pallet positions will be required for the warehouse? A. 120 positions B. 375 positions C. 5,000 positions D. 125 positions Overall explanation 15,000 cartons divided by 40 per pallet divided by 3 high equals 125 positions.

387. In a min-max inventory system, inventory equal to the order point plus a variable order quantity is the: A. hybrid inventory level. B. part period inventory level. C. periodic inventory level. D. target inventory level. Overall explanation In a min-max inventory system, a target inventory level is the equivalent of the maximum. The target inventory is equal to the order point plus a variable order quantity.

388. A work center needs to process units more quickly in order to get up to takt time. What tool can be used to specify work elements, their sequence, and how long each step should take, including walking to get parts and so on? A. Production capacity chart B. Standardized work combination table C. Standardized work analysis chart D. Job element sheets Overall explanation A standardized work combination table is used to identify work elements and their required sequence. It can show walking, automatic, and manual steps. It considers takt time.

389. What is a good method for mitigating an out-of-control internal manufacturing process? A. Fact finding, educating, empowering, observing, adjusting, and repeating B. Hiring more quality personnel C. Using the supplier of the raw materials as the temporary scapegoat D. Hiring a public relations consultant Overall explanation This method is illustrated in the example of a paper supplier. A major multinational customer reported to the paper supplier that their ink-jet paper product was curling (failing) under conditions of low humidity. A year later the plant was supplying acceptable paper, but plant productivity, scrap, and rework levels were poor. Then the major customer produced statistical proof that the supplier's process was out of control. This is a variation on the theme of plan, do, check, action.

390. Which of the following is more characteristic of a general business contract than a customer-supplier partnership? A. Customer and supplier perform concurrent engineering on the design of a new product. B. Supplier dedicates a portion of its capacity over a long-term basis to the customer. C. Customer establishes a single-source relationship with the supplier for certain products. D. Distributor provides all of the company's hardware and standard electrical components. Overall explanation This would be a contractual purchase agreement that does not involve the mutual commitment of a partnership.

391. To be successful, both six sigma and total quality management (TQM) must: A. involve years of training and indoctrination. B. recognize and severely deal with naysayers and non-supporters early on. C. obtain managerial commitment, establish a quality culture, and fully involve all employees. D. above all have a recognizable executive champion. Overall explanation As in the case with TQM, six sigma requires managerial commitment, the establishment of a quality culture, and fully involved employees.

392. An organization's average inventory in the aggregate is $3 million. Capital costs are 7 percent per year, storage costs are 8 percent per year, and risk costs are 11 percent per year. What is the annual carrying cost? A. $570,000 B. $1,848 C. $450,000 D. $780,000 Overall explanation Carrying Cost = Average Annual Inventory x Carrying Cost Rate. To determine the carrying cost rate, sum the capital cost, storage cost, and risk cost percentages: 7% + 8% + 11% = 26%. Carrying Cost = $3,000,000 x 0.26 = $780,000.

393. Cost reduction objectives with suppliers can best be achieved by: A. cost-volume-profit analysis. B. reengineering designs. C. continuous improvement. D. volume purchasing. Overall explanation Continuous improvement activities will highlight areas on both sides of the partnership that can be beneficial in reducing costs.

394. What is the best reason for closing the loop between master scheduling and sales and operations planning (S&OP)? A. One is the plan, and one shows where the plan is valid. B. One is the plan, and one confirms resource availability. C. One is the plan, and one confirms execution of the plan, D. One is the plan, and one is the execution of the plan. Overall explanation S&OP is the plan, and master scheduling identifies how the plan will be executed.

395. Which of the following techniques should be introduced to reduce the cost of processing transactions? A. Larger order quantities, backflushing, and kanbans B. Backflushing, supplier certification, and kanban C. Larger order quantities, backflushing, and supplier certification D. Larger order quantities, supplier certifications, and kanbans Overall explanation Although larger order quantities reduce the number of batches, they increase lead time, inventory, and costs.

396. Which of the following may be used as a measure of manufacturing process flexibility? A. Low overhead costs B. Work center efficiency C. Output per employee D. Skills per employee Overall explanation A key component in manufacturing process flexibility is the ability of operators to perform multiple processing tasks.Multiple skilled employees can be moved around in the plant to tackle bottlenecks.

397. Engineering has suggested that a company's products would provide more value to customers if the products were capable of identifying and automatically reporting problems to service and repair associates. What would be the most likely effect of this strategy? A. Enhancing the product's order-qualifying features B. Facilitating a move to higher selling prices C. More frequent on-site service, thus increasing costs overall D. Increasing customer uptime, reducing customer repair costs Overall explanation An elevator company has diagnostic capabilities built into each system so that a worldwide 24-hour remote electronic monitoring system can detect any one of 325 problems with an elevator or escalator installed at a customer's site. After notification, the system can analyze and diagnose the problem. It then may make the call to a company service person at the nearest location and assists the mechanic in identification of the part(s) in question. This system helps keep outage times to less than three hours. Design is in the loop too, so that they can assess and update as necessary for recurring problems (continuous improvement). Customers also have access to the performance history of each of their elevators and escalators.

398. Which is recorded in control charts? A. Average of specification limits over time. B. Mean of the results from product inspection. C. Range of each set of samples taken over time. D. Root causes of process variation. Overall explanation Control charts provide information on the average and range of each set of samples taken over time. However, they do not record the results of inspections, as inspections occur on the final product, while statistical process control occurs at the work center level.

399. Which metric measures the amount of inventory on hand? A. Obsolescence list B. Days of supply C. ABC classification D. Inventory velocity Overall explanation Days of supply is an inventory-on-hand metric converted from units to how long the units will last.

400. What would a job shop organization located in the U.S. need to get to put "Made in the U.S.A." on their products intended for export? A. Shipper's export declaration B. A lot traceability system C. Unique IDs at the instance level D. Certificate of manufacture Overall explanation The APICS Dictionary, 16th edition, defines a certificate of manufacture as a document that "attests that the goods were manufactured in the exporter's country. It is provided and signed by the exporter's chamber of commerce."

401. A supplier indicates that the ideal temperature for a raw material being considered as a possible ingredient in a food product is 0 degrees Celsius. What is an important follow-up question? A. Is air transport acceptable? B. For what duration of time can the product be above freezing? C. Is there a need for a safety data sheet? D. What is the acceptable temperature range? Overall explanation Temperature requirements are usually specified in a range. Items could get too cold or too warm. How long a product can stay above freezing would be highly dependent on the ambient air temperature and would not be very accurate information. If the range is known and the product temperature can be monitored, however, the temperature reading will indicate when the product is being stored outside of the acceptable range (too warm or too cold).

402. Which of the following benefits of setup reduction is most immediate? A. Improved quality B. Reduced work in process C. Reduced queue time D. Reduced product cost Overall explanation The time to set up a product has a direct cost that is a component of the overall cost of producing the item. When the setup time is reduced, not only is the cost of setup reduced

403. Companies typically make final purchasing decisions based on which of the following supplier characteristics? A. Product advertising B. Free-on-board shipping C. Supplier fixed cost D. Delivery reliability Overall explanation Besides perfect quality, a key final purchasing decision point is delivery reliability. Ensuring that purchase deliveries arrive on time is an essential feature of supplier partnerships.

404. A strategy to attain technology superiority in product development may lead to: A. market domination during the early stages of a product's life cycle. B. copycat manufacturers who have no regard for intellectual property rights. C. unnecessary complexity in the manufacturing process. D. overly complex products containing unnecessary features. Overall explanation A principal offensive competitive strategy includes leapfrogging competitors by being the first to market with next¬generation products. For example, with its Xbox, Microsoft led the market by 12 months, until Sony's PlayStation was released.

405. Distribution requirements planning (DRP) should directly interface with: A. purchasing planning. B. material requirements planning. C. master scheduling. D. capacity requirements planning. Overall explanation The output of the DRP plan is placed in the master schedule along with other sources of demand on items. This enables the planner to completely plan the requirements on an item.

406. Which function of inventory involves the purchase of additional inventory by buyers who expect prices to rise? A. Transportation B. Fluctuation C. Hedge D. Anticipation Overall explanation Purchasing additional inventory is a hedge against future price increases, leading to reduced overall costs if an increase does occur.

407. Reducing setup time to enable quick changeovers of products on a manufacturing line is an example of: A. continuous exchange of products. B. continuous process improvement. C. continuous replenishment. D. continuous production. Overall explanation Continuous process improvement is a never-ending effort to expose and eliminate the root causes of problems, focusing on small-step improvement as opposed to big-step improvement.

408. A company ships production to its distribution centers (DCs) weekly. When reporting inventory levels at the end of the month for the sales and operations planning process, under which of the following categories should the inventory at the production facility be reported? A. Finished goods B. Pipeline C. Distribution D. In-transit Overall explanation Inventory that has not yet shipped to a DC would be reported as finished goods.

409. Which of the following is true of product costs? A. They are non-manufacturing costs. B. They are allocated to the product. C. They are period costs. D. They vary with production. Overall explanation Product costs are allocated by some method to the products being produced.

410. Direct delivery of material to a specified location on a plant floor near the production line is called: A. point-of-purchase. B. point-of-need. C. point-of-use. D. point-of-sale. Overall explanation Point-of-use delivery is the direct delivery of material to a specified location on a plant floor near the operation where it is to be used.

411. Which technology would best assist an organization that needed to inspect pipelines to monitor for leakage? A. Autonomous vehicles B. Drones C. Blockchain D. Robotic process automation Overall explanation Drones can be used to inspect pipelines and other difficult-to-access areas.

412. Which of the following applies to the number of levels in a cause-and-effect diagram? A. Limited by the number of causes and sub-causes B. Limited by the length of the brainstorming session C. Limited to two to three based on a significant few principle D. Limited by the physical dimensions of the paper Overall explanation The only limit is the number of reasons for the problem.

413. Today's information systems deliver operation-specific performance data concerning machine, people, and product detail within the time frame required directly to managers. What is this an example of? A. Nice-to-have feature of a fully implemented enterprise resources planning system B. Invasive big-brother-type monitoring C. IT systems delivering production value D. Fully functioning numerically controlled computer system Overall explanation Tracking key performance indicators, gathering information from operating personnel, quickly identifying and diagnosing problems, and taking corrective actions are all integral pieces of the process of managing strategy execution.

414. An operation's actual run time is 300 minutes, and its planned run time is 400 minutes. The operation's actual quantity produced is 900 units but its target quantity produced is 1,000 units. Of the 900 units produced, 810 were produced right the first time and 90 required rework. What is the overall equipment effectiveness (OEE)? A. 6.75% B. 60.75% C. 76.67% D. 54.68% Overall explanation The OEE is the availability times the performance times the quality. Availability is actual run time divided by planned run time, or 300 minutes/400 minutes = 0.75 Performance is actual quantity produced divided by target quantity produced, or 900 units/1,000 units = 0.9 Quality is the quantity produced right the first time divided by the total quantity produced, or 810 units/900 units = 0.9 OEE = 0.75 x 0.9 x 0.9 = 0.6075, or 60.75%.

415. Which of the following improvements is most difficult to achieve with a well-implemented continuous improvement program? A. Safety stock reduction B. Lot size reduction C. Workplace organization D. Run time reduction Overall explanation Run time reduction may require new equipment, part design, new methodologies, etc.

416. Which of the following types of quality costs includes inspecting materials? A. Appraisal B. Prevention C. External failure D. Internal failure Overall explanation Typical appraisal costs include inspection, quality audits, testing, calibration, and checking time.

417. Incoterms define which of the following in regard to shipping? A. Identity of the freight forwarder and/or broker B. When ownership passes from the seller to the buyer C. Point at which risk for shipped goods transfers between parties D. When the sender needs to post an advance ship notice (ASN) Overall explanation When goods are moved between two entities, it is imperative that clarity exists as to who is responsible for what. Incoterms, developed by the International Chamber of Commerce, are specifically designed to address this need. Incoterms are contracts for carriage. A contract for sale determines when ownership is transferred.

418. Which statement about information and process technology is true? A. Technology should be selected on the basis of the competitive advantage it conveys. B. Information infrastructure requirements in push and pull systems are the same. C. The learning curve should not affect investment decisions. D. ERP systems are more important to pull systems than push systems. Overall explanation One of the selection criteria for technology should be whether it conveys an advantage that is significant and hard to copy. An ERP provides organizational benefit by providing access to accurate and current data. The learning curve should be a consideration since it will affect the payback analysis. Push and pull systems do require different types of technology.

419. The actual cost of an order can be different from the standard cost because of which of the following factors? A. Tooling and queue B. Efficiency, tooling, and scrap C. Tooling, scrap, and queue D. Efficiency and scrap Overall explanation Efficiency can affect actual cost because the actual production time will be impacted by how much time is actually spent producing a product. Scrap creates excess material, labor, and overhead costs.

420. Which of the following best represents evidence of upper management leadership at the strategic level? A. Attending quality meetings B. Inspecting and checking outgoing products C. Creating a vision of a total quality culture D. Conducting quality system audits Overall explanation Creating a vision of quality is evidence of upper management leadership at the strategic level. All of the other options are at a tactical level.

421. Which of the following is an example of an internal failure cost of quality? A. Scrapping products that do not meet specifications B. Providing warranty field repair C. Processing customer complaints D. Testing products before shipment to customers Overall explanation Scrapping products that do not meet specifications represents an internal failure cost of quality.

422. What type of inventory is held due to the unpredictable nature of supply, demand, or lead time? A. Demand inventory B. Hedge inventory C. Fluctuation inventory D. Anticipation inventory Overall explanation Fluctuation inventory, also known as inventory buffer, is carried as a cushion to protect against forecast error.

423. Which of the following are training subject areas for managers who will use a new enterprise resources planning (ERP) system? A. Workarounds to enable established processes to still be used B. APS principles and techniques C. Application of the system to business problems D. Minimizing the need for change in the behavior of the organization Overall explanation ERP project leaders must be fully conversant in ERP principles and techniques, be effective as change managers to overcome personnel and corporate culture issues, and be able to apply the ERP functionality to solve business

424. Which of the following is an example of using the poka-yoke technique in process design? A. A rack system is designed to go in only one direction. B. The number of types of fasteners is reduced from 20 to 5. C. Setup time is reduced by standardizing tooling. D. A coupling is designed to eliminate incorrect insertion. Overall explanation Poka-yoke tries to eliminate the occurrence of errors in a process by making the steps as foolproof as possible.

425. What is an advantage of pre-assigning storage locations upon receipt? A. Working stock and reserve stock can be separated. B. The material handler can select the location of his or her choice. C. Zoning rules can be automatically applied by the computer. D. No empty locations will go unused. Overall explanation Zoning rules can be applied with the pre-assignment.

426. Inventory that has been superseded by a new model and will never be used or sold at full value is defined as: A. inactive. B. distressed C. surplus. D. obsolete. Overall explanation Obsolete inventory includes items that have met the obsolescence criteria established by the organization.

427. Which of the following is a framework for organizing, defining, and standardizing the business processes necessary to effectively plan and control an organization? A. Enterprise resources planning B. Advanced planning and scheduling C. Collaborative planning, forecasting, and replenishment D. Manufacturing resource planning Overall explanation Enterprise resources planning (ERP) delivers an integrated suite of business applications.Manufacturing resource planning is a method for the effective planning of all resources of a manufacturing company. Advanced planning and scheduling is a manufacturing management process that ensures raw materials and production capacity are optimally allocated to meet demand. Collaborative planning is related to the handling of complex, multi-stakeholder projects and planning scenarios.

428. Point-of-use storage has which of the following advantages as compared to warehousing? A. Improves accessibility and productivity B. Random storage C. Better use of the space D. Computer-controlled Overall explanation Point-of-use storage (on the production floor, near work centers) improves accessibility, productivity, and customer service. In this type of system, frequently used and lower-valued items may be issued in batches to the production floor and will be managed by the workers themselves. The items are removed from the inventory record when they are issued (front flushing) rather than when they are used (backflushing).

429. Large-scale productivity software often experiences implementation delays or initially performs below expectations. What mitigation strategy could be used in this situation? A. Budget for additional time and reduced performance after implementation. B. Keep the old system running in parallel until there is 100% functionality and user acceptance. C. Hire a third party to implement it. D. Implement it in small pieces while keeping existing systems in place. Overall explanation With productivity software implementations, it is often the case that performance drops below existing and projected levels until the application "works as expected."

430. A company has a standard product line that is regularly reengineered to reduce cost and improve quality. What must the buyer be most aware of when communicating new replenishment requirements to the supplier? A. Drawing revision B. Due date C. Order quantity D. Part cost Overall explanation The buyer needs to make sure that the supplier is providing parts for the latest engineering revision.

431. Inventory located in warehouses or in transit between warehouses and the consumer is called: A. work-in-process inventory. B. in-transit inventory. C. distribution inventory. D. finished goods inventory. Overall explanation Distribution inventory typically includes spare parts and finished goods, located in the distribution system (e.g., in warehouses or in transit between warehouses and the consumer).

432. Conducting business via electronic transfer of data and documents is considered: A. e-commerce. B. e-marketing. C. e-partnering. D. e-transacting. Overall explanation Electronic commerce (e-commerce) is the use of computer and telecommunication technologies to conduct business via electronic transfer of data and documents.

433. The following information exists for a part. A cycle count has been done, and a negative adjustment of two units was identified. What is the new balance of the item? * Quantity in location A200:100 units * Allocated quantity: 10 units * Reserved quantity: 4 units * Cycle count tolerance+/5 units A. 100 units B. 98 units C. 84 units D. 88 units Overall explanation The quantity is adjusted from 100 units to 98 units.

434. An organization is looking to meet its sustainability goals but has budget constraints. Which is the best sustainability option for this organization? A. Match inventory turnover with the product life cycle. B. Minimize total inventory investment by ordering efficiently. C. Install solar panels on the roofs of all facility buildings. D. Change products to use only recyclable plastics. Overall explanation A lower inventory investment aligns with organizational sustainability objectives by avoiding excess inventory that may otherwise enter the waste stream if it becomes obsolete.

435. A company is required to provide lot traceability for all of its products. This means that the company must be able to: A. provide a listing of all raw materials used in the product B. track every step of the process from supplier to customer. C. track every step of the process through the manufacturing facility, D. show exactly where each lot is stored in the warehouse. Overall explanation Lot traceability is the ability to identify the lot or batch number of products in terms of one or all of the following: its composition, purchased parts, manufacturing date, shipped items.

436. With respect to production, which of the following occurs when actual inventory of a part is greater than that shown by the computer? A. Assembly orders can be increased up to the additional quantity. B. The effect is to adjust inventory and keep production the same. C. Orders held due to a shortage can be released to production. D. Orders scheduled in a later period by material requirements planning can be safely expedited. Overall explanation No change should occur in production, which has been validated with capacity requirements planning. Material requirements planning will automatically revise planned dates if necessary.

437. A major airline has achieved considerable cost savings with its mastery of fast turnarounds of planes at the gate. This is an example of improvements from: A. vertical integration. B. improved efficiencies. C. improved labor conditions for gate personnel. D. supply chain redesign. Overall explanation Southwest Airlines, RyanAir, and EasyJet have all achieved considerable cost savings by reconfiguring the traditional value chain of commercial airlines, thereby permitting them to offer travelers dramatically lower fares.

438. A company is determining how much floor space to reserve in the layout for point-of-use storage in order to eliminate centralized storage. Which inventory classifications would be the most useful for initial planning purposes? A. Surplus and inactive B. Inactive and obsolete C. Excess and surplus D. Active and excess Overall explanation The layout should provide room for active inventory and possibly some quantity of excess, due to purchasing lot sizes.

439. Which of the following environments is most unlike the others from an operational perspective? A. Repetitive manufacturing B. Synchronized production C. Discrete manufacturing D. Batch processing Overall explanation Synchronized production is a philosophy that can be implemented in a number of ways. The others are all production processes.

440. Which technology would be best used to automatically update machinery use in order to better plan maintenance routines before breakdowns can occur? A. Blockchain B. Internet of Things C. Robotic process automation D. Artificial intelligence Overall explanation The Internet of Things enables equipment and other devices to update their status and location, which can be helpful for automatically tracking machine use and status in order to plan and execute maintenance routines.

441. Rework, scrap, spoilage, and downgrades are examples of: A. the product development cycle. B. a design process. C. external failure costs. D. internal failure costs. Overall explanation Internal failure costs are accrued when things go wrong before the product reaches the customer. They usually include the costs of rework, scrap, downgrades, reinspection, retesting, and process losses. They can have the added impediment of extending lead times or resulting in incomplete shipments.

442. A dispute arises over damage to goods shipped between two entities in different countries. Which international standards, if applied at the time of the shipment, would clearly resolve the dispute? A. Omnibus Foreign Trade and Competitiveness Act B. UN Global Compact C. Incoterms D. Export Trading Company Act Overall explanation When goods are moved between two entities, it is imperative that clarity exists as to who is responsible for what. Incoterms, developed by the International Chamber of Commerce, are specifically designed to address this need.

443. Pareto analysis can be used to identify which of the following? A. Out-of-control operations B. Most frequently occurring defects C. Customer base for marketing D. Volume of work throughout the plant Overall explanation The Pareto principle is used in prioritizing or ranking a range of items to separate the vital few from the trivial many. Identifying the most frequently occurring defects in a process is an excellent example of the use of Pareto analysis.

444. Which of the following actions is most likely to produce a high degree of sustained inventory data integrity? A. Resolving problems exposed by cycle counting B. Performing periodic physical inventories C. Increasing the frequency of cycle counts D. Changing cycle counting methods periodically Overall explanation Operations can count inventory as many times as they want, but variances will never disappear until the root causes of variances are fully investigated and the process changed to eliminate the variances from occurring again.

445. Which example of a key control to prevent inventory loss would be most prudent at a manufacturing location that uses precious metals in the manufacturing process? A. Annual physical inventory B. Blockchain C. Monitoring employee financials D. Segregation of duties Overall explanation Segregation of duties, in which the same personnel who authorize material moves cannot execute them, may be best suited to help prevent theft from a specific location. Annual physical inventory may not be sufficient

446. Which level of technology systems requirements stem from choices made for the production process? A. Strategic B. Analytical C. Operational D. Tactical

447. An organization produces industrial-capacity printer systems. It sells relatively few units a year at a high margin. If this product's technology clock speed is low, what would be the best design and manufacturing philosophies? A. Integral design and push-pull manufacturing B. Integral design and make-to-stock manufacturing C. Modular design and push manufacturing D. Modular design and pull manufacturing Overall explanation The question describes a product that has low technology clock speed, which is a product with a long-life cycle. Since it has few buyers, its demand will by nature be unstable compared to a product with a much larger customer base. The combination of high demand uncertainty plus low new product introduction frequency enables an integral design to be the most efficient design choice. Push-pull manufacturing is called for to enable the organization to be make-to-order but have reasonable lead times. The long lead time sourcing and component manufacture requirements can be push, while the products themselves can be make-to-order and pull.

448. Which method of sourcing refers to an organization that is the only supplier capable of meeting (usually technical) requirements for an item? A. Unisourcing B. Sole-source supplier C. Multi-sourcing D. Single-source supplier Overall explanation A sole-source supplier is the only supplier capable of meeting (usually technical) requirements for an item.

449. A parent item has a net demand of 100 units in period 6. Its lead time is two periods. One of the components is used in quantities of 4 per unit, and it has 0 in inventory and a lead time of 1 week. It is purchased in 1,000-unit order quantities. Which of the following planned order receipts would be the result of the explosion process for the component? A. Quantity of 1,000 units in period 4 B. Quantity of 1,000 units in period 3 C. Quantity of 400 units in period 4 D. Quantity of 400 units in period 3 Overall explanation 100 units x 4 = 400 units; period 6-2 periods = period 4; order quantity = 1,000 units

450. Which of the following data is not considered in the available-to-promise (ATP) calculation? A. On-hand inventory B. Master production schedule orders C. Customer orders D. Safety stock quantity Overall explanation The ATP calculation does not include safety stock, meaning that the safety stock can be promised to customers if needed (it is uncommitted inventory).

452. Processes for identifying, assessing, and managing the environmental, social, and ethical risk in the supply chain are elements of: A. fitness for use. B. responsible procurement. C. green reverse logistics. D. risk response planning. Overall explanation Responsible procurement is ensuring the use of ethical sources of goods and services to bring about a positive impact and minimize the negative impact on society and the environment.

451. Which is true of part numbers and their relationship on bills of material? A. A part at a particular processing stage has one and only one part number. B. A part can be either a parent or a child but never both. C. The same part number can be used to identify the same product at different stages of production before and after value has been added to it. D. The same part used on different bills of material will need different part numbers. Overall explanation Part numbers must be unique for control purposes, and a part that receives further processing during production will have a new part number when it exits the work center doing the processing.

453. A company that has a supply chain partner provide warehouse and delivery services is using a: A. extended enterprise partner. B. nominal trading partner. C. virtual warehouse provider. D. third-party logistics (3PL) provider. Overall explanation Third-party logistics (3PL) provides product delivery services. This third party may provide added supply chain expertise.

454. When an organization fails to follow up on supplier performance issues, how does that do the supplier a disservice? A. It does not allow them to correct problems that may result in the failure to secure another contract. B. It prevents the supplier from increasing brand value based on their performance on current contracts. C. It can lead to loss of morale among the suppliers workforce. D. It increases the likelihood of future orders that outstrip the suppliers' ability to meet demand. Overall explanation If an organization identifies issues with a supplier's performance and fails to communicate those issues back to the supplier, it does not allow the supplier the opportunity to correct the identified issues, which may result in the supplier being unable to secure a contract in the future.

455. A company is implementing lean principles, including reducing its supplier base. What is a key element for the supplier rating system? A. Delivery lead time B. Kanban cycle time C. Lowest cost D. On-time delivery Overall explanation On-time delivery reliability will be a key performance measure.

456. Which factor contributes most to the success of a change initiative? A. Communicating to employees the reason for the change B. Education and training at the top of the organization C. Day-to-day involvement of top management in implementation and control D. Using supervisors as coaches Overall explanation The most critical step listed is to communicate the purpose and objectives behind the initiative to employees. This creates a sense of urgency and involvement and reduces resistance.

457. Which of the following documents or verbiage must accompany a purchase order to confirm how the contract is to be executed? A. Supply agreement B. Terms and conditions C. Purchase requisition D. Quality agreement Overall explanation The terms and conditions specify all the provisions and agreements of a contract.

458. A blanket order can be defined as: A. 3 contract with the global headquarters of a supplier. B. a long-term commitment to a supplier for the purchase of a quantity of goods. C. a purchase order that includes multiple items. D. a purchase order that includes all the items necessary for a new project. Overall explanation A blanket purchase order is a long-term commitment to a supplier for material against which short-term releases will be generated to satisfy requirements.

459. A time fence policy does which of the following? A. Controls supply planning information for production B. Avoids excess inventory through a dynamic process C. Controls the amount of change that can occur during predefined areas of the planning horizon D. Monitors changes in supply and demand conditions Overall explanation The time fence policy controls the amount of change that can occur within a predefined area of the planning horizon. The other answers are incorrect because the time fence policy is designed to control the demand side of the MPS; time fence policies control the amount of change permitted to a MPS, and are not maintained; and time fence policies control the amount of change permitted within predetermined zones of the MPS, not changes in supply and demand conditions.

460. A typical supplier performance evaluation would rate suppliers on their ability to meet delivery dates and: A. quote promises. B. hidden renewal requirements. C. quality specifications. D. transportation needs. Overall explanation The supplier must be capable of producing items that meet quality specifications. Suppliers should be aware of the metrics that will be used to measure their performance.

461. In a planning bill for an updated configuration of a cellphone, the total percentages for the amounts required for the three possible memory chips used equal 115. What does this indicate? A. The manufacturer is making up for missed orders. B. The manufacturer is making a hedge against higher demand. C. The manufacturer has received more orders for blue than other colors. D. There has been an error in the calculations. Overall explanation When a planning bill's percentage is higher than 100, it is a form of hedge against volatility in demand. It serves roughly the same purpose as safety stock. Because this is a planning bill, no orders have yet been received, and therefore it does not refer to received orders.

462. What is pegging used for? A. Displaying the quantity of a component in the bill of material B. Determining the source of gross requirements C. Linking subassemblies with parent items D. Determining priorities for manufacturing Overall explanation Pegging is the ability to identify the sources of a given item's gross requirements and/or allocations.

463. Which of the following is the process of identifying a company that provides a needed good or service? A. Purchasing B. Buying C. Sourcing D. Surveying Overall explanation Sourcing is the process of identifying a company that provides a needed good or service.

464. A company produces lawn mowers that have many options to choose: three horsepower choices, three cut widths, manual versus self-propelled options, and four color choices. Product is produced in lot quantities for retail sales and assembled-to- order for direct sales. Which of the following types of bills of material is most likely used for the two-level master scheduling? A. Multilevel B. Modular C. Common parts D. Single-level Overall explanation Modular bills (also called planning bills) would allow a percentage to be applied to each of the various options.

465. A company is expecting a one-year downturn in the economy that is likely to reduce customer demand as compared to past annual sales levels. Which of the following responses would be best in this situation? A. Increase inventory levels to reduce lead times. B. Reduce production output and inventory levels. C. Increase order demand satisfied from production. D. Match competitors' responses to price and lead time. Overall explanation Reducing output and inventory sustains the business strategy while addressing the effect of the economy. Increasing inventory ties up more capital in a bad economy. Matching prices may become necessary but is not implied in the question, and order demand is already being satisfied from production.

466. Which two of the following actions within a change program will lead to improved organizational performance? A. Strengthening commitment through joint diagnosis of business problems, and using measures that support continuous learning and change. B. Using measures that support continuous learning and change, and using a functional team management approach to reorganize operating units. C. Strengthening commitment through joint diagnosis of business problems, and institutionalizing systems and procedures early in the change process. D. Institutionalizing systems and procedures early in the change process, and using measures that support continuous learning and change. Overall explanation To be successful, a change management program requires strong commitment, participation, freedom of discussion, and a collaborative approach among team members.

467. Which of the following statements best applies to the master production schedule (MPS)? A. The MPS is represented as a single aggregate line for all of a company's products. B. The MPS defines the daily quantities for production execution and control. C. Each MPS is directly translated into the product quantity and time period from the production plan. D. Each product is represented as a quantity per time period and is consistent with the production plan. Overall explanation Each product is a quantity within the MPS time period.

468. Using the information provided, which periods would have a master production schedule quantity? Note: The safety stock level is 10 units, and the lot size is 30 units. A. 1,2,3 B. 1, 3, 4, 7 C. 1, 2, 4, 5, 6, 8 D. 1, 2, 3, 4, 6, 7 Overall explanation OH Demand Time Fence Planning Time Fence Period 1 2 3 4 5 6 7 8 Forecast 20 20 20 20 20 20 20 Customer Orders 19 20 21 21 25 20 18 PAB 15 26 36 15 24 29 35 15 25 ATP MPS 30 30 30 30 30 30 469. Which of the following is the least likely to result from using certified suppliers? A. Reduced supplier risk B. Reduced cost of quality C. Increased cost of managing supplier quality D. Delivery of quality products and services Overall explanation Reduced supplier risk, reduced cost of quality, and delivery of quality products and services are benefits of supplier certification. Increased cost of managing supplier quality is incorrect because costs of managing supplier quality decrease when using certified suppliers.

470. A company makes four product lines, each with a variety of features and options. Which of the following tools would be most appropriate for the company to use to document the product configurations to be built over the next two weeks? A. Final assembly schedule B. Detailed material plan C. Planning bill of material D. Master production schedule Overall explanation The final assembly schedule (FAS) is prepared after receipt of a customer order, as constrained by the availability of material and capacity (based on the features and options ordered). It schedules the operations necessary to complete the product assembly and states the exact set of end products to be built over the time periods.

470. What is the portion of inventory or production that has yet to be assigned to specific customer orders? A. Capable-to-promise B. Anticipation inventory C. Available-to-promise D. Excess production Overall explanation Available-to-promise (ATP) inventory has not yet been committed to customer orders. "Excess production" and "capable-to- promise" are not appropriate descriptions for inventory that might still have a chance of being sold. "Anticipation inventory" is not a term commonly used to describe ATP inventory.

471. RCCP takes place at which of the following planning levels? A. Master scheduling B. Business planning C. MRP D. Strategic planning Overall explanation RCCP is used to determine if sufficient capacity is available for the MPS.Strategic and business planning are incorrect because resource planning is used for strategic and business planning. MRP is incorrect because CRP is used for material requirements planning.

472. Having suppliers that are certified via ISO 9000, or some other quality standard means that: A. processes are defined and followed. B. single-source relationships can be established. C. product quality is assured. D. suppliers fully understand customer needs. Overall explanation Under ISO 9000, processes are defined and followed.

473. Which of the following statements about capacity is true? A. Common units such as quantities or hours are used at all levels for consistency. B. The master scheduler can schedule load above that indicated by rough-cut capacity planning. C. Resource planning capacity is more accurate than rough-cut capacity planning due to aggregation. D. The number of machines in a machine shop is the primary determinant of capacity. Overall explanation Rough-cut capacity planning is a check of only critical resources.

474. Rough-cut capacity planning (RCCP) checks which of the following data? A. Resources for a family of products B. Materials and labor C. Critical resources D. Inventory Overall explanation In order to validate the feasibility of the master production schedule, RCCP uses a bill of resources to check critical resources.

475. Which of the following is the most appropriate first step in a significant organizational change? A. Consolidating previous improvements B. Setting breakthrough objectives for the effort C. Developing the vision of the future state for the organization D. Establishing a sense of urgency that change is needed Overall explanation An important first step in organizational change is to motivate people to change by creating a sense of urgency. This may be due to a change in the organization's competitive situation, market position, technological trends, financial performance, and so on.

476. When a supplier is selected for a partnership, the most important selection criterion is the supplier's: A. quality practices. B. prices. C. location. D. return policy. Overall explanation An essential element in a supplier relationship is the elimination of quality inspection by the buyer. Even if the supplier delivers the right items in the right quantities and on time, if the items lack perfect quality, the entire delivery is faulty.

477. For this question, use the following example for an MTS environment. Note that ATP is discrete and the MPS receipt scheduled in period 1 was carried over from a previous plan. * On hand: 15 * Planning time fence: 7 * Lot size: 40 * Safety stock: 8 * Demand time fence: 2 A. 15 in period 5 B. 50 in period 5 C. 29 in period 7 D. 18 in period 4 Overall explanation Period 1 2 3 4 5 6 7 8 Forecast 20 20 20 20 20 20 20 20 Actual Orders 18 15 27 10 10 8 6 5 PAB 15 37 22 5 15 35 15 35 15 MPS Receipts 40 40 40 40 ATP 22 3 22 29

478. Which originates with the department or person who will be the ultimate user? A. Purchase requisition B. Purchase order C. Vendor selection D. Request for quotation (RFQ) Overall explanation A purchase requisition is prepared by the person or department who will be the ultimate user. Because a purchase order originates from the company's purchasing department and is sent to the vendor or supplier, it is not the. Vendor or supplier selection and requests for quotation (to obtain the price information before an order is placed) are the responsibilities of the purchasing department.

479. Which of the following is a potential process transition point that a business with declining production volume may face? A. Project to jobbing B. Line to project C. Batch to line D. Continuous to batch Overall explanation With declining production volume, the appropriate choice would be to move from high-volume continuous production to building products in intermittent batches.

480. A supplier produces for countries around the globe. If only domestic customers are considered in demand management, what will the resulting outcome likely be? A. Demand will be overstated. B. Demand will be understated. C. Not enough information exists to comment. D. Demand will be unaffected. Overall explanation When both domestic and international demand are present, ignoring international demand will result in understated requirements.

481. Which of the following statements about the bill of material (BOM) used in material requirements planning (MRP) is true? A. It lists one and only one unit of each type of component that will be needed. B. It lists only components that are held in inventory; the rest are purchased. C. It plays no role in computing requirements. D. It should be structured to reflect how a product is built. Overall explanation The BOM is a listing of all the subassemblies, intermediates, parts, and raw materials that go into a parent assembly, showing the required quantity of each. When the MRP BOM explosion occurs, the BOM enables the identification of all items and quantities that need to be replenished. The BOM is structured to reflect how the product is produced; this guides the operators in the process.

482. A company receives a new order for 25 units, shippable immediately. If it is assumed that previous customer orders have higher priority and that no rescheduling is possible within the first three periods, the new order should be scheduled in which of the following ways? Item: X – Lead Time: 2 – On-Hand: 4 Period 1 2 3 4 5 Forecast 10 5 20 12 12 Customer Orders 5 2 1 Projected Available Balance 9 2 1 9 17 Master Prod. Sch. 20 20 20 20 A. 19, 0, 6 B. 17, 0, 8 C. 5, 3,17 D. 20, 0, 5 Overall explanation This question uses discrete available-to-promise (ATP). Period 1: ATP for period 1 is calculated as on-hand (or projected available balance [PAB]) plus supply minus demand (customer orders) up to the next MPS receipt. (Note: ATP ignores the forecast and focuses on customer orders only.) The PBA is calculated only in those periods with as MPS receipt. Starting numbers: on-hand = 4; MPS receipt = 20. demand (customer orders) = 7 (5 in period 1, 2 in period 2); 4 + 20 - 7 = 17 Therefore, 17 can be promised in period 1. Period 2: Since there is no ATP in period 2, ATP is 0. Period 3: The remaining 8 are then promised from period 3.

483. A new product is being introduced to the company's product mix, which will have an effect on the current period material plan due to the cumulative lead time of the purchased parts. Which of the following actions would be of immediate value to the material planner? A. Modeling the key work center capacities B. Simulating the revised material plan C. Analyzing orders that are likely to be late D. Analyzing the product's cumulative lead time Overall explanation Simulating the new material plan will identify those items that will be out of balance, without disrupting the already balanced plan.

484. Expediting can be a positive response to business growth and: A. a good way to augment ever-changing schedules that the enterprise resources planning system may have difficulty managing. B. a solid replacement for a push shop floor control system. C. a source of operational risk when operations is constantly stressed to meet ever-growing demand. D. a function that manufacturing companies should make permanent. Overall explanation Business growth, although seemingly positive, becomes a risk when operations has to stretch or be reconfigured to deal with larger volumes, often leading to a loss of focus.

485. Which of the following actions is taken first to ensure the validity of the material plan in a make-to-stock company? A. Development of the operations plan B. Development of the material requirements plan C. Development of the master production schedule D. Development of the capacity requirements plan Overall explanation The master production schedule is the first time in the planning hierarchy that individual products are defined by date and quantity.

486. If an annual contract is in place, the supplier is notified of the delivery amount required by means of: A. an advance shipment notification. B. a blanket order. C. a release. D. a purchase order. Overall explanation Monthly, weekly, or daily quantities needed are communicated via releases, which may be in the form of a kanban.

487. Material requirements planning (MRP) may recalculate planned orders as a direct result of changes in: A. the planning horizon. B. customer order dates. C. work order receipt dates. D. capacity. Overall explanation A change in a scheduled receipt may cause the replanning of a planned order.

488. A company produces make-to-order product families that use common work centers configured in a functional layout. It is a stable product line in the maturity stage, but demand is erratic. Ship dates are specified by the customer. The master scheduler has ongoing problems maintaining a balanced schedule due to randomly appearing overload conditions among the various work centers. What is a likely cause of the overload condition? A. Late supplier shipments B. Changes in customer orders C. Missed schedules in production D. Inaccurate capacity records Overall explanation Missed schedules are likely due to having a mix of products using the same work centers.

489. Because bills of material (BOMs) identify the exact materials used in production and can include component and subcomponent cost information, they are also useful for which department? A. Marketing B. Returns C. Finance D. Sales Overall explanation Bills of material are useful for finance because they help determine the direct materials used in the product. BOMs can summarize cost information for all components and subcomponents. The bill may also be helpful in calculating direct labor and provide a means of allocating overhead.

490. Using the information provided below, when must a planned order be released to meet a new requirement in period 5? * Order quantity: 40 units * Safety stock: 10 units * Lead time: 3 periods A. Period 2 B. Period 3 C. Period 1 D. Period 4 Overall explanation Period 1 2 3 4 5 6 7 8 Gross Requirements 40 10 30 50 50 20 30 40 Sched. Receipts Projected Avail. Bal. 130 90 80 50 40 30 10 20 20 Net Requirements 0 0 0 10 20 0 30 30 Planned Order Rec. 40 40 0 40 40 Planned Order Release 40 40 0 40 40

491. Which of the following is the best use of a material requirements planning (MRP) simulation capability? A. Evaluating the number of standard deviations to protect via safety stock B. Determining the optimal order quantity required to maximize inventory turns C. Rescheduling orders to resolve a key work center overload problem D. Determining the effect of the master production schedule on a bottleneck Overall explanation MRP modeling is for the purpose of establishing the best schedule possible within the given constraints of demand and supply.

492. The final assembly schedule designates: A. the specific goods to build in an assemble-to-order environment. B. the list of products to be used in the planning cycle. C. the last master production schedule to provide manufacturing. D. the items to be shipped to the distribution warehouses. Overall explanation The final assembly schedule is a schedule of end items to finish the product for specific customers' orders in a make- or assemble-to-order environment.

493. In which of the following zones can changes be made with relative ease? A. Frozen B. Liquid C. Danger D. Slushy Overall explanation In the liquid zone, extensive changes can be made without causing much disruption to the MPS. The other answers are incorrect because there is no zone called the danger zone; the frozen zone should be the most protected in terms of the amount of change permitted; and changes in the slushy zone must be reviewed for potential impact on existing supply and demand

494. Referring to the figure below and using exploding, how many Gs are needed in total to make one A? (Image) A. 30 Gs B. 6 Gs C. 18 Gs D. 36 Gs Overall explanation One A requires 3 Ds, and one D requires 4 Gs directly: 3 x 4 = 12 Gs. One D also requires 3 Fs and one F requires 2 more Gs: 3 x 3 x 2 = 18 Gs. the total is 12 + 18 = 30 Gs

495. What is necessary in a new product introduction schedule? A. Time for the concept to be developed without needing to have multiple iterations B. Time for the customer to review engineering drawings and documents for manufacturability C. Time for the customer to review the prototype and give detailed feedback D. Time for the manufacturing capacity to be at full scale before launch Overall explanation During prototyping, a working model of the product and related services is developed. A prototype's purposes include to prove feasibility and to elicit feedback. Sufficient time needs to be given to customers and to supply to give this feedback. Supply should make suggestions, such as for manufacturability, at this stage, not the customer.

496. The basic requirement of the design of a manufacturing process is to meet: A. line balancing standards. B. production schedules. C. management cost objectives. D. product specifications. Overall explanation Producing the product or service to the specifications is the goal of the process design.

497. A medium-sized make-to-order manufacturing company has three operating divisions and four locations, with three plants in one country and one plant in another country. The second largest division is a recent acquisition. There are three different software packages in use at the plants, and each plant has its own way of operating its business. The overall costs per transaction for the company are the highest in its industry. Senior management has decided that the plants should standardize on one software package and one approach to all major business processes to achieve some economies of scale. A new software package is selected and a project leader is named. The new project leader has assembled a team to perform the implementation. For the change to be effective, what should senior management do first? A. Send out a memo to the plant managers explaining the decision. B. Create a vision statement about this new strategy. C. Create a sense of urgency among the company's leaders. D. Build the project team from key members of each division. Overall explanation Senior managers should start the project by communicating a sense of urgency and the importance of the new implementation project to the project team and the company as a whole.

498. Which of the following engineering groups is most involved with a process design quality initiative? A. Manufacturing B. Quality C. Industrial D. Design Overall explanation Manufacturing engineers can apply the proper lean principles, quality systems, and use of technology for the process.

499. An engineer-to-order environment with fairly long lead times has a severely overloaded work center in the middle of the production process. Assuming that deadlines cannot be changed, a simulation of the situation is most likely to: A. project new end-item dates. B. identify changes to specific work orders required. C. identify the magnitude of the overload. D. resolve the overload for each period. Overall explanation Load is tied to specific orders in this situation.

500. Which of the following is true of the ultimate effect of a change in strategy? A. It is rarely known for sure. B. It must be highly predictable. C. It is typically instantaneous. D. It is relatively straightforward. Overall explanation The ultimate effect of a change in strategy is rarely known for sure.

501. A company produces a line of configurable desks, which are shipped from retailers. Orders are taken at the store and transmitted to the factory daily, with delivery promised within five to ten workdays, depending on the options. This is achieved by stocking drawers, desk subassemblies, and hardware. Which of the following master schedule formats is best for this product family? A. Two-level B. Multilevel C. One-level D. Single-level Overall explanation The two-level format would allow the use of a super bill to master schedule an end product family, and also selected key features and options.

502. The purpose of first-article inspection is to verify the product's: A. process variability. B. sustainability. C. functionality. D. manufacturability. Overall explanation Auditing the first lot of products manufactured is the first time the quality of the design and process can be reviewed to ensure that the product meets the requirements.

503. What two areas of an end-of-life plan should be planned separately with their own time lines? A. Insourced and outsourced manufacture end B. Minimum order quantity and lifetime buy quantity C. Reverse logistics and final disposition D. End of sales and end of service Overall explanation End of sales needs to be separated from end of service, because a product may need to be supported for a long time after new unit production has ceased.

504. What is the difference between an FAS and a MPS? A. The FAS addresses a shorter-term planning period than the MPS and looks at customer orders rather than forecasted demand. B. The FAS addresses a longer-term planning period than the MPS and looks at forecasted orders rather than customer orders. C. The FAS addresses a shorter-term planning period than the MPS and looks at forecasted demand rather than customer orders. D. The FAS addresses a longer-term planning period than the MPS and looks at customer orders rather than forecasted demand. Overall explanation The FAS addresses a shorter-term planning period than the MPS and looks at customer orders rather than forecasted demand.

505. What is a key benefit of using certified suppliers? A. The firm will receive the best possible price for the goods. B. The need for incoming inspection is eliminated. C. The need for price negotiation is eliminated. D. Purchasing lead times are reduced. Overall explanation Parts coming from certified suppliers do not require incoming inspection.

506. Which activity is a key interface with MRP? A. Customer service B. Calculating cost of goods sold C. Capacity requirements planning D. Sales and operation planning Overall explanation Capacity requirements planning checks to see if the necessary capacity is available to produce the MRP output as planned. Sales and operations planning indirectly influences MRP, but does not directly interact with MRP. Customer service levels are important in measuring customer satisfaction, but only indirectly interface with MRP. Cost of goods sold is the result of accumulating inventory costs

507. A company uses material requirements planning (MRP) and reorder point. Which of the following most relates to the planner's ability to determine the source of gross requirements for a part having both dependent and independent demand? A. Planners do not normally use or understand time-phased order point. B. There is no easy way to separate independent from dependent demand. C. Independent demand cannot be imploded to identify the parent. D. Independent demand has no source and no gross requirements. Overall explanation There is no parent for an item subject to independent demand. The demand source of the requirement on the item will be the demand order.

508. Using the information provided below, when must a planned order be released to meet a new requirement in period 7? Period 1 2 3 4 5 6 7 8 Gross requirements 40 10 30 50 50 20 30 40 Scheduled receipts PAB -130 -90 80 50 40 30 10 20 20 Net requirements 0 0 0 10 20 0 30 30 Planned requirements Planned order release 40 * Order quantity: 40 units * Safety stock: 10 units * Lead time: 3 periods Scheduled Receipts Projected Available Balance-130 Net Requirements Planned Order Receipt Planned Order Release A. Period 3 B. Period 5 C. Period 4 D. Period 2 Overall explanation Period 1 2 3 4 5 6 7 8 Gross Requirements 40 10 30 50 50 20 30 40 Scheduled Receipts Projected Available Balance-130-90 80 50 40 30 10 20 20 Net Requirements 0 0 0 10 20 0 30 30 Planned Order Receipt 40 40 0 40 40 Planned Order Release 40 40 0 40 40

509. What type of material requirements planning (MRP) system lists the actual date for actions/events and omits periods of inactivity? A. Perpetual flow B. Two-bin C. Bucketed D. Bucket-less Overall explanation Bucket-less MRP systems are far more common than bucketed systems. Rather than showing buckets, these systems list the actual date for actions or other events and omit periods in which there is no activity.

510. What needs to be part of a new product introduction strategy when the product is a replacement for a product in decline? A. Capital equipment changes need to be planned and executed. B. Plans must find a way to sell both the old and new products for a period of time. C. The new product strategy needs to coordinate most closely with the material requirements planning process. D. The old product's production equipment needs to be moved out of the prime shop floor locations while keeping its capacity available. Overall explanation If the new product introduction is a replacement for a product in the decline phase, there needs to be a transition strategy that provides enough time to build or acquire the production capacity. While some organizations will sell the old and new units at the same time, other organizations will have a cutoff from one to the other to reduce market confusion.

511. Which is true about time fences in a master schedule system? A. Changes in the frozen zone entail scheduling difficulty but no added production cost. B. The master planner can authorize changes in the frozen zone. C. Changes in the liquid zone can be made with little or no cost to production. D. In the slushy zone, capacity and materials can easily be committed to new orders. Overall explanation Changes in the liquid zone can be routine and entail no cost to production. The other answers are incorrect because it is still relatively difficult to change production priorities in the slushy zone; and because the cost of changes in the frozen zone is such that authorization should come from the management level above the master planner.

512. A change from reporting operations to reporting only parts completed requires all of the following systems to be changed except: A. production activity control. B. cost accounting. C. inventory accounting. D. master scheduling. Overall explanation The master schedule is concerned with the planning and scheduling of the firm's finished goods. The change from reporting operations to reporting only parts has no direct impact on the master schedule. Since the change will impact materials and operations reporting below the master production schedule level, it will impact inventory accounting, cost accounting, and production activity control.

513. What is the term for a schedule of end items to finish the product for specific customers' orders in a make-to-order or assemble- to-order environment? A. Build sequence B. Final assembly schedule C. Dispatch list D. Shop floor schedule Overall explanation The final assembly schedule identifies the end items necessary to complete a specific customer's order. A dispatch list is used to identify the priority and sequence of manufacturing orders at a workstation. The build sequence lists the order of jobs to be worked on at a workstation. The shop floor schedule is the actual assignment of starting or completion dates to operations or groups of operations to show when these must be done if the manufacturing order is to be completed on time.

514. Which is set up when a product is available from several sources but only one source gets all of the business? A. Multi-sourcing B. Sole-source supplier C. Single-source supplier D. Purchase requisition Overall explanation This question describes a situation in which only one supplier is used even though multiple suppliers exist, which conforms to the definition of single-source supplier.

515. Due to a quality problem, only 85% of the master schedule for a finished good has been produced. If the decision in this scenario is to service all customers who have submitted orders according to their percentage of total orders, what is this called? A. Assigned material B. Allocation C. Allowance D. Reserve stock Overall explanation Available inventory is allocated among all customers, so each gets part of their order.

516. Which of the following statements about the final assembly schedule (FAS) is true? A. The FAS is the same as the production plan. B. The FAS includes only final operations. C. The FAS is separate from the master production schedule and serves a completely different purpose. D. The FAS is the same as the master production schedule. Overall explanation e FAS plans and controls final assembly, which is different from the master production schedule. It is typically driven by customer demand, not the forecast, and is for end items.

517. Within a given period: * Opening balance = 350 * Gross requirements = 50 * Scheduled receipts = 75 * Gross requirements in the next period = 500 What quantity should the planned order release be in this period? A. 275 B. 25 C. 175 D. 125 Overall explanation Net Requirements = Gross Requirements - Scheduled Receipts - Available Inventory

518. Which of the following steps completes the purchasing cycle? A. Receiving and accepting goods B. Closing the purchase order C. Approving supplier's invoice for payment D. Filing the purchase order Overall explanation The purchasing cycle consists of the following steps: 1. Generate Requisition 2. Issue Purchase Order 3. Follow Up 4. Receive Goods 5. Approve Payment

519. Which of the following drives the material requirements planning (MRP) system and is the statement of which end items are to be produced? A. Master production schedule B. Inventory replenishment orders C. Demand forecasts D. Preproduction plan Overall explanation The master production schedule states which end items are to be produced, in what quantities, and when, and it provides input of the items needed to the MRP system.

520. A set of techniques that uses bill-of-material data, inventory data, and the master production schedule to calculate requirements for materials is known as: A. kanban. B. a pull system. C. material requirements planning. D. the theory of constraints. Overall explanation The key input to material requirements planning (MRP) is the master production schedule (MPS), which provides due dates and quantities for end items. MRP systems combine bills of material with planning data on lead times to determine when to make or buy components.

521. Based on the information below, what would the cumulative available-to-promise quantity be in the first period? Week 1 2 3 4 Forecast 100 100 100 100 Customer Orders 80 20 10 40 Projected Avail. Bal 225 125 25 25 25 Avail. To Promise Master Production Sched 0 0 100 100 A. 145 units B. 75 units C. 125 units D. 0 units Overall explanation The cumulative available-to-promise quantity in the first period is equal to the on-hand inventory (which is 225) plus the master production schedule (MPS, which is 0) minus the sum of orders until the next MPS (80 + 20)

522. Which of the following is defined as the process of converting the MPS into the load for critical resources? A. Resource capacity planning B. Multilevel master scheduling C. RCCP D. ATP Overall explanation Rough-cut capacity planning (RCCP) is defined as the process of converting the MPS into capacity needs for critical resources: workforce, machinery, warehouse space, vendors' capabilities, and, in some cases, money. Essentially, it is a validity check for the MPS. ATP is incorrect, because it is the uncommitted portion of a company's inventory and planned production, maintained in the MPS to support customer order promising. Resource capacity planning is incorrect, because it is used to determine the load placed on resources by product families in the production plan. Multilevel master scheduling is incorrect, because it is a master scheduling technique that enables any level in an end item's BOM to be master-scheduled.

523. Using the information provided below, what is the available-to-promise quantity in period 2? A. 31 B. 9 C. -19 D. 50 Overall explanation Period 1 2 3 4 5 6 7 8 Forecast 20 21 20 22 24 26 28 28 Customer Orders 19 20 21 21 25 24 20 18 Projected Avail. Bal 20 1 31 10 38 13 37 9 31 Avail. To Promise 1 9 4 6 16 Master Production Sched 50 50 50 50

524. Which two of the following action messages may be generated by material requirements planning (MRP)? A. Cancel the order and change the lot size B. Cancel the order and release the order C. Cancel the order and generate the overload D. Change the lot size and release the order Overall explanation Cancel the order and "Release the order" are valid MRP action messages because they refer to order scheduling and management.

525. Which of the following statements about material requirements planning (MRP) and scheduled receipts is true? A. MRP will neither reschedule nor explode scheduled receipts. B. MRP will not reschedule but will explode scheduled receipts. C. MRP will reschedule but not explode scheduled receipts. D. MRP will reschedule and explode scheduled receipts. Overall explanation MRP may recommend the rescheduling of a scheduled receipt but will not automatically reschedule

526. A production plan has established 1,000 units in a period for a stocked product family. Specific percentages for end items are not known with certainty. Which of the following alternatives should the master schedule ignore when translating the product family into specific master production schedule quantities? A. Use a super bill of material to over plan the percentages in a two-level master production schedule. B. Make an estimate of the number of actual end items to produce based on history. C. Use a modular bill of material and over plan the options to provide for some uncertainty. D. Overplan the end items based on historical deviations to provide for some uncertainty. Overall explanation The end item quantities should not be over planned, as they must equal the quantity in the production plan.

527. Measuring the order fill rate enables a company to determine: A. customer service levels. B. throughput time. C. backorder allocations. D. forecast accuracy. Overall explanation The fill rate measures delivery performance of finished goods.

528. When are final assembly schedules typically used? A. When all assemblies are the same with no variation in product structure B. When there are many options and it is difficult to forecast which combination the customer will want C. When production is a continuous flow process D. When products come from an engineer-to-order production strategy Overall explanation When there are many possible combinations of options, it can be impractical to store every possible configuration. Using a final assembly schedule, combinations are assembled based on customer order input.

529. Generating and rewarding short-term performance improvements within organizational change: A. proves that the project champion was right. B. should strike fear into the hearts of the naysayers. C. sidelines cynics and selfish resisters. D. may be the only success within the entire project. Overall explanation Short-term performance improvements help transformations.

530. An item is being replaced on a BOM. The effectivity of the original item ends when the new item's effectivity date begins. What does this action illustrate? A. Engineering change process B. Horizontal dependence C. Parent-child relationship D. Phantom bill of material Overall explanation A parent-child relationship exists between items at different levels on the BOM, making this answer incorrect. Horizontal dependency exists between two items on the same level in the BOM; thus, this answer is incorrect. A phantom BOM rarely is stocked and has a lead time of zero; its parent consumes it during manufacture, and is therefore also an in.

531. The final assembly schedule (FAS) takes place when: A. the customer's order is received. B. the component level is fixed. C. the forecast is fixed. D. there are few options. Overall explanation The FAS is a schedule of end items to finish the product for specific customers' orders in a make- or assemble-to-order environment.

532. Using simulation in manufacturing is most beneficial for: A. improving data collection. B. prototyping new technology. C. training new employees. D. identifying potential continuous improvement areas. Overall explanation Simulating alternate processes can identify areas where improvements can be made.

533. An executive discussion centers on offshoring and outsourcing. Which of the following should participate in the outsourcing discussion? A. Director of strategic sourcing B. Director of facility development C. Director of warehousing and transportation D. Director of logistics Overall explanation Outsourcing is the process of having suppliers provide goods and services that were previously provided internally. It involves substitution—the replacement of internal capacity and production by that of the supplier.

534. Which of the following is a performance measure for material requirements planning (MRP)? A. Percent reduction in purchase orders B. Percent reduction in lead time C. Percent of orders released on time D. Percent utilization of a work center Overall explanation How well the MRP is being handled, as well as the accuracy of the input data, can be determined by whether manufacturing orders and purchase orders are released on time based on the lead time.

535. Which of the following types of demand should be input to the master schedule? A. Forecast for end items B. Forecast for service parts C. All of the above D. Orders for end items Overall explanation All sources of demand, including service parts, forecasts, and actual customer orders, constitute demand in the master schedule.

536. Which of the following is true of using planning bills to forecast options for an assemble-to-order product? A. Each planning bill option is forecast separately and is not combined with other options. B. Overplanning of an option would mean that the percentages equal more than 100%. C. The product mix cannot equal more than 100%. D. The product mix can equal less than 100%. Overall explanation The mix for a planning bill must add up to a minimum of 100% but may be greater in order to gain flexibility.

537. For this question, use the following example for an MTS environment. Note that the MPS receipt scheduled in period 1 was carried over from a previous plan. Period 1 2 3 4 5 6 7 8 Forecast 20 20 20 20 20 20 20 20 Actual Orders 18 15 27 10 10 8 6 5 PAB 20 MPS Receipts 40 Given the above information, in which period will the first MPS receipt occur after the demand time fence? A. Can't tell B. Period 2 C. Period 3 D. Period 1 Overall explanation The previous MPS plan included a receipt in period 1. It has been carried over and is shown in the grid.PAB for periods 1 and 2 will use actual orders for the calculation, as they are before the demand time fence. In period 3, the actual orders are equal to the period 2 PAB, with a resulting PAB of zero in period 3. This is less than safety stock and requires an MPS receipt to be scheduled in period 3.

538. A supplier has placed goods at a customer location but does not receive payment until after the goods are consumed. What is this an example of? A. Point-of-use inventory B. Leasing C. Floor stock D. Consignment Overall explanation Consignment is the process of a supplier placing goods at a customer location without receiving payment until after the goods are used or sold.

539. Which best describes a summarized parts list? A. The relationships among all components B. All of the parents for which there is an existing requirement C. All of the parts required to produce one item D. All of the parents in which a component is used Overall explanation The summarized parts list, or summarized BOM, is a list of all the parts and their quantities required in a given product structure to produce one unit. All of the parents in which a component is used, and for which there is an existing requirement describe the where-used list and pegging report. The summarized parts list does not show the relationships among components.

540. An authorization to the purchasing department to purchase specified materials in specified quantities within a specified time is a: A. request for quote. B. planned order. C. requisition. D. purchase order. Overall explanation A purchase requisition is an authorization to the purchasing department to purchase specified materials in specified quantities within a specified time.

541. Which is a major input to a material requirement planning system? A. Production activity control schedule. B. Capacity requirements plan. C. Production plan. D. Master production schedule. Overall explanation Although the production plan is an input to the MPS and therefore indirectly an input to MRP, it is more accurate to identify the master production schedule as a major input to a material requirements planning system. Capacity requirements plans and production activity control schedules validate and implement the priority plan produced by the MRP system.

542. The production forecast A. is based on production lead times. B. represents the product family forecast in two-level master scheduling. C. forecasts the family ATP multiplied by option percentages. D. is primarily used with master production scheduled items. Overall explanation The production forecast is used with two-level master scheduling and represents the ATP (MPS minus customer orders) at the family level multiplied by the option percentage. The other answers are incorrect because the production forecast is used with a subset of master-scheduled items only; the production forecast does not represent the product family forecast; and the production forecast is not based on production lead times.

543. Risk assessment prior to offshoring or outsourcing should analyze at a minimum which of the following attributes? A. Quality, data security, loss of control, employee turnover, cultural differences B. Quality, data security, loss of control, financial exchange rates, delivery lead times C. Quality, intellectual property, infrastructure, employee attitudes, cultural differences D. Quality, data security, loss of control, employee attitudes, cultural differences Overall explanation In a survey, it was revealed that these attributes, in order, were of concern when offshoring: * Quality * Data security * Loss of control * High turnover * Cultural differences

544. A company has not been able to provide customers with information when a make-to-stock item is out of stock. Which of the following actions would be beneficial in this situation? A. Provide available-to-promise information to customer service. B. Increase safety stock levels to reduce stockouts. C. Increase sales and operations planning frequency. D. Implement forecast accuracy measures. Overall explanation Available-to-promise is the uncommitted portion of a company's inventory and planned production maintained in the master schedule to support customer order promising.

545. An artificial grouping of items or events in a bill-of-material format used to facilitate production planning is known as: A. a routing. B. a pick list. C. a planning bill of material. D. an item master. Overall explanation A planning bill of material is an artificial grouping of items or events used to facilitate production planning. Routing describes the method for manufacturing an item. Item master refers to the database repository where information about an item is kept. A pick list references finished goods, materials, and components to be withdrawn from stock for shipment or production purposes.

546. Who is responsible for disaggregating the production plan into the master production schedule? A. Materials manager B. Master scheduler C. Production manager D. Sales manager Overall explanation The master scheduler is responsible for disaggregating the production plan into the master production schedule.

547. An assemble-to-order environment using a mixed-model production schedule has a bottleneck work center. What is the best rough-cut capacity planning approach for determining the feasibility of the master production schedule? A. Define capacity as 85% of rated capacity to provide 15% to accept additional customer orders. B. Define capacity as rated capacity times utilization times efficiency to factor the engineering standard. C. Define capacity as some percentage less than 100% of rated capacity by management policy. D. Define capacity at 100% of rated capacity and utilization when the mix of demand justifies it. Overall explanation Bottlenecks should be scheduled at the rated capacity if there is sufficient business volume to justify it.

548. The standard hours of load placed on a resource within a time period is the: A. resource driver. B. resource profile. C. resource calendar. D. bill of resources. Overall explanation The resource profile is the standard hours of load placed on a resource by time period.

549. Orders for a specific assembly have been released over the last two weeks. Stockroom personnel have reported unplanned issues for one component and returns of another component. Which of the following is the most likely cause of this situation? A. There are errors in the inventory records for the two components. B. Material availability checking is not being performed before release of the orders. C. An engineering change for the assembly is not in the bill of material. D. The master scheduling horizon is not long enough. Overall explanation Product design engineers may have changed the components used in the product without updating the bill of material, resulting in the unplanned issue for one component and the return of the other component.

550. What is an appropriate objective for a buyer in paying a visit to a potential supplier? A. To obtain information about the supplier's financial stability B. To determine the supplier's capability for vendor-managed inventory C. To verify the production and quality capabilities of the supplier D. To assess the compatibility of the supplier's enterprise resources planning system Overall explanation It is important to ensure that the supplier is capable of producing to the required specifications. An on-site visit to ensure that the capability exists and see the quality measures in place is often the last step in the supplier selection process.

551. The gateway work center performs the operation that: A. is first in a routing. B. is just prior to final assembly. C. consumes the most capacity. D. feeds a bottleneck. Overall explanation A gateway work center performs the first operation of a particular routing sequence.

552. What determines the frequency with which material requirements should be replanned? A. Frequency with which requirements and/or priorities change B. Amount of forecast error C. Total manufacturing lead time D. Frequency of bill of material changes Overall explanation Material requirements planning (MRP) is used to maintain the priorities of manufacturing and purchase orders. As demand changes, so do the priorities, so MRP should be run to rebalance supply and demand.

553. A representative of a supplier has called a buyer to tell her that the minimum order quantity for a raw material is being increased to 1,000 pieces immediately. Which of the following would be the most appropriate action for the buyer to take next? A. Use a pegging report to identify all affected customer orders. B. Change the quantity for all scheduled receipts. C. Firm all planned orders for the item at 1,000 pieces. D. Change the lot sizing parameters for the item. Overall explanation The revised minimum order quantity should result in a change to the lot size for the item.

554. A company purchases a high-volume commodity part from three suppliers. Which performance measure is most likely compared by the supplier rating system? A. Quoted lead time B. Price-to-cost ratio C. On-time delivery D. Incoming quality Overall explanation On-time delivery is probably the only variable.

555. Which of the following is an advantage of over-forecasting a new assemble-to-order product during the growth phase as it relates to raw material inventory? A. The planner is assured that any raw material excess will be used eventually. B. There is no relationship between forecasting at the sales and operations level and raw materials. C. Raw materials are purchased only when actual customer orders offset forecasts. D. Over forecasting improves customer service by increasing part availability. Overall explanation The growth phase may result in levels that are too low, so excess raw material buffers against that.

556. The relationship for all components at the same level in the bill of material to be available at the same time is: A. a parent-child relationship. B. component availability. C. a horizontal dependency. D. a vertical dependency. Overall explanation Horizontal dependency is the relationship between components at the same level in the bill of material.

557. Increased output is best achieved by doing which of the following? A. Implementing flexible manufacturing systems B. Simplifying design C. Using computer-aided design D. Using expert systems Overall explanation Making the production process easier, more visible, and foolproof enables operators and production equipment to effectively increase output and quality and reduce wastes.

558. On-time supplier deliveries can be impacted most by: A. supplier capacity. B. long lead times. C. purchase order quantities. D. dedicated transportation carriers. Overall explanation Supplier capacity that is adequate for meeting the dates has the most impact on on-time deliveries.

559. Which of the following choices will improve a company's responsiveness to customer demand? A. Increased productivity B. Drum-buffer-rope C. Large lot sizes D. Two-level master schedule Overall explanation A company using a two-level master schedule would have flexibility in operations based on actual demand.

560. In relation to time fences, in which of the following zones can scheduling software make automatic adjustments without the input of the master scheduler? A. Frozen zone B. Liquid zone C. Forecast zone D. slushy zone Overall explanation In the liquid zone, scheduling software may automatically make adjustments without input from the master scheduler.Manual changes can also be made in this zone. The only constraint will be the limits set in the production plan. This zone is usually the extra time added beyond the cumulative lead time of the product.

561. A company that uses a functional layout produces several product families that use the same work centers, with some units being a standard design and others having custom design. Which of the following management decisions is most applicable as it relates to master scheduling? A. Use of a final assembly schedule B. Level and type of inventory to stock C. Relevance of a demand time fence D. Use of a quantity/period or flow rate Overall explanation Decisions would be required on which products to keep in stock as finished goods versus assemblies.

562. Using a planning horizon shorter than the longest cumulative lead time may result in: A. replenishment orders released with short lead times. B. a decrease in inventory turns. C. increased throughput. D. a reduction of work in process. Overall explanation If the planning horizon does not extend far enough out for items with long lead times, the planned order release will fall in the current period, with a message that the release is past due.

563. Using the information provided below, what are the available-to-promise quantities for periods one through five? Period 1 2 3 4 5 6 7 8 Forecast 10 10 10 10 10 10 10 10 Customer orders 10 11 9 11 8 11 9 8 PAB -15 5 34 24 13 33 22 12 32 ATP MPS 40 30 30 A. 5, 34, 24,13, 33 B. 5, 9, 0, 0, 2 C. 0,31, 22,10, 22 D. 5, 24,14, 4, 24 Overall explanation Period 1 2 3 4 5 6 7 8 Forecast 10 10 10 10 10 10 10 10 Customer Orders 10 11 9 11 8 11 9 8 Projected Available Balance-15 5 34 24 13 33 22 12 32 Available-to-Promise 5 9 2 22 Master Production Schedule 40 30 30

564. What is the primary reason for using an alternative means of transportation when a part is late? A. To meet the promised date B. To ensure part delivery C. To save shipping expense D. To meet the due date Overall explanation The promise date may or may not be the actual due date, but it is the one that was communicated.

565. Which of the following contributes the most to a purchasing department's ability to improve supplier delivery reliability? A. Use of electronic data interchange (EDI) B. Long-term contracts with suppliers C. Improved relations between expediters and suppliers D. Computerized purchase requisition system Overall explanation Detailing delivery reliability is part of an effective long-term contract negotiated with the supplier.

566. Which of the following terms is associated with the systematic use of techniques that identify a required function, establish a value for that function, and finally provide that function at the lowest overall cost? A. Value stream B. Value-added C. Value analysis D. Value chain analysis Overall explanation A value analysis focuses on the functions of an item rather than the methods of producing the present product design.

567. The table below is an example of what type of material requirements planning (MRP) record? Part Number Lead Time Date 1/8/2018 1/16/2018 1/29/2018 Gross Requirements 4 4 Scheduled Receipts 5 C Projected Available 2 7 3 4 Net Requirements 1 Planned Order Receipt 5 2 Planned Order Release 5 A. Kanban B. Bucket-less C. Bucketed D. Lead-time offset Overall explanation Bucket-less MRP records show the exact date on which a specific action is required.

568. Rough-cut capacity planning performs a: A. scheduling routine and then checks capacity availability. B. detailed capacity analysis. C. comparison to available or demonstrated capacity. D. material requirements explosion. Overall explanation Rough-cut capacity planning is compared to available or demonstrated capacity and is usually done for each key resource.

569. In master scheduling, hedging refers to a practice that A. provides safety lead time, and provides safety capacity to protect against work center overload only B. provides safety capacity to protect against work center overload only C. provides safety inventory in case option mixes are different from those forecasts, and provides safety inventory in case volume is greater than forecast only D. provides safety lead time, provides safety inventory in case option mixes are different from those forecasts, and provides safety inventory in case volume is greater than forecast only Overall explanation Hedging is a quantity of stock to protect against uncertainty of demand; it has the dimensions of timing and amount. The hedge may be either a mix hedge or a volume hedge. The other answers are incorrect because hedging is not related to safety capacity; hedging does use safety lead times to protect against late deliveries but does not use safety capacity; and hedging does provide safety inventory in case volume or option mixes are greater than forecast, but it also provides safety lead times to protect against late deliveries.

570. What is a principal function of MRP? A. Provide accurate planned order loading for use by RCCP B. Provide engineering change notice information to engineering C. Provide safety lead time to ensure supplier delivery dates are met D. Plan and control orders released to the factory to ensure valid due dates are met Overall explanation

571. The other answers are incorrect because MRP provides accurate planned order loading for capacity requirements planning, not RCCP Reducing the levels on the bill of material reduces: A. schedule flexibility. B. material costs. C. production reporting activities. D. work in process. Overall explanation Reducing the number of subassemblies within the bill of material reduces the times reporting has to be done.

572. Last year a company had average inventory of $24,000,000, and the cost of sales for the year was $48,000,000. The budget for the year shows the cost of sales increasing by 25%, with no increase in the average inventory. What inventory turns did the company have, and what will they need to have this year to meet the budget? A. 2,2.5 B. 2,3 C. 0.5,2.5 D. 0.5,0.4 Overall explanation $48,000,000/$24,000,000 = 2

573. Which investment analysis tool accounts for the time value of money? A. Net present value B. Residual income C. Payback period D. Return on investment Overall explanation Of the choices, only net present value uses the discounted rate of the original investment. Return on investment does not reflect the time value of money. Payback period shows how long it will take for the initial investment to be recouped. Residual income uses a minimum required rate of return in its analysis of gain from capital investment.

574. What are three of the broad areas necessary to address how well the strategy execution process is performing? A. Customer, backorder/backlog, critical ratio B. Quality, financial, employee turnover C. Financial, customer, employees D. Operations, financial, schedule Overall explanation Accurate and timely information about daily operations is essential if managers are to gauge how well the strategy execution process is proceeding. Information systems need to cover five broad areas: * Customer data * Operations data * Employee data * Supplier/strategic partner data * Financial performance data

575. U-shaped cells that group dissimilar machines to perform various operations on a part result in reduction of all of the following except: A. machine downtime. B. travel distances. C. lead times. D. in-process inventory. Overall explanation Regardless of how machines are arranged in a work center, machine downtime can occur. The way to prevent machine downtime is an effective preventive maintenance program.

576. Which of the following maybe necessary to prove feasibility when seeking capital investment approvals? A. Leveraging the existing overhead rates prior to completion B. Outsourcing production until the project is complete or the machine comes up to speed C. Investigating interest rates from various lending institutions D. Calculating the payback period or internal rate of return Overall explanation To finance a large, expensive project or capital investment, it is often necessary to calculate the payback period or internal rate of return.

577. If a customer or service provider is given less leeway to customize a service, what is one trade off? A. The sales opportunity is lower. B. Production efficiency is lower. C. The perceived value of the service must be higher. D. The degree of contact between the customer and the service provider must be higher. Overall explanation Per the service design matrix, reducing opportunities for customization will reduce the likelihood of making a sale. However, production efficiency will be higher.

578. The internal rate of return (IRR): A. equals the net present value. B. is used when considering investing in projects. C. is used to calculate the profitability index. D. is the interest rate that makes the net present value of the investment equal to 1. Overall explanation The I RR is the rate of compound interest at which the company's outstanding investment is repaid by proceeds from a project.

579. When following the UN Global Compact Management Model, what must an organization do once it has assessed its current state of risks and opportunities related to human rights, labor, the environment, and anti-corruption? A. Adjust metrics to ensure that there is a way to determine if new policies and procedures are being followed. B. Create or refine the organization's strategy and related policies, goals, and metrics. C. Transform organizational strategy into tactics, such as capital improvement projects. D. Commit in a transparent way to incorporate the principles into formal governance structures. Overall explanation The "Assess" step, described in the question, is the second step in the model. The next step is the "Define" step, which consists of creating or refining the organizational strategy and related polices, goals, and metrics based on the results of the assessment step.

580. What is a good policy concerning a company's internal rate of return (IRR)? A. Approve the project if the IRR exceeds the cost of capital. B. Set margins based on competitive analysis. C. Reverse-engineer competing products whenever possible. D. Exceed the costs of material, labor, and overhead prior to approval. Overall explanation The IRR is the rate of compound interest at which the company's outstanding investment is repaid by the proceeds from a project.

581. A group of products with similar characteristics, often used in production planning, is known as a: A. phantom bill of material. B. product family. C. product portfolio. D. planning bill of material. Overall explanation A product family is a group of products with similar characteristics, often used in production planning (or sales and operations planning).

582. Which of the following terms refers to a systematic approach to identifying, analyzing, and addressing an organization's exposure to uncertainty within the supply chain? A. Producer's risk B. Buffer management C. Risk management D. Safety factor calculation Overall explanation Risk management is a systematic approach to identifying, analyzing, and addressing an organization's exposure to uncertainty within the supply chain.

583. Analysts must be aware of which of the following when assessing potential points of weakness in a risk assessment for a technology-based business? A. A solidly composed patent will give the business many years of competitive protection. B. Colleges and universities are often available for cutting-edge research and development. C. Outsourcing is a viable alternative to increase capacity and provide flexibility to customers. D. At any moment, a competitor may experience a breakthrough and take market share. Overall explanation A technology-based supplier of high-tech coatings was caught by surprise when its competitor introduced a new coating technology, enabling it to produce product at significantly better levels of cleanliness.

584. How does demand-driven material requirements planning (DDMRP) avoid system nervousness? A. The system uses a red, yellow, and green zone system to show when changes would be too frequent. B. Late changes in requirements are prevented because it is driven by demand pull. C. The system uses daily buckets and daily reviews so system-wide changes are minor. D. A change only affects the subsystem related to the strategic buffer. Overall explanation While the nature of conventional material requirements planning (MRP) is to make everything dependent so it can all be fully automated, this means that late changes can have a systemic effect called system nervousness. Strategic buffers in DDMRP prevent system nervousness by preventing a change from affecting the entire system. Instead, a change an only affect the subsystem created by the placement of the strategic buffers at decoupling points. This is called a DDMRP decoupled explosion.

585. A product has moved from regular production to spare parts supply. Which of the following factors is likely to become least important? A. Price B. Customer service C. Delivery reliability D. Quality Overall explanation Once a product has moved from regular production to intermittent spare parts supply, customer service, delivery reliability, and quality must remain high. Service parts are usually critical to the customer and must be available at all times with perfect quality. Since the product is no longer considered "product," its price can become elastic and based on what the market will bear. Price, therefore, declines as an important factor, as customers will pay a premium when equipment goes down.

586. Which is the biggest tradeoff that needs to be accepted when an industry with strong seasonality chooses a level production strategy? A. Increased overtime costs. B. Lower production efficiency. C. Skilled workers unavailable for rehire. D. Increased inventory carrying cost. Overall explanation A level strategy for a seasonal product requires building extra inventory in times of low demand to enable satisfying demand at the seasonal peak. This is called anticipation inventory. It results in higher average inventory levels and therefore higher inventory carrying costs. The other answers are tradeoffs of other methods such as the chase strategy.

587. What is an advantage of small-scale operations and facilities? A. Good fit for high-volume, low-variety operations B. Higher average production cost per unit C. Less overcapacity during scale-up D. Good fit for high-volume, low-variety operations Overall explanation The smaller facility better matches demand during the scale-up period

588. All of the following are sources of demand that should be considered in sales and operations planning (S&OP) except: A. service part requirements family. B. interplant demands family. C. firm planned orders family. D. customer order backlog family. Overall explanation Firm planned orders are a planning convention used in master scheduling. They are not used in the calculation of S&OP.

589. A B2B organization makes replaceable belts for newspaper printing press maintenance. When identifying their customer segments, who would be the economic buyer? A. The Associated Press B. Printing press manufacturers C. Newspaper companies D. Newspaper readers Overall explanation The economic buyer is the organization whose budget funds the purchase. Since these are maintenance items for products out in the field, the newspaper companies would be the primary buyers. The printing press manufacturers would also be buyers but would buy in lower volume.

590. Which of the following programs asks businesses to embrace, support, and enact, within their sphere of influence, a set of core values in the areas of human rights, labor standards, the environment, and anti-corruption? A. Universal Declaration of Human Rights B. United Nations Children's Fund C. United Nations Global Compact D. ADB/OECD Anti-Corruption Initiative Overall explanation The inCorrect Answers all represent global initiatives to increase human rights and well-being, but they do not have the focus of the United Nations Global Compact on supply chain management.

591. Capacity requirements planning (CRP) directly interfaces with: A. work center finite scheduling. B. master production scheduling (MPS). C. material requirements planning (MRP). D. rough-cut capacity planning (RCCP). Overall explanation CRP directly interfaces with MRP.

592. When a company is pursuing a capacity-lagging strategy, which of the following will likely be true? A. The plants will be more expensive from a machine and labor perspective than for a capacity-leading strategy. B. The plants should always be working at full capacity. C. Operations will typically find that achieving 90% to 100% capacity utilization is very difficult. D. The organization will be more capable of protecting its market share than if it had used a capacity-leading strategy. Overall explanation A capacity-lagging strategy should always find plants working at full capacity.

593. Prior to constructing industrial power lines in a wilderness area, a company seeks input from various public groups. This company is exhibiting its: A. pro forma fiduciary responsibility. B. product positioning. C. public relations. D. social responsibility. Overall explanation Social responsibility is a commitment by management to behave ethically and to contribute to community development.

594. A company with a product differentiation strategy is focused on: A. high productivity. B. customer-valued product features. C. mass customization. D. low cost of quality. Overall explanation Product differentiation is a strategy of making a product distinct from the competition on a non-price basis such as availability, durability, quality, or reliability.

595. Why does the UN Global Compact single out supply chain partners as an important factor in a firm's ability to comply with its 10 principles? A. If the organization uses unionized labor, all of its suppliers should, too. B. It motivates suppliers in countries with low labor costs toward compliance. C. It spreads the Compact's reach, even though partner actions can't impact the firm. D. Customers define which of the principles have the highest priority. Overall explanation In an extended supply chain, the actions of an organization's suppliers may reflect positively or negatively on the organization, especially if they are the channel master or most visible partner in the network. Therefore, the Global Compact stresses the need to ensure that suppliers are compliant with the principles (or are making reasonable progress in that direction). When located in countries with lower labor costs, it is both more important to ensure compliance, while also harder to do so.

596. Which is a key reason to use the SCOR-DS model? A. Determining order winners, order qualifiers, and the location of the push-pull frontier B. Ensuring the targets for all metrics seek superior performance relative to competitors C. Maximizing the number of metrics available to decision makers D. Measuring performance improvement success against benchmarked competitive priorities Overall explanation Part of the definition of the SCOR-DS model is as follows: "Use of the model includes analyzing the current state of a company's processes and goals, quantifying operational performance, and comparing company performance to benchmark data." Once an organization's metrics have been calculated, they are compared against internal standards and possibly industry or best-in-class benchmark data. An organization uses the results to drive performance improvements. However, an organization needs to determine its competitive priorities and work toward superior performance relative to competitors in those areas. Since trying to prioritize all areas at once would dilute any strategy due to the inherent tradeoffs, they seek only parity in other benchmarked areas.

597. Of the following, which has the most influence on the choice of manufacturing environment? A. S&OP B. Logistics resource planning C. Master scheduling D. Business planning Overall explanation The business planning process uses the strategic plan as a key input. Business planning leads to decisions such as what products to sell, types of customers, product variety and volume, and order fulfillment lead time. These decisions have a major influence on choice of manufacturing environment. The other answers are tactical planning processes aimed at leveraging the capabilities of manufacturing environments to create profitable manufacturing processes.

598. In an emerging market for a new product, financially strong companies pose which of the following risks to initial frontrunners? A. Reducing the barriers to entry B. Increasing the velocity of distribution channels C. Acquiring operations of weaker competitors D. Increasing the complexity of products Overall explanation Financially strong organizations have the ability to reduce competition by buying weaker marketplace rivals.

599. The capacity planning technique used at the S&OP planning level is A. resource planning. B. detailed capacity requirements planning. C. input/output control. D. rough-cut capacity planning. Overall explanation S&OP planning uses resource planning to check key resource availability.

600. Which of the following statements best describes how the production plan is related to the resource plan? A. The production plan operates independently of the resource plan. B. The resource plan drives the production plan. C. The resource plan cannot succeed without a level production plan. D. The production plan is constrained by the resource plan. Overall explanation How much the factory can build is constrained by the capacities of the plant. The production plan's determination of build priorities cannot work unless it is matched against available capacities.

601. A company uses a chase production strategy to schedule production. A product family consists of ten end items, produced every month. Four high-volume units comprise 70% of total production. The two lowest-volume units comprise only a very small percentage. How would sales and operations be planning plan the items in this product family? A. One line for the total number of units with no consideration for mix B. Four lines for the highest-volume units, one for the two lowest, and one for the balance C. Separate line for each type of unit D. One line for the highest-volume units and one for the remaining six products Overall explanation Regardless of the number of end items, they are all one product family, so they are planned as one line, with consideration for volume.

602. What is the risk posed to an organization by measuring too many key performance indicators (KPIs)? A. Goals not being tracked B. Slower production times C. Slowed decision making D. Oversimplification of performance Overall explanation Tracking too many KPIs can complicate tracking and slow decision making down. Measuring KPIs should not affect production times. Goals not being tracked and or oversimplification of performance are risks of tracking too few KPIs.

603. Manufacturing is responsible for executing which of the plans that come from the sales and operations planning meeting? A. Capacity B. Sales C. Production D. Backlog Overall explanation Manufacturing is responsible for the production plan.

604. Subassemblies and options need to be master scheduled separately from the end item in which of the following environments? A. Make-to-order B. Make-to-stock C. Assemble-to-order D. Engineer-to-order Overall explanation Subassemblies and options need to be master-scheduled separately from the end item in assemble-to-order to ensure a short final assembly and delivery lead time. In a make-to-stock environment, parts are dependent demand

605. Which product design strategy shifts product differentiation closer to the consumer by delaying identity changes, such as assembly or packaging, to the last possible supply chain location? A. Deferral B. Bright packaging C. Postponement D. Assemble-to-order Overall explanation Postponement enables specific identification of a product as close to the market as possible.

606. What conditions are most favorable to a best-cost provider strategy? A. Intense price-cutting tactics among category leaders B. Period of economic recession and declining household income C. Periods of economic energy and expansion of wealth D. General increase in quality levels in category due to new technology Overall explanation Periods of limited wealth create greater sensitivity to cost while customers still want some level of quality.

607. Which helps set boundaries around the type of work the company will pursue and indicates what is out of scope? A. Vision B. Mission C. Core values D. Project scope statement Overall explanation The APICS Dictionary, 16th edition, defines mission as "the overall goal(s) for an organization set within the parameters of the business scope."

608. Companies that produce a narrow range of high-volume products will most likely choose which of the following types of processes? A. Batch B. Line C. Jobbing D. Project Overall explanation Line manufacturing is defined as repetitive manufacturing performed by specialized equipment in a fixed sequence. It is suited to situations that involve a narrow range of high-volume products

609. A plant refines a raw material into a bulk liquid chemical using a highly automated production process. Which of the following would be the most appropriate operational unit of measure for capacity and load in this situation? A. Standard labor hours B. Plant operating hours C. Monetary units of the chemical D. Gallons of the bulk chemical Overall explanation The volume of the liquid chemical is the most appropriate operational unit of measure. Although monetary units can be used in such a case, volume is a more typical unit of measure.

610. Which of the following is likely true of a new product development strategy? A. It will be more robust and aggressive if accompanied by heightened confidence that operations is capable of delivering a quality product. B. It will be downsized if operations continuously beats standard times. C. It will be used to augment manufacturing if there is significant uncertainty in operational delivery. D. It will take a back seat to product volumes if operations are highly efficient. Overall explanation Operational knowledge is vital to establishing an operations-based strategic advantage. A superior understanding of what one's processes can do at the limits of their capability allows the organization to better provide products and services, due to confidence in knowing for sure that the processes can deliver. Well-controlled processes will also have fewer errors and waste and therefore higher efficiency (lower costs, higher quality).

611. After reviewing production for a particular product family over the past six months, the master scheduler is recommending that the demand time fence be moved out one period. Which of the following sales and operations planning team members could be excused from the discussion and decision making? A. Purchasing B. Production C. Sales D. Senior management Overall explanation Changing the demand time fence does not impact purchasing lead times or purchase orders.

612. A critical role that a shop floor supervisor can play in health, safety, and environment (HSE) compliance is ensuring ease of access to A. GRI sustainability reports. B. regulatory requirements. C. safety data sheets. D. senior management for complaints. Overall explanation Managing safe working conditions and practices is a primary HSE concern, and one of the most important responsibilities is to ensure ease of access to safety data sheets (SDS).

613. What will likely happen when a company adds a selling option to its own website? A. It will risk disinter mediating its traditional retailers. B. It will see growth in its market share. C. It will find its net profits increasing year over year. D. It will experience no change in its market share. Overall explanation Companies that use a traditional model of selling product through retail stores may consider adding a selling portal to their own website. This will likely risk disinter-mediating their traditional retailers.

614. How is a business plan different from a strategic plan? A. A business plan is tactical in nature. B. A business plan focuses on the long-range financial objectives of a company. C. A business plan is a near-term projection of a company's financials. D. A business plan receives input from the sales and operations plan. Overall explanation A business plan is a statement of long-range strategy and revenue, cost, and profit objectives usually accompanied by budgets, a projected balance sheet, and a cash flow. A strategic plan contains the company's vision, mission statement, goals, and objectives.

615. A company wants to develop a level production plan for a family of MTS products. Assume that there is a level production plan. The opening inventory is 200 units, and an increase to 260 units is expected by the end of the plan. The demand for each period is as shown in the table, below: Calculate how much should the company produce each period. Based on that data, what will be the total planned production? A. 1500 B. 2,940 C. 2,650 D. 1440 Overall explanation Total planned production = 1,440 + 260 - 200 = 1,500 units Period production = 250 units The expected ending inventory is 260 units.

616. What is a primary shortcoming of using the simple payback period method to justify capital budgeting expenditures? A. It will likely not remain stable over the time period used. B. It does not recognize the time value of money. C. It is too simple to compute and therefore is subject to adulteration. D. It does recognize the time value of money and is therefore more exact and realistic than using the accounting rate of return (ARR). Overall explanation One of the primary shortcomings of using the payback period to justify capital budgeting expenditures is that it does not recognize the time value of money. The discounted payback period method does not have this disadvantage.

617. A company's products compete in a market with highly variable demand. Management agrees that a good way to win sales for these products is to add capacity, even though it may be underutilized. What is most likely the primary order winner for this product? A. Flexibility B. Quality C. Customization D. Cost Overall explanation Flexibility is the ability of the manufacturing system to respond quickly, in terms of range and time, to external or internal changes. Having excess capacity allows for changeover flexibility so that the organization can react to customer demand changes.

618. What does the five forces model of competition suggest will happen to rivalry between competitors when high exit barriers exist, such as job protection agreements, or in industries in which assets cannot be easily sold? A. It will diminish. B. It will invite even more competition. C. It will increase. D. It often results in backward integration. Overall explanation In a vertical market with many competitors, rivalry increases.

619. During the production strategy review portion of developing the supply plan, which would be a good reason to consider changing from chase production to a hybrid strategy of level production plus some outsourcing? A. The financial plan review indicates that the cost of maintaining excess capacity is low. B. Product family load profiles are becoming smoother, but competitor failures sometimes cause a spike in demand. C. The production performance review indicates that flexibility metrics for production are higher than targeted. D. The review of production rates finds that there is not sufficient aggregate capacity to meet the production plan's load requirements. Overall explanation The production and inventory planning process that results in a supply plan starts with corporate strategy and includes a review of production strategy, then financial plans, then production rates, and then production performance. During the production strategy review phase, the inputs to that strategy are assessed for changes. The Correct Answer is an example of such changes. The other answer choices are from later in the process.

620. A manufacturer's decision to extend the degree of forward integration should be influenced by its desire to do which of the following? A. Reduce the uncertainty of demand. B. Reduce the number of processes to be controlled. C. Reduce the uncertainty of demand and erect barriers to potential competitors. D. Reduce the uncertainty of demand, erect barriers to potential competitors, and reduce the number of processes to be controlled. Overall explanation Forward integration provides a greater level of control of forward supply channel processes.

621. Which is a category of performance measures that relates to daily work routines, such as cycle time and utilization? A. Sustainability metrics B. Strategic metrics C. Tactical metrics D. Operational metrics Overall explanation Operational metrics relate to daily work. Tactical metrics relate to intermediate-term goals to support the strategic plan. Strategic metrics relate to the long-term goals of a business. Although sustainability can be measured, it is not necessarily associated with daily operations.

622. What is the term for the process of interpreting the production plan's impact on critical key materials and capacity? A. Master production scheduling B. Strategic business planning C. Infinite scheduling D. Resource requirements planning Overall explanation Production planning is a long-term planning technique, and it is checked by means of resource requirements planning for key work centers.

623. Managers must consider which of the following basic types of risks? A. Risks that cannot be avoided and risks that can be avoided B. Risks associated with only negative results and risks that may have either negative or positive results C. Risks with losses that difficult to quantify and risks that are variable due to a number of unknowns D. Risk that have been fully defined and those that have been historically documented Overall explanation Speculative risk differs from pure risk in that pure risk is associated with only negative results while speculative risk sees opportunity for both negative and positive outcomes.

624. Which of the following describes the Global Reporting Initiative (GRI) guidelines concerning a company's environmental performance? A. Preliminary set of rules that the U.S. Environmental Protection Agency (EPA) is considering codifying into law B. Framework around which a company can set its own goals C. Set of rules that the U.S. Environmental Protection Agency (EPA) enforces for U.S.-based companies and their tier 1 suppliers D. Mandatory set of European Environment Agency (EEA) rules that EU-based companies are required to follow Overall explanation The GRI framework sets out principles and performance indicators that organizations can use to measure and report their human rights, labor, environment, and anti-corruption practices and outcomes.

625. How many full-time assembly workers would be required in week 25 to support the plan shown below, assuming a 40-hour workweek? Part Number Quantity Assembly Hours Per Unit A 100 1.2 B 250 0.8 C 500 1.5 D 150 1.5 A. 33 B. 17 C. 40 D. 42 Overall explanation First, determine the total number of assembly hours required: (100 x 1.2) + (250 x 0.8) + (500 x 1.5) + (150 x 1.5) = 1,295. Second, divide the total number of hours required (1,295) by the hours in a full-time assembly worker's week (40): 1,295/40 = 32.4 (rounded to 33).

626. In the case where a customer is located far from the supplier and shipping costs and the potential for damage are creating problems, a plan to co-locate a customer's operation within the supplier's facility will: A. likely become a source of employee dissatisfaction when cross-company salaries and benefits are discussed off-site. B. likely improve multiple customer performance metrics. C. likely give the supplier a chance to raise prices significantly, since they know that they have all of the customer's business. D. always lead to backward integration. Overall explanation Improved supply reliability could reduce customer inventories (safety stocks and quarantined for return), improve customer performance to schedule and on time delivery to customers, and reduce expediting and downstream costs. This could result in improvements in multiple performance metrics for the customer.

627. There are two generally recognized types of errors that can occur when responding to risk. In the first, the organization takes action, but it is an incorrect action. What is the second? A. The organization does not take action when it should have. B. The organization postpones a decision while operations deteriorate. C. The organization continues to support an incorrect action when evidence suggests that it should not. D. The organization halts all operations to gather more data. Overall explanation Two basic types of errors an organization can make when responding to risk are: * Taking an action that is incorrect. * Not taking action when they should have.

628. Practices or guidelines that minimize the impact of an operation on the environment are part of a company's policy on: A. sustainability. B. the reverse supply chain. C. strategic diversity. D. hazardous material (HAZMAT). Overall explanation Having a sustainability policy means that an organization's activities and operations will not compromise the needs of future generations.

629. Many organizations use a balanced scorecard to create key performance indicators for their strategies. What feature of the balanced scorecard approach makes it attractive for this purpose? A. More valid from the perspectives of external stakeholders B. Demonstrates compliance with general accounting principles C. Provides detailed performance objectives down to the operations unit level D. Helps define multiple perspectives on the organization's strategic goals Overall explanation A balanced scorecard represents external stakeholders' needs, financial objectives, operational or process needs, and future development needs.

630. Which of the following would occur with a chase strategy? A. High inventories and few capacities changes B. High inventories and frequent capacity changes C. Low inventories and few capacity changes D. Low inventories and frequent capacity changes Overall explanation With a chase strategy, inventories are kept relatively low due to following sales, but frequent capacity changes occur.

631. If an organization has implemented a sustainability initiative but it has not produced the desired results, what step should the organization take next? A. Revise the plan's objectives. B. Prepare a business case for the plan. C. Educate the organization about the goals of the plan. D. Implement an audit. Overall explanation The next step the organization takes should be to implement an audit. All of the other options should have preceded implementation of the sustainability initiative.

632. Which of the following statements about capacity in a job shop environment is true? A. If capacity is insufficient, no shop floor system will be able to decrease backlog. B. If capacity is sufficient, there is no need for shop floor control. C. If capacity is insufficient, effective shop floor control can be used to achieve objectives. D. If capacity is sufficient, shop floor control reports only material movement. Overall explanation If the load at a work center exceeds the available capacity and it is permitted to continue, the backlog will never be decreased. The backlog can only be reduced either by increasing capacity or reducing the load on the work center.

633. The S&OP process occurs at which of the following levels? A. Service parts B. Individual item C. Product families D. Subcomponent line items Overall explanation Individual and subcomponent items are also not addressed at the S&OP level, which specifically addresses planning at the product family level. While service parts may be a product family, this is an individual category of production items, which may or may not be planned at the S&OP level.

634. Which of the following is most appropriate as a key performance indicator from the customer's perspective in a balanced scorecard for an enterprise? A. Total revenue growth B. On-time delivery performance C. Average product manufacturing time D. Scrap cost for the period Overall explanation The customer perspective in a balanced scorecard helps managers evaluate how customers see the company. Customers are typically most concerned with a product's price, quality, sales service quality, and delivery time.

635. Corporate strategy is best developed by: A. the CEO and other senior executives. B. an industry guru. C. surveying the market and rolling up responses. D. surveying sales and marketing associates and rolling up their responses. Overall explanation Corporate strategy is orchestrated by the CEO and other senior executives, as they are most familiar with the marketplace and the company's strengths and weaknesses.

636. What is an example of an external influence that may guide strategy regarding corporate social responsibility? A. International competition B. Customer segments C. The organization's chief environmental officer D. Employee organizations Overall explanation External influences are influences that the organization cannot exert control over, such as international competition. A company may choose to market to particular customer segments or avoid others, may endorse or ban employee organizations, and may choose to dismiss or eliminate the role of a chief environmental officer, so those are all examples of internal influences.

637. Which is a decision at the operations strategy level related to planning and controlling the delivery of products and services? A. How should operations adjust its activity levels in response to demand fluctuations? B. What should be the size of the workforce and how much subcontracting should be used? C. What aggregate levels of inventory should be maintained? D. Should the operation develop its products or services in house or outsource the design? Overall explanation Operational strategies address detailed day-to-day planning. The adjustment of activity levels is one example of an operational decision related to planning and controlling the delivery of products and services. The other answer choices either relate to other areas of the operational plan or are tactical (more long-term) decisions.

638. In order to be sustainable in terms of financial returns, what should an organization focus on? A. Increasing costs charged to downstream members of the supply chain B. Lowering all variable costs as much as possible in the short term C. Providing competitive and stable return on investments while protecting company assets D. Pursuing profits from new sources, even if the company is not well equipped to serve a new customer Overall explanation Sustainability in financial returns entails providing competitive and stable return on investments while protecting company assets. Lowering all variable costs in the short term may incur larger long-term costs that are financially damaging. Charging more to downstream members of the supply chain may cause the customer base to shrink and the company to lose money long-term. Chasing profits from customers that the company is not well equipped to service may lead to increased setup costs or costly contract breaches if the company cannot perform in ways that they have contractually agreed to.

639. Which of the following performance measures is of no use to the management of a make-to-stock company with regard to master scheduling and sales and operations planning? A. Order completion per the master schedule B. On-time shipment per the promise date C. Achievement of the backlog plan D. Adherence to the inventory plan Overall explanation A make-to-stock environment uses an inventory plan, not a backlog plan.

640. Which is a key aspect of selecting organizational supply chain performance metrics for an improvement initiative that is leveraging ASCM's Supply Chain Operations Reference Model Digital Standard (SCOR-DS) as a guiding framework? A. Organization's select their own level 4 metrics for supply chain support processes such as demand generation or product development to show how these integrate with the primary supply chain metrics. B. Organizations use the levels 1 through 3 calculation methods in SCOR-DS without modifications so that any organization using SCOR-DS metrics will be comparable. C. Organizations select the level 4 metrics listed in the SCOR-DS that apply to their industry using the SCOR-DS practices as a guide. D. Some metrics will need targets that drive superior performance relative to competitors while other metrics will only need to drive equivalent performance. Overall explanation Organizations select the metrics that will drive them toward superior performance in priority areas and equivalent performance in lower priority areas relative to competitors or other benchmark organizations. Organizations then adapt the SCOR-DS metrics as needed to enable them to be calculated using the data that are actually available in their databases (or will be after they make improvements). Organizations need to make their own level 4 metrics

641. As an organization becomes more horizontal, which of the following will occur? A. Need to expand the supplier base with redundant suppliers to reduce overall risks to supply chain performance B. Decreasing exposure to integration and culture risk C. Increased exposure to supplier risk D. Neutral risk, because many suppliers provide the same components Overall explanation Increased reliance on suppliers in the supply chain increases exposure to supplier risk. Also, if the horizontal integration involves entering new global markets, this may increase risks related to cultural differences. If the horizontal integration requires new business partnerships, mergers, etc., this will increase integration risk. However, horizontal integration can increase diversification, which reduces overall business risk.

642. What is the Global Reporting Initiative (GRI)? A. Supplier scheduling tool for communicating supply status B. Internet-based enterprise resources planning system C. Organization that pioneered a sustainability reporting framework D. Guidelines for a global enterprise to use in reporting on production Overall explanation The GRI is a network-based organization that pioneered the world's most widely used sustainability reporting framework.

643. Customer-supplier relationships that focus on the future and long-term inter-company team building may be: A. jeopardized by a failure to meet expected order qualifying characteristics. B. jeopardized by a failure to meet expected order winning characteristics. C. something that needs to be formalized using long-term partnership agreements. D. a major order winning factor. Overall explanation Enlightened customer-supplier relationships that focus on the big picture and the longer term may be a major order winning factor.

644. Which is a health, safety, and environment (HSE) procedure that can best prevent the electrocution of equipment maintenance staff? A. Lockout/tagout procedures B. Blocking off maintenance time in work center schedules C. Total productive maintenance (TPM) scheduling D. Safety data sheet provision Overall explanation Lockout/tagout procedures prevent equipment from being turned back on after it has been turned off for maintenance. A lockout physically prevents the equipment from being turned back on, while a tagout is a prominent sign indicating not to do so. Either method reduces the risk of electrocution or physical danger to maintenance staff. Blocking off maintenance time could also help but is not foolproof.

645. Which of the following is the most appropriate response when a significant increase in production volume is anticipated? A. Realigning the process to match the new volume B. Increasing the degree of vertical integration C. Obtaining a flexible manufacturing system D. Implementing a focused factory concept Overall explanation If demand requires an increase in production volume for a product, the first step is to investigate whether or not the process can support the anticipated volume.

646. A company has a lag capacity strategy. If demand growth is predictable, this strategy: A. should be paired with a chase manufacturing strategy. B. fully utilizes capacity, so unit costs are lower. C. increases the risk of inventory loss (e.g., obsolescence, theft, damage). D. will always generate high levels of past-due customer orders. Overall explanation A lag capacity strategy will add capacity after it is needed, which will mean that equipment remains at full utilization. When demand growth is predictable, a lag capacity strategy works well if inventory is manufactured ahead of time

647. A diversified company is typically a collection of businesses. Which of the following is a strategy-making challenge for such a company? A. Assessing multiple industry strategies, one for each industry arena in which the company operates B. Becoming a decentralized organization that allows each business to formulate its own corporate strategy C. Gathering local marketing data for each industry and for the businesses within that industry D. Making small incremental changes in individual business units based on current market direction Overall explanation Because a diversified company is a collection of individual businesses, the strategy-making challenge involves assessing multiple industry strategies, one for each industry arena in which the company operates.

648. Value is defined by: A. top management. B. sales and marketing. C. engineering. D. the customer (external or internal). Overall explanation Value is defined by customers, both internal and external. Determining what is valued requires two things: understanding who the customers are and understanding what they value. Engineering, sales and marketing, and top management determine value only in so far as they are internal customers for the product or service. Ultimately, it is the external customer who pays for the product or service, and their definition of value is paramount.

649. A company defines the critical parameters for a component of a new product and then lets a supplier partner design the component. What is the most significant advantage of this approach? A. It reduces the cost of the final product. B. It simplifies internal project coordination. C. It enables a reduction in the marketing staff. D. It improves the performance of the final product. Overall explanation The practice of subcontracting work to suppliers with whom the organization has developed a close relationship has the advantage of simplifying the amount of internal project coordination required, which can result in shorter lead times and higher development efficiencies.

650. A company produces make-to-stock products that are stocked and shipped from distribution centers, to which deliveries are made weekly. No safety stock is carried, and inventory shows available when it is placed into stock at the distribution center. Which of the following statements is most true of a performance measure based on units completed within the master- scheduled weekly period? A. Performance is more accurate if products are aggregated into families. B. On-time completion is measured relative to the day of shipment to distribution. C. Any order completed is considered on time any day of the week. D. Master scheduling performance is secondary to distribution customer service. Overall explanation Completion must be on time to meet the weekly shipments since no safety stock is carried.

651. Which of the following performance measurements is likely to be the most important to operations managers of a product line with medium volume and a short life cycle? A. Number of schedule changes B. Time to market C. Capacity utilization D. Standard error of the forecast Overall explanation Short life cycle production is usually focused on products that need to get to market quickly. Production is medium volume, so the smaller lot sizes enable managers to quickly schedule and reschedule production.

652. A product line has become so widely popular that the company has built a new facility dedicated to manufacturing it. What is this an example of? A. Supplier alliance B. Tax inversion C. Focused factory D. Outsourcing policy Overall explanation A focused factory is a facility established to focus the entire manufacturing system on a limited set of products, technologies, volumes, and markets.

653. Operations management is responsible for a product line where minimizing labor rates and maximizing operation efficiencies are very important. The product line will most likely have which of the following characteristics? A. Medium volume, custom design B. Low volume, engineer-to-order C. Medium volume, short life cycle D. High volume, standard design Overall explanation A product line characterized by high volume and standard design will need to make sure that efficiencies and utilizations are at a high level so the maximum production can be ensured from the available capacity.

654. Based on the information provided below, what would the production plan be? Starting inventory 1,500 units Forecast of demand 2,500 units Projected ending inventory 1,200 units A. 2,500 units B. 2,200 units C. 2,800 units D. 2,000 units Overall explanation The company plans to decrease the inventory by 300 units in addition to selling 2,500 units. The production plan would need to be 2,200 units.

655. A company has researched expanding capacity by designing and acquiring the largest machine of its type in the industry, even though this would result in excess capacity if business remained steady. However, the new machine would provide capacity flexibility without requiring much more additional staff. The alternative would be a second smaller machine, but this would require twice as many workers. A new facility is also planned rather than expanding the existing one. This new facility would be big enough for the new equipment, and it would also allow the organization's support functions that are currently leasing space elsewhere to move into the new facility. What is this an example of? A. The business strategy driving the need for a focused factory B. Wishful thinking about capacity utilization C. The operations people having too much influence in the company D. Antiquated thinking that bigger is better Overall explanation This is a real example of a company that had an earlier plan to expand capacity, but market share had diminished and the plan was put on hold. During the next few years, they fine-tuned the plan on paper and decided that big was best because it allowed them to have excess capacity (flexibility) and the higher volumes would drive item costs down through economies of scale. When the market again rose, they decided to not expand incrementally, but instead to go big. The new facility had enough room for the largest machine of its kind and enough room to consolidate the business and marketing teams in the same focused facility. Their major customer liked what they saw and awarded them 100% of their orders over the next ten years. Success was achieved immediately.

656. In addition to the ruinous price-cutting and easy imitation by competitors, which of the following is another common risk of pursuing a low-cost provider strategy? A. Shift in market interest from low cost B. Shift in value chain design C. Need to offer best-in-class customer service D. Need to improve product delivery speed Overall explanation The risk of a shift in market interest away from low cost is the most common risk of pursuing a low-cost provider strategy among the options. Offering best-in-class customer service, while desirable and nice for the customer, will likely increase costs and therefore is counter to pursuing a low-cost provider strategy. The need to improve product delivery is also desirable, but it is not a risk (but might be a solution).

657. What are the three components of sustainability? A. Economic, environmental, ecological B. Economic, environmental, social C. Social, economic, regulatory D. Social, environmental, regulatory Overall explanation Sustainability includes elements of protecting the environment, sustaining the future economy, and being a responsible citizen.

658. A company has developed a new, innovative product that is taking over the market. Early sales consume everything the company can produce, but things have started to slow down. Both production and sales continue to grow. What are the typical challenges that would be expected in this growth phase of the product's life? A. Price and delivery B. Design and quality C. Design and availability D. Quality and delivery Overall explanation In the growth phase of a product, rapid expansion and increased production often lead to degradation in quality and delivery.

659. What is the primary use of environmental scanning? A. To understand competitors' strategies B. To identify threats and opportunities C. To identify effective supply chains D. To understand current markets Overall explanation Environmental scanning looks at external factors that represent either threats to the organization or opportunities for it. Identifying effective supply chains and understanding competitors and markets are not objectives of environmental scanning.

660. Which type of legal risk refers to the misuse of intellectual property? A. Bribery and corruption B. Patent infringement C. Contract D. Compliance Overall explanation Trademark or patent infringement refers to the misuse of intellectual property or using a trademark without authorization. It may result in financial and legal damages.

661. Success in operations drives better products and services, an increased range of product capability, better supply relationships, and heightened customer satisfaction due to high quality performance. Which of the following is true of all of these attributes? A. Once mastered, they should be relied upon to continue their high performance. B. They become strategic when taken from a holistic viewpoint. C. They are independent of strategy development, as they are all tactical. D. They may be relied upon to manage almost any new product design that could increase market share. Overall explanation Operational knowledge is vital to establishing an operations-based strategic advantage. A superior understanding of what one's processes can do at the limits of their capability allows the organization to better provide products and services, due to confidence in knowing for sure that the processes can deliver. Well-controlled processes will also have fewer errors and waste and therefore higher efficiency (lower costs, higher quality).

662. An organization consistently wins awards for the designs of its products, but customer satisfaction scores don't seem to reflect this product superiority. What is likely the root cause of this issue? A. Fickle customers B. Order winners becoming order qualifiers C. Even better competitor products D. Poor service provision Overall explanation The combination of the product and its associated services is sometimes called the product-service package to indicate that the two are inseparable, especially in the mind of the customer. The customer may like a product itself, but if it has poor associated services, the customer will still likely not be satisfied.

663. The design of a manufacturing process for high production volumes would likely facilitate which two of the following outcomes? A. High frequency of new product introduction and low level of finished goods inventory B. High frequency of new product introduction and low process flexibility except for options C. Low level of work-in-process inventory and low process flexibility except for options D. Low level of work-in-process inventory and low level of finished goods inventory Overall explanation Processes with a high volume of output will have a high degree of repeatability and specialization and a narrow variety of finished goods. Work-in-process and finished goods inventories will be low because of the high volume.

664. Operations strategy formulation should be: A. an annual process with quarterly adjustments. B. a monthly seven-step process involving top management. C. a five-year rolling activity updated biannually. D. a relatively infrequent event. Overall explanation The process of formulating an entirely new operations strategy should be a relatively infrequent event.

665. In which of the following stages of a product's life cycle is a product-focused manufacturing organization most appropriate? A. Introduction and decline B. Maturity and decline C. Growth and maturity D. Introduction and decline Overall explanation A product-focused approach occurs mostly at the introduction and decline stages of the product life cycle. In the introduction stage, the product is new and will often require fixes as well as the addition of new features and options overlooked during product design. In the decline stage, the company will often try to revive sales by revamping the product or adding new features and options. In contrast, products in the growth and maturity stages have minimal, if any, changes to product structures. The focus is squarely on marketing and sales issues.

666. What should an effective manufacturing strategy provide in addition to supporting the overall organizational strategy? A. Advanced planning and scheduling capabilities B. Competitive advantage C. Maximization of volume and variety D. Stable supply and demand Overall explanation The APICS Dictionary defines manufacturing strategy as follows: "A collective pattern of decisions that acts upon the formulation and deployment of manufacturing resources. To be most effective, the manufacturing strategy should act in support of the overall strategic direction of the business and provide for competitive advantages (edges)."

667. What is the key output of the sales and operations planning process? A. Material requirements plan B. Master schedule C. Rough-cut capacity plan D. Production plan Overall explanation The production plan is the agreed-upon plan that comes from the sales and operations planning process, specifically the overall level of manufacturing output planned to be produced, usually stated as a monthly rate for each product family (group of products, items, options, features, and so on).

668. The timing of project tasks and completion dates is displayed in a: A. Gantt chart. B. control chart C. histogram D. flowchart. Overall explanation A Gantt chart provides a timeline for each activity, getting the task information from the work breakdown structure.

669. An organization has determined that brand recognition is its most important strategic advantage for breaking into a foreign market. Which entry option would create the greatest risk to this advantage? A. Export B. Joint venture C. Franchise D. Subsidiary Overall explanation When using franchising as an entry option to gain access to foreign markets, the franchisor gives up some control over its brand. Franchisees can weaken the brand in the new market by delivering poor quality or service. They may also alter the brand when it conflicts with local culture and customer preferences. This has the effect of diluting the power of the brand.

670. A commercial door manufacturer wants to add some make-to-stock (MTS) capabilities to its current make- to-order (MTO) manufacturing environment. Which of the following should be modified to reflect this strategy and what competitive advantage could be emphasized in line with this strategy? A. Vision statement should be modified to express a goal of low-cost leadership. B. Mission statement should be modified to express a goal of faster lead time. C. Mission statement should be modified to express a goal of low-cost leadership. D. Vision statement should be modified to express a goal of faster lead time. Overall explanation Essentially, a company's vision statement answers the question, "Where are we going?" The vision statement for this organization needs to express what competitive advantage they are pursuing in moving to a MTS environment for some of their products. Often MTS is about improving availability such as by having faster lead times. While low-cost leadership could be a goal, carrying MTS inventory will bake this goal harder to achieve.

671. A make-to-order company is in the process of implementing lean manufacturing techniques, making equipment layout changes and standardizing the designs of their highest-value products in order to transition to assemble-to-order. They begin building the options that the customers will select. Which of the following actions should also be taken? A. Don't take orders for the assemble-to-order products a time to enable the backlog to go to zero as the changes come into effect. B. Gradually reduce marketing's quoted lead time as the changes reduce the backlog. C. No action is required, since the backlog will reduce automatically. D. Work overtime until the backlog has been reduced so the changes can be permanent. Overall explanation As product design and production improvements shorten cycle time, the backlog will be reduced as well. However, if the quoted lead time is not reduced, customers will continue to order too far in advance.

672. Which of the following is a disadvantage of being an innovator in product design and technology? A. Higher research and development expenses may not increase market share or margins. B. A lengthy learning curve will be required of customers for correct product operation. C. Competitors may make poor-quality copies and destroy the market by making customers believe that all such products have poor quality. D. Early adopters will not aware of the product's unique features. Overall explanation Being an innovator in product design and technology is more costly than using previous designs or existing technology, so the increased research and development expense needs to be offset by higher market share or higher margins per sale or the organization will not be as profitable as competitors that spend less on innovation.

673. A company's electromechanical products are used heavily in sometimes unanticipated ways, thus leading to emergency service outages. The on-site repair team suggests that the products be made to automatically assess, diagnose, and report status. The cross-functional product review team sees this as an opportunity to increase overall product value. What would likely be the most impactful outcome of implementing this strategy? A. Providing data for continuous improvement B. Facilitating upstream integration C. Increasing the product's order-winning features D. Becoming a potential union problem if machine diagnostics replaces something a person could do Overall explanation Order winners are competitive characteristics that cause customers to choose a firm's goods and services over those of its competitors. They are a competitive advantage for the firm. In this case, product design would be the order winner, ideally eliminating the expensive emergency service outages.

674. Which of the following is an international standard that assists organizations in contributing to sustainable development through an understanding of social responsibility? A. ISO 9000 B. GAMP C. GRI D. ISO 26000 Overall explanation ISO 26000 is an international standard adopted by the International Standards Organization to assist organizations in contributing to sustainable development beyond legal compliance through a common understanding of social responsibility.

675. What is the purpose of a gate review meeting? A. Determine if the project should continue based on prospects of success B. Perform periodic reconciliation of project scope, schedule, and budget C. Secure initial senior management support for project goals D. To identify and respond to signs of scope creep Overall explanation Gate review meetings, also called go/no go decision points, are used in long or complex projects to review that the project can be successful and that the initial benefit and risk profiles are still accurate. The other choices are incorrect because management support must be in place before the project begins

676. For some companies, value chain analysis has led to support processes such as design for sustainability, which is exemplified by: A. ensuring that multiple suppliers are qualified for sourcing key components. B. annual monitoring of the supply chain to ensure viability of parts and raw materials supply. C. supplier rating systems where all key suppliers are graded using common scorecards. D. working to eliminate toxic chemicals from the supply chain. Overall explanation In its design for sustainability activities, Nestle, for example, is working to eliminate toxic chemicals from its supply chain.Pepsi and Coca-Cola are working to improve water resources in developing countries.

677. Which statement is true? A. Value starts with the customer. B. Lean manufacturing means always having product ready for the customer. C. Cost and value are synonyms. D. Cost buildup and storage add value to a project. Overall explanation Value should be defined from the customer's point of view, and any activity that does not add value from the customer's point of view is waste. The other options are incorrect because cost buildup and storage do not add value to the customer; cost is the money a company expends to make the product, and value is customer's perception, thus they are not interchangeable; and if the product is always ready for the customer, then the company is maintaining finished goods inventory, which is a form of waste in lean.

678. A food producer and distributor of processed meats is considering purchasing a poultry business. This is an example of: A. green manufacturing. B. vertical integration. C. sustainable business practices. D. horizontal integration. Overall explanation Vertical integration is the degree to which a firm has decided to directly produce multiple value-adding stages from raw material to the sale of the product to the ultimate consumer.

679. What will increase rivalry among sellers in the same industry? A. Customer loyalty is high, and cost to switch brands is high B. Both strong and weak rivals exist. C. Buyer demand grows slowly or is flat, and cost to switch brands is high. D. Buyer demand grows slowly or is flat, and both strong and weak rivals exist. Overall explanation When buyer demand grows slowly or is flat, sellers must compete harder to increase revenues. When strong and weak rivals exist, strong competitors tend to exploit their advantages and weak ones have to move quickly to compete. It is harder to entice a customer to switch when they are loyal. Buyers are not likely to change suppliers.

680. Which of the following performance metrics refers to an operation's ability to provide a products or services to customers inexpensively? A. Cost B. Dependability C. Quality D. Speed Overall explanation There are five generic performance objectives: quality, speed, dependability, flexibility, and cost. The cost objective refers to the goal of lowering the costs of individual units in order to increase profit and/or improve competitive advantage.

681. Which is a market strategic driver with strong potential to result in changes to the attributes of an existing product? A. Inquiry into customer satisfaction levels that indicates customers are highly satisfied with the product in normal wind conditions B. Observation of a customer configuring the product in an undocumented way that improves performance in high winds C. Inquiry into supplier costs that indicates a different process could result in an identical supplied component at a lower cost D. Observation of a new competitor product that addresses target customer segment needs in an entirely new way Overall explanation Strategic drivers influence business unit and manufacturing strategies. Market research can use observation, such as observation of customer product use in relevant conditions. In this case, the product is capable of being improved for use in windy conditions. Product development could test out these changes, and, if they are valid, the product attributes could be changed in simple ways. For example, this could involve adding the relevant instructions to the user manual and adding visual guides to the product to ensure correct reconfiguration for windy conditions. A competitor product that approaches customer needs in entirely new ways could result in the need for a new product rather than a change to existing product attributes (assuming no other existing products could serve as a viable substitute and the new approach is determined to be needed).

682. Which of the following factors is likely to become LEAST important for a product that has moved from regular production to spare parts supply? A. Customer service B. Price C. Delivery reliability D. Quality Overall explanation Once a product has moved from regular production to intermittent spare parts supply, customer service, delivery reliability, and quality must remain high. Service parts are usually critical to the customer and must be available at all times with perfect quality. Since the item is no longer considered a "product," its price can become elastic and can be based on what the market will bear. Price, therefore, declines as an important factor, as customers will pay a premium when equipment has downtime.

683. What does an effective strategy require? A. Flexibility to adapt to changing conditions B. Detailed steps for the implementation of strategic initiatives C. Specific time frame of at least three years D. Long and challenging list of initiatives to implement Overall explanation Strategies are both deliberate (planned) and emergent (adaptive). The length of their time frames may vary but is usually longer than one business planning period. They are general rather than specific and focus on key opportunities rather than laundry lists of actions.

684. The strategic risk plan must have go/no-go guidelines for: A. customer contracts. B. the legal community. C. switching from problem mitigation to recovery, D. make-or-buy decisions. Overall explanation The strategic risk plan asks, "At what point do we reach the limit of avoidance and mitigation strategies before we start to rely on recovery strategies?"

685. Which of the following is true of the differences between inventory turns or costs in a distribution center (DC) versus for the manufacturer of the goods? A. The distribution environment has a higher cost of goods sold than does the manufacturer for the same finished goods. B. Manufacturers typically approximate work-in-process value, so inventory turns tend to be more accurate in a distribution environment. C. Distribution environments tend to have higher turns because inventory remains in stock for only a short time compared to that for a manufacturer. D. Distribution environments tend to have lower turns because they don't carry any raw material inventory. Overall explanation Distribution cost of goods sold includes the cost to buy or transfer the goods from the warehouse as well as the additional material-handling costs. DCs carry inventory longer as it is based on a forecast

686. The shared perception of the organization's future, or what the organization will achieve, is known as its: A. strategic plan. B. mission. C. sales and operations plan. D. vision. Overall explanation An organization's vision describes the organization as it would appear in a future successful state. The strategic plan defines which actions will be taken by an organization to support its mission and achieve its goals. The mission statement is a short statement of why an organization exists (i.e., it outlines the organization's purpose for existing). Sales and operations planning is related to an organization's ability to match its supply with demand.

687. Which team has the responsibility for preparing the preliminary production plan? A. Pre-S&OP team B. Demand planning team C. Executive S&OP team D. Supply planning team Overall explanation The supply planning team is responsible for preparing the production plan and recommending changes as necessary to meet the demand plan. The other answers are incorrect because the demand planning team reviews the sales plan; the pre-S&OP team makes decisions on balancing supply and demand; and the executive S&OP team reviews and makes the final decisions on sales and operations plans as necessary.

688. By approving projects that improve performance with its order qualifiers, a company is: A. likely using the 80-20 rule for project prioritization. B. spending its money wisely. C. not going to achieve high levels of competitive benefits. D. likely selecting improvement projects based on the theory of constraints. Overall explanation No matter how well the company performs at its qualifiers, it is not going to achieve high levels of competitive benefits.

689. Which generic strategy has two subsets? A. Differentiation B. Low-cost provider C. Best-cost provider D. Focus Overall explanation The focus strategy has two subsets: a low-cost focus and a differentiation focus.

690. What is a bill of resources? A. Listing of key resources required to manufacture one unit of a selected item B. Amount of product that can be loaded for distribution C. Listing of key materials required to manufacture one unit of a selected item D. Unique configuration created to aid the master scheduler Overall explanation The bill of resources details the key resources required to manufacture one unit of an item.

691. During a discussion centered on lead and lag, a CEO approves a capital equipment expansion. This is an example of the CEO implementing the firm's: A. business acumen. B. capacity strategy. C. continuous improvement strategy. D. approved budget. Overall explanation One of the strategic choices that a firm must make as part of its manufacturing strategy is the capacity strategy, such as lead, lag, and tracking.

692. Which type of lead time is the time required to design a product, modify or design equipment, conduct market research, and obtain all necessary materials? A. Supplier lead time B. Procurement lead time C. Purchasing lead time D. Manufacturing lead time Overall explanation The APICS Dictionary, 16th edition, defines procurement lead time as follows: "The time required to design a product, modify or design equipment, conduct market research, and obtain all necessary materials. Lead time begins when a decision has been made to accept an order to produce a new product and ends when production commences."

693. Strategies that lack stability over time and employee acceptance are the result of an organization not having which of the following? A. Mission and vision B. Dependability and flexibility C. Big opportunities and eight accelerators D. Differentiation strategies Overall explanation A business's mission, vision, and core values create a foundation for the organization's strategy by unifying leaders and employees behind a shared vision of the organization's principles and future. Without this foundation, strategies can lack stability over time and broad acceptance by executives, managers, and employees.

694. Once the company's value chain has been documented and internal consensus has been gained, the next step in using value chain analysis is: A. completing a value chain analysis for the company's most significant competitors. B. isolating core activities from non-core activities with the goal of outsourcing the non-core activities. C. finding overlapping activities and consolidating whenever possible. D. identifying key functions and people in each step to facilitate duplication and fail-safe processes. Overall explanation The primary purpose of value chain analysis is to facilitate an activity-by-activity comparison of how effective a company is relative to its competitors.

695. If an organization wants to prioritize the customer's ability to customize the organization's service offerings, what is a tradeoff they must be prepared to accept? A. Higher degree of contact with the customer B. Higher cost of services C. Lower sales conversion rates D. Higher contribution margin of services Overall explanation Highly customizable services will reduce service standardization and therefore increase the cost of these services. This will tend to increase sales conversion rates. Higher contribution margins would be a positive thing. The degree of contact with the customer could also be higher or lower, but this represents a different area of tradeoffs from the degree of customization decision.

696. Which factor has the least impact on the choice of process technology? A. Volume and variety of products B. Level of automation required C. Worker skills D. Scale and scalability Overall explanation Worker skills might have some effect on the choice but are not as important as the other factors. Of the choices offered, volume and variety are perhaps the most important factors. For example, very high volumes usually require higher levels of automation, and decisions about scale reflect performance objectives choices with respect to flexibility and cost—as in whether to have large-scale centralized operations or small-scale decentralized operations.

697. A major multinational customer reported to its paper supplier that the supplier's inkjet paper product was curling under conditions of low humidity. Later, the plant was supplying acceptable paper, but plant productivity, scrap, and rework levels were poor and the major customer produced statistical proof that the supplier's process was out of control. They addressed these factors and eventually returned to an in-control state, which helped them return to an acceptable contribution margin. Which of the following best indicates the correct sequence of generic performance objectives that this organization used to recover from this catastrophic failure? A. Cost, flexibility, dependability, speed, quality B. Quality, cost, flexibility, speed, dependability C. Quality, cost, schedule, speed, profit D. Quality, speed, dependability, flexibility, cost Overall explanation The paper supplier focused on quality and speed to quickly get the products to an acceptable level (using inspection at first). They then developed new processes to enhance dependability and flexibility, which eventually also helped improve their contribution margin (cost).

698. How can the objectives of marketing be met while also considering other stakeholder objectives? A. Marketing and finance objectives can be met with higher inventories. B. Marketing and production objectives can be met with lower inventories. C. Marketing and finance objectives can be met with lower inventories. D. Marketing and production objectives can be met with higher inventories. Overall explanation Both marketing and production objectives can be met with higher inventories. The other answers are incorrect because high inventory investment that will increase costs is of concern to finance

699. A company manufactures component parts for machine tools in the UK and ships them to Southeast Asia for assembly and sale in the local market. The components have been shipped by sea, transit time averages six weeks, and the shipping cost is £1,000 per shipment. The company is considering moving the parts by air at an estimated cost of £7,500; shipment will take two days. If inventory in transit for the shipment costs £190 per day, should the company ship by air? A. Ship by air B. Both are the same C. Neither is a good option D. Ship by water Overall explanation Based on cost alone, the best choice would be to ship by air. Total Cost = Transport Cost + Inventory Carrying Cost Air: £7,500 + £380 = £7,880 Water: £1,000 + £7,980 = £8,980 Shipping 40 days later by air rather than by sea—which has a two-day delivery lead time—enables a higher percentage of the order quantity and product mix to be based on orders rather than forecasts at the regional level. Lower levels of safety stock also will be required at the central and regional facilities.

700. What must leaders be aware of when developing a company's strategy policy? A. ISO 14001 requires strict adherence to their outline. B. All sustainability goals and objectives must be included. C. It is acceptable to develop a separate and more specific sustainability policy. D. ISO regulators will likely be on site to validate the sustainability plan once it is published. Overall explanation The overarching foundation of a company's sustainability management system is a sustainability policy consistent with the company's overall mission, vision, and core values. Many companies choose to have a separate and more specific sustainability policy, one that includes goals for both environmental stewardship and social well-being.

701. What is the rule for using net present value for project justification? A. If the net present value is greater than the calculated internal rate of return, then accept the project. Otherwise, reject it. B. if the net present value is positive, accept the project. Otherwise, reject it. C. If the net present value D. If the net present value is negative, accept the project. Otherwise, reject it. Overall explanation The rule for using net present value (NPV) for project justification is that if the NPV is positive, the project should be accepted.

702. The possibility of maintaining or acquiring other diverse businesses will be facilitated by finding: A. an entity with a positive cash flow. B. an entity with solid assets. C. a manufacturing strategic fit D. a company with a similar strategic vision. Overall explanation When snowmobile maker Bombardier diversified into motorcycles, it was able to set up motorcycle assembly lines within the same manufacturing facility where it was assembling snowmobiles.

703. Which of the following is part of a business plan? A. Production plan B. Statement of profit objectives C. Master scheduling D. Short-term sales objectives Overall explanation The statement of profit objectives is part of a business plan, along with a long-range strategy and revenue and cost objectives. The production plan is derived from the business plan through the S&OP process and must agree with the business plan, but it is not a part of the business plan. The business plan specifically is concerned with long-range strategy and revenue and cost and profit objectives, not short-term sales objectives. Master scheduling occurs following S&OP, which follows business planning.

704. Which of the following guidelines should be used when selecting activities for performance measurement? A. The activity has a significant effect on the performance of the overall system, and the activity is measurable (objective and quantifiable). B. The activity has a significant effect on the performance of the overall system, the activity has a high potential for improvement, and the activity is measurable (objective and quantifiable). C. The activity has a significant effect on the performance of the overall system, the activity has a high potential for improvement, the activity falls within the responsibility of the organization, and the activity is measurable (objective and quantifiable). D. The activity has a high potential for improvement, the activity falls within the responsibility of the organization, and the activity is measurable (objective and quantifiable). Overall explanation Performance measurement should focus on important activities, and only measurable activities can be measured.

705. A manufacturer of building supplies decides to improve its competitive advantage by buying sand and gravel suppliers near its factories. What type of strategy is this? A. Disintermediation B. Forward integration C. Horizontal integration D. Backward integration Overall explanation According to the APICS Dictionary backward integration is "the process of buying or owning elements of the production cycle and channel of distribution back toward raw material suppliers." When an organization is able to produce raw materials, parts, or services with at least the same efficiency, reliability, and quality as its suppliers, then backward integration may make sense.

706. Which of the following business characteristics would typically make a lead capacity strategy appropriate? A. Both material and capacity constraints exist. B. Capacity can be activated or deactivated in increments. C. Price is the competitive priority being pursued. D. Activating and deactivating capacity is costly. Overall explanation A lead capacity strategy is one where, as demand is increasing, capacity is added prior to the realization of demand. If capacity can be activated and deactivated in increments, the business can respond accordingly to changing demand.

707. A fairly new organization has no subsidiaries. It is considering creating two product lines, one that is the cheapest option on the market and another that is a premium line with high cost but innovative differentiating features. What is an issue with this strategy? A. Both employees and customers will be confused by the conflicting brand identities. B. The organization will need to develop a "dual operating system" for its functional areas to function effectively. C. The organization will need to become a best-cost provider. D. The manufacturing functional area will need to generate synergy from the twin focus on cost control and quality. Overall explanation It is very challenging for one business unit to implement multiple strategies simultaneously. The brand identity will be difficult to overcome. Multiple marketing messages will confuse customers

708. In addition to a financial evaluation, assessment of capital investments should include taking which of the following actions? A. Dictating customer needs B. Reviewing organizational capabilities C. Adopting the latest technologies D. Revising organizational structures Overall explanation Financial planners need to review organizational capabilities and available related technologies, and analyze customer needs when assessing capital investments.

709. Failure mode and effects analysis (FMEA) rates failures based on the probability of their occurrence and their: A. chance of occurring more than once. B. ease of mitigation. C. likelihood of causing other failures. D. degree of severity. Overall explanation FMEA is used to identify the factors that are critical to failure and rates them by the likelihood that they will occur and the consequences of the failure (severity). Corrective actions can then be applied to those failures based on their rankings for occurrence and severity.

710. The competitive characteristics that a firm must exhibit to be a viable competitor in the marketplace are known as: A. order winners. B. order qualifiers. C. customer preferences. D. a competitive advantage. Overall explanation Order qualifiers are competitive characteristics that are required for a firm to be a viable competitor in the marketplace.

711. What is the most accurate description of the make-or-buy decision? A. The decision should not consider workforce stability. B. Current capacity should be excluded from the analysis. C. Short-term needs should be the primary consideration. D. This type of decision should be revisited often. Overall explanation Make-or-buy decisions need to be re-evaluated as conditions that led to a particular decision change. Long-term costs, workforce stability, and capacity are all considerations, but not the primary.

712. A company performs the final assembly and packaging stage of the product at the distribution center. What is this process known as? A. Consolidation B. Break-bulk C. Postponement D. Terminal handling Overall explanation Postponement is a product design strategy that shifts product differentiation closer to the consumer by postponing identity changes, such as assembly or packaging, to the last possible supply chain location.

713. As a company seeks to align operations with market needs, it is likely that strategies will be adjusted over time, primarily because of: A. credit lines available to the company. B. changes in forecasting methodology. C. changes to the company's internal rate of return. D. changes in both operations resources and market requirements. Overall explanation Strategies will likely be adjusted over time to take into account changes in both operations resources and market requirements.

714. By validating the need and timing of capacity requirements and by recommending adjustments to capacity, resource planning can add what to the strategic plan? A. Longer planning horizon B. Efficiency C. Lead time D. Value Overall explanation Resource planning can add value to the strategic plan by, for example, validating the need and timing of capacity requirements and by recommending whether to expand capacity in advance of need all at once, to expand capacity incrementally in steps, or to lag behind the need.

715. Companies that both provide valuable social benefits and fulfill customer needs are likely to: A. win more government contracts. B. reduce investment in research and development. C. improve their competitive strength. D. see profits drop. Overall explanation Today's corporations must implement social responsibility in order to be competitive in the marketplace.

716. Understanding the human and environmental aspects and impacts during the life of a product, process, or service is called: A. life cycle analysis. B. life cycle assessment. C. life cycle analogy. D. life cycle appraisal. Overall explanation Life cycle assessment (LCA) is defined by the APICS Dictionary as follows: "Understanding the human and environmental impacts during the life of a product, process, or service, including energy, material, and environmental inputs and outputs. Sometimes called cradle-to-grave analysis, LCA includes raw material extraction through materials processing, manufacture, distribution, use, repair and maintenance, and disposal or recycling."

717. A work center is best described as a set of machines and/or operators that: A. perform related processes. B. produce the same products. C. perform tasks in a sequence. D. produce at the same rate of output. Overall explanation A work center is a specific production area consisting of one or more people and/or machines with similar capabilities.

718. What happens once the final draft of a company's strategy has been formulated? A. It is typically submitted to the company's board of directors for review and approval. B. It must next be published in the company's annual report if the company is publicly traded. C. It must be filed with the Securities and Exchange Commission. D. All stakeholders have approximately 30 days to fine-tune it. Overall explanation The strategy-making efforts of top managers are complemented by advice and counsel from the company's board of directors. Normally all major strategic decisions are submitted to the board for review, discussion, and official approval.

719. Which of the following includes an analysis of the nature of the firm, the market, and the business environment? A. Strategic plan B. Benchmarking C. S&OP D. Product family analysis Overall explanation S&OP is incorrect, because although it is concerned with these factors, the analysis is conducted as a part of the business planning process. Benchmarking is incorrect because it is a separate part of business planning, which does not include analysis of the nature of the firm, the market, or the business environment. Product family analysis is incorrect because it occurs as a part of S&OP and does not include analysis of the nature of the firm, the market, or the business environment.

720. Which of the following is the most likely manufacturing environment for an industrial hydraulic press? A. Make-to-order B. Assemble-to-order C. Make-to-stock D. Engineer-to-order Overall explanation According to the APICS Dictionary, a make-to-order manufacturing environment is one in which "a good or service can be made after receipt of a customer's order. The final product is usually a combination of standard items and items customed- designed to meet the special needs of the customer." In the question's example, the hydraulic press would include standard components as well as special components specific to the needs of the customer.

721. A work center that is designated to produce a single item or a limited number of similar items is said to have: A. group technology. B. horizontal integration. C. dedicated capacity. D. a functional layout. Overall explanation A work center that has dedicated capacity is designated to produce a single item or a limited number of similar items.

722. What is the role of top management in the sales and operations planning (S&OP) process? A. To commit to the process and the results B. To provide the information used in the process C. To make the final decisions after the meeting D. To develop the production plan Overall explanation Top management's role is to support the S&OP process and agree to the results.

723. A company has a number of products that are similar but are subject to unstable demand patterns. The company wants to implement a program to reduce inventory investment while providing a maximum three-day customer order turnaround. Which of the following manufacturing environments will most likely meet that goal? A. Engineer-to-order B. Make-to-stock C. Make-to-order D. Assemble-to-order Overall explanation Since the products are similar, assemblies and options could be produced to a forecast and then assembled to a customer order.

724. In the sales and operations plan of a make-to-stock company, which of the following indicates that a chase production strategy is being employed? A. The quality plan closely approximates the sales plan. B. The inventory plan increases and decreases along with sales. C. The backlog plan remains level as the production level changes. D. The production plan closely approximates the sales plan. Overall explanation In a chase strategy, the sales and production plans approximate each other.

725. A company produces a high-volume electronic assembly using a series of dedicated production lines. This is an example of which process environment? A. Job shop B. Batch C. Repetitive D. Continuous Overall explanation The use of dedicated production lines for high-volume demand occurs in repetitive manufacturing.

726. Which of the following entities or conditions impacts customer demand through regulations in areas such as safety, liability, taxes, or the environment? A. Competition B. Economy C. Quality D. Government Overall explanation Governments establish regulations that can greatly impact market demand for products due to a number of resulting factors.

727. In a supply network, the company is in the center, and it is surrounded by: A. suppliers and perhaps several tiers of customers but never competitors. B. third- and fourth-party providers. C. competitors, suppliers, and perhaps several tiers of customers. D. suppliers and their suppliers but never competitors. Overall explanation In a supply network, the company is surrounded by competitors, suppliers (and perhaps their suppliers), and perhaps several tiers of customers (e.g., distributors/wholesalers, retailers, and end customers).

728. The business plan reflects a connection between which of the following areas? A. Financial numbers and sales forecasts B. Sales forecasts and customer orders C. Production quantity and financial numbers D. Customer orders and production quantity Overall explanation The financial goals (profit and loss) are directly tied to the sales forecasts, which will provide a statement of expected company revenues.

729. In a company with a 12% internal rate of return, a capital budget item costs $18,000 and has annual savings of $2,500 in labor and $500 in annual power use. What would be the simple payback period in years? A. 8.3 years B. No enough information is provided to calculate the payback period. C. 6 years D. 5 years Overall explanation $18,000/$3,000 = 6 years. The internal rate of return is not needed to calculate this answer.

730. A small engine parts manufacturer is working to segment suppliers and customers to enhance profitability. When it discusses the companies that carry those parts in retail locations, which segment is it considering? A. Intermediate customers B. Ultimate customers C. Suppliers D. Lead time Overall explanation Intermediate customers refer to the customers that are not at the end of the supply chain, which in this case would refer to retailers who carry the parts for sale to the general public. Ultimate customers would refer to the customers of those retailers that purchase the parts from those retail locations. Supplier segmentation refers to companies that supply the manufacturer with parts and raw materials. Lead time segmentation is a form of supplier segmentation.

731. An organization develops a dual operating system consisting of a traditional organizational hierarchy and a network organizational structure. The latter develops "big opportunities." What is a typical role for the traditional organizational hierarchy? A. Executing strategic changes that are extensions of the current strategy B. Executing strategic changes that require speed and agility C. Focusing more on leadership than management D. Focusing more on creativity than logic Overall explanation The traditional hierarchical structure is good at running the day-to-day affairs of the organization, which includes executing the current strategy and continuously improving it.

732. Which of the following is true of the sales and operations planning (S&OP) process? A. The supply plan does not include inventory. B. Consensus by management is not necessary. C. Forecasts of future demand are best expressed in units. D. The production plan is the agreed-upon plan. Overall explanation The production plan must be agreed to by all members of the S&OP team.

733. Sales and operations planning (S&OP) typically includes which of the following functions? A. Quality, planning, sales, and production B. Design, distribution, marketing, and quality C. Operations, purchasing, quality, and design D. Sales, marketing, finance, and operations Overall explanation Sales, marketing, finance, operations, and engineering are all possible contributors to the S&OP process and are able to make decisions on how best to service customers in the future. Quality, design, and distribution do not typically participate in S&OP meetings.

734. Which is the best example of how a change to longer production runs with fewer changeovers at a make-to-order organization could result in a tradeoff with customer service objectives? A. Fulfilling a customer's mix of goods for an order will require a longer lead time. B. Some ability to customize goods will be lost due to standardized runs. C. The quality of the product will likely be lower due to tool and die wear. D. The price to the customer may no longer be acceptable after the change. Overall explanation Longer production runs with fewer changeovers will reduce production costs. If a customer order requires a mix of goods in an order, the various runs needed for the order will each need to be completed. Since each run is longer, the total lead time for the order will be longer in this method.

735. Demand for a part that is produced by another plant or division within the same organization is known as: A. distribution demand. B. coupled demand. C. interplant demand. D. internal demand. Overall explanation Interplant demand is one plant's need for a part or product that is produced by another plant or division within the same organization.

736. A make-to-order company is ready to introduce a new product family that has many of the criteria the market is demanding. Which of the following production strategies is most applicable for the introduction phase of the new product family? A. Ramp-up B. Chase C. Level D. Hybrid Overall explanation Demand is unknown, but the company believes that sales will be good. Some inventory buildup enables the company to be somewhat flexible for the actual timing and quantity of demand.

737. The development of corporate strategy ideally starts at the top, cascading downward throughout the organization and ultimately reaching: A. the HR department for further input. B. key buyers and customers. C. the associated functional and operating levels. D. the front-line employees for review and approval. Overall explanation As a general rule, strategy making must start at the top and then proceed downward from corporate levels to the business levels and then down to the associated functional and operational levels.

738. Which of the following describes the outputs of the business planning process? A. Mission, goals, and objectives of the organization, with action plans B. Determination of capital equipment investment to support the resource plan C. Statement of revenue, cost, and profit objectives by product family D. Sales and operations plan, production plan, and inventory or backlog plan Overall explanation The business plan is a statement of long-range strategy and revenue, cost, and profit objectives usually accompanied by budgets, a projected balance sheet, and a cash flow statement.

739. The automaker Toyota turned societal concerns for fuel efficiency and automobile emissions into an industry-leading hybrid car strategy that enabled them to gain early market leadership. What is key to Toyota's strategy in this initiative? A. Awareness of need to mitigate harm from value chain activities B. Aligning competencies with social benefit for competitive advantage C. Differentiating itself from major competitors at this time D. Response to market needs to shape product designs Overall explanation This is a proactive response to an opportunity, using capabilities to create benefits.

740. In hopes of achieving strategic goals, executives may: A. engage specialists to lobby the government in hopes of attaining special tax breaks. B. provide resources for only those projects that facilitate accomplishing strategic goals. C. pit one department or group against another in hopes of instilling competition. D. initiate a public relations organization to advertise the company's strategic objectives. Overall explanation Compensation packages at many companies have increasingly rewarded executives for short-term performance improvements—most noticeably achieving quarterly and annual earnings targets and boosting stock prices by specified percentages. This can motivate the executives to take unwise business risks to boost short-term earnings. The focus on short-term performance has proved damaging to long-term company performance and shareholder interests.

741. A company produces and distributes three families of basic materials that are sold directly to manufacturers. The industry is very competitive, and the growth rate is low. Which of the following would be the most appropriate focus for the operations strategy in this situation? A. Increasing operating flexibility B. Reducing lead time variability C. Reducing waste in operations D. Increasing speed of production Overall explanation The performance objectives for a company differ depending on the type of business. In this situation, with a business that produces standard, basic products in a competitive environment, the focus of the operations strategy will likely be cost reduction and efficiencies, which can be achieved by reducing waste in operations.

742. What is the most common form of international distribution? A. Licensing international companies for manufacturing processes B. Expansion into foreign markets through warehousing C. Establishing a joint venture with a foreign organization D. Export of products into foreign markets Overall explanation All of these are ways to expand into foreign markets, but exporting is by far the most common and the least expensive.

743. Which is an objective of a pull system? A. To limit the total inventory B. To establish due dates C. To assign priority to orders D. To increase throughput (rate) Overall explanation One objective of a pull system is to produce exactly what is needed, when it is needed, and avoid unnecessary WIP and finished goods inventory.Increasing throughput would have the effect of speeding up production and could build up inventory in advance of customer demand. Establishing due dates and assigning order priority are features of a push system.

744. Current trends are essentially forcing companies that use outsourcing to ensure that all suppliers conform to: A. USMCA regulations. B. appropriate corporate social responsibility practices. C. EDI (electronic data interchange) protocols. D. Electronic Product Code (EPC) standards. Overall explanation When a company chooses to outsource any part of its operations, it must consider quality, speed, dependability, flexibility, and cost and must ensure that suppliers conform to appropriate corporate social responsibility (CSR) practices.

745. Which of the following statements characterizes a job shop environment? A. Work centers are organized by function. B. Routings for all products are the same. C. Kanban is the most appropriate scheduling method. D. Work center load is predictable. Overall explanation In a job shop plant, the different methods and equipment for producing inventory are separated into departments. Production jobs pass serially through each department as detailed in the production order routing. Production is intermittent in a job shop, not predictable. The products in a job shop are often make-to-order with very different routings. Kanban is better fit to a continuous production environment.

746. What is a typical question to ask when evaluating the acquisition of new process technology? A. Does the process technology improve the specification of the product or service? B. Will this put the company into a market-share leadership position? C. How will this process improvement affect the company's balance sheet? D. Will the process improvement meet the performance promises of the process technology supplier? Overall explanation When evaluating the acceptability of a process technology investment, a key question to ask is "Does the process technology improve the specification of the product or service?"

747. What is a core competency? A. Task best done by outsourcing to an innovative supplier B. Proficiently performed activity central to the company's strategy and competitive success C. Rare capability a company possesses, often protected by patents D. Operation a company performs better than anyone else in the marketplace Overall explanation To be a core competency, a task must be performed proficiently and must be central to the company's strategy and competitiveness.

748. When outsourcing products or processes, a critical first step for all involved is identification of the company's: A. core competencies. B. strategic plan. C. patents. D. existing capacity strategy. Overall explanation Core competencies are the skills or knowledge sets that enable a firm to provide the greatest level of value to its customers in a way that is difficult for competitors to emulate and that provides for future growth.

749. Delivery lead time in an engineer-to-order environment includes which of the following elements? A. Design, purchase, manufacture, assemble, ship B. Manufacture, assemble, ship C. Assemble, ship D. Purchase, manufacture, assemble, ship Overall explanation Delivery lead time is the time from the receipt of a customer order to the delivery of the product. Since this is engineer-to- order, the receipt of the order would initiate the design phase.

750. Using the information provided below, what is the monthly planned production if level production is used? Beginning inventory 600 units Total annual forecast 12,600 units Ending inventory target 1,200 units Working days per month 20 days Number of periods 12 periods Employee productivity 11 per day A. 1,000 units per period B. 630 units per period C. 660 units per period D. 1,100 units per period Overall explanation Level Production per Period = (Annual Demand - Beginning Inventory + Ending inventory)/Number of Periods = (12,600 units - 600 units + 1,200 units)/12 periods = 1,100 units per period

751. What formula is used to calculate the cash-to-cash cycle time? A. Inventory Days + Accounts Payable Days - Accounts Receivable Days B. Inventory Days + Accounts Receivable Days - Accounts Payable Days C. Accounts Receivable - Accounts Payable D. Average Accounts Payable Days Overall explanation Cash-to-Cash Cycle Time = Inventory Days + Accounts Receivable Days - Accounts Payable Days

752. Which of the following actions to improve the validity of the master schedule is most under the master scheduler's control? A. Identifying sources of demand problems B. Reducing sources of supply problems C. Aggregating capacity by flattening bills of material D. Improving the accuracy of the resource bills of material Overall explanation Maintaining the resource bills of material to reflect current conditions has an ongoing impact on the validity of the master schedule.

753. The process used to validate that adequate resources and capacity exist for the S&OP production plan is A. capacity requirements planning. B. resource planning. C. bill of resources. D. rough-cut capacity planning. Overall explanation Resource planning is the process that evaluates the availability of key resources, and the feasibility of the production plan generated by the sales and operations plan. A bill of resources is incorrect, because it determines the number of key resources used in the manufacturing process to produce a product and is a necessary input to the resource planning process. Rough-cut capacity planning is incorrect, because it is the process used by master scheduling to validate that capacity is adequate. Capacity requirements planning is incorrect because it is the process that validates the adequacy of capacity to execute the material plan.

754. What are the four concerns of sales and operations planning (S&OP)? A. Demand, supply, forecast, inventory B. Volume, mix, money, sales C. Sales, production, inventory, money D. Volume, mix, demand, supply Overall explanation The four concerns of S&OP are sales, production, inventory, and money.

755. A company has decided to redesign a product's overall value chain to eliminate some cost-producing activities. This product is currently in the company's broad differentiation strategy product group. What is the product likely moving to? A. Innovation product group B. Product group that will compete on delivery speed C. Focused low-cost strategy product group D. Focused differentiation strategy product group Overall explanation A company competes on either an overall low-cost provider strategy, a broad differentiation strategy, a focused low-cost strategy, or a focused differentiation strategy.

756. A piece of electronics equipment is several years old, and new models with new functionality are common on store shelves. Which of the following factors are likely to be more important to consumers when choosing this product? A. Price and delivery B. Price and quality C. Quality and delivery D. Design and availability Overall explanation Electronic equipment usually has relatively short life cycles. With newer models available, customers interested in the more mature products typically want price reductions and/or faster or more reliable delivery. Quality is important, but a mature product typically will have demonstrated adequate quality by this point.

757. The integration effort of cable companies to diversify into providing internet and telephone services is an example of: A. a company seeking to become a monopoly. B. the need for more government regulations. C. a larger company restraining industry opportunities. D. strategic fit in R&D and technological activities. Overall explanation Businesses with a strategic fit in R&D or technology activities perform better together than apart because of potential cost savings.

758. Which tool is best suited to tracking the business activities associated with satisfying a customer's demand, from a supply chain management perspective? A. United Nations Global Compact Management Model B. Performance Standards C. UNGC D. SCOR Overall explanation The SCOR model describes the business activities associated with satisfying a customer's demand, which include plan, source, make, deliver, return, and enable.

759. The resource plan is typically stated in all of the following terms except: A. item numbers. B. labor hours. C. pounds or kilograms. D. machine hours. Overall explanation Resource plans deal with the planning and managing of plant capacities. Pounds/kilograms and hours are important capacity measurements. Item numbers are not relevant to capacity units of measure.

760. Which of the following is a typical measure for the SCOR metric reliability? A. Average lateness of orders B. Perfect order fulfillment C. Time to increase activity rate D. Actual versus theoretical throughput time Overall explanation Perfect order fulfillment is a typical measure for the SCOR metric reliability.

761. A supplier produces for countries around the globe. If only domestic customers are considered in demand management, what will the resulting outcome likely be? A. Demand will be unaffected. B. Not enough information exists to comment. C. Demand will be understated. D. Demand will be overstated. Overall explanation When both domestic and international demand are present, ignoring international demand will result in understated requirements.

762. A discrete manufacturer's marketing strategy is to be the low-cost, high-quality, high-volume, rapid-delivery supplier. Which of the following manufacturing processes would best fulfill this marketing strategy? A. Line B. Batch C. Cellular D. Jobbing Overall explanation A line process has high volume and high quality but usually narrow effective variety.

763. Using the partially completed figure and the results of your quarterly leveled production calculation, now calculate the ending inventory per quarter. What is the ending inventory for quarter 3? A. 180 units B. 140 units C. 95 units D. 80 units Overall explanation To determine the ending inventory per quarter, use the following calculation for each quarter, starting with quarter 1: Ending Inventory = Prior Period Inventory + Current Production – Current Forecast. For quarter 1, this is 100 units + 115 units – 50 units = 165 units. For quarter 2, this is 165 units + 115 units – 100 units = 180 units. For quarter 3, this is 180 units + 115 units – 200 units = 95 units.

764. Why do companies that are striving to continuously improve environmentally often require suppliers to obtain third-party ISO 14001 certification? A. When advertising the use of an environmentally compliant supply chain, the company can refer to authorized certification entities. B. ISO 14001 allows companies to outline their own environmental policies. C. It avoids the legal liability of accepting a supplier's personal assertion that they're ISO 14001-compliant. D. If the supplier commits an egregious environmental error, the company can claim innocence. Overall explanation ISO 14001 describes an environmental management system intended to continually improve the environmental performance of a company. However, companies set their own goals, so improvement is not standardized. As a result, third- party certification is often required by customers to ensure that suppliers are following stringent standards.

765. Which of the following actions by purchasing would reduce a manufactured product's environmental impact? A. Working with key suppliers to reduce product packaging B. Encouraging customers to reduce their carbon footprint C. Reengineering the purchasing processes to reduce time and costs D. Requiring suppliers to sign a statement that they do not use child labor Overall explanation Reducing a product's packaging would reduce the environmental impact of the product by reducing packaging production and disposal.

766. What should leaders do to ensure that strategic goals are clearly articulated and prioritized to address only those of highest importance? A. Make sure that all IT initiatives are dollarized and prioritized using the internal rate of return method for improvement. B. See that improvement initiatives are acceptable to the people and to the departments in which the people reside. C. See that all department-initiated improvement initiatives are prioritized based on speed and value of implementation. D. Align improvement initiatives with strategic objectives. Overall explanation To get the most from initiatives to execute strategy more proficiently, managers must have a clear idea of what specific outcomes really matter. Once initiatives to improve operations are linked to the company's strategic priorities, then comes the managerial task of building a total quality culture that is genuinely committed to achieving the performance outcomes that strategic success requires.

767. During a core competency analysis, it is discovered that the company has best-in-class capabilities in designing integrated circuits for their top-end products. A few multinational integrated circuit manufacturers have the potential to lower costs significantly. What should the outsourcing decision be? A. To outsource to the chip manufacturer whose technical design group is geographically closest to the company B. To outsource to the chip manufacturer that comes closest to sharing the company's vision of the future C. To keep this technology in-house D. To weight the highest quality outside supplier most heavily Overall explanation Outsourcing is the process of having suppliers provide goods and services that were previously provided internally. It involves substitution—the replacement of internal capacity and production by that of the supplier.

768. During the assessment period of an acquisition, specific synergies are observed and found to be positive. However, the acquiring organization's strategists keep in mind that risks continue to lie in the fulfillment of the overall strategic goal. Strategically, the decision to acquire then becomes a question of: A. how long it will take to successfully implement a common order entry system. B. whether it is faster or cheaper to buy rather than develop internally. C. the compatibility of company cultures and how they can be made more similar. D. what the international market thinks of the plan. Overall explanation The decision to acquire is a question of whether it is faster and more economical to buy something that the company could have developed on its own.

769. A training program is developed to ensure that powder-coating professionals know how to select the right chemical pretreatment for the given substrate and how to set the right curing temperature and dwell time for parts based on their density. Experienced powder coaters provide their input to the course developer, who also relies on the results of a design of experiments. The materials get to the specifics, especially as they relate to actual errors in the past, and include some hands-on training. The course is taught to new employees on their first day of work just after the basic powder-coating process is covered in a different training course. If this is the only time this course is offered, why might this training program still fail? A. Poor timeliness B. Poor method C. Poor participation D. Poor level of detail Overall explanation In this case, the course is being offered too soon, just after the new employees have been taught the basic process. The training is not being provided when the actual knowledge or skill will be used. It would be better to offer the course after the new employees have had some time to learn the basic process and get some practice under supervision.

770. When implementing new productivity technology, a significant risk is that the application: A. May not be operable without internal or external experts. B. May not work as planned, be done on schedule, or stay within budget. C. May not meet paying customers' needs. D. May not have the necessary documentation for training and implementation. Overall explanation The risk with implementing new productivity technology is that it may not work, and the project may not be done on time or within budget.

771. Which of the following interfaces deals primarily with translating monetary units into product families for planning purposes? A. Strategic planning to business planning B. Sales and operations planning to master scheduling C. Master scheduling to detailed scheduling and planning D. Business planning to sales and operations planning Overall explanation The business plan is in monetary units, while the sales and operations plan uses aggregate product family planning.

772. Which of the following is true of a business plan? A. It is stated in terms of monetary units and detailed by product. B. It is stated in terms of units and grouped by distribution channel. C. It is stated in terms of monetary units and grouped by product family. D. It is stated in terms of units and grouped by manufacturing site. Overall explanation A business plan is a statement of long-range strategy and revenue, cost, and profit objectives usually accompanied by budgets, a projected balance sheet, and a cash flow.

773. In a conventional manufacturing planning and control environment, which of the following objectives often conflict? A. Minimize production costs and increase the length of production runs. B. Minimize production costs and decrease product variety. C. Meet customer service targets and minimize delivery lead times. D. Meet customer service targets and decrease inventory investment. Overall explanation In order to meet fluctuations in customer needs, you need inventory. However, storing inventory can be costly and inefficient. Therefore, a manufacturing environment will need to balance these two potentially conflicting objectives.

774. The master scheduler would ignore which of the following elements when setting up the bill of resources? A. Labor B. Setup C. Equipment D. Demand Overall explanation Demand is external, not a resource or a constraint on a resource.

775. Which of the following activities is a reportable occurrence by production? A. New equipment installation B. Preventive maintenance C. Repair of existing equipment D. Downtime for tooling change Overall explanation Repair of existing equipment affects capacity and needs to be reported.

776. A large organization that maintains manufacturing, distribution, marketing, and retail operations wants to track key performance indicators (KPIs) to measure overall organizational performance. Which tool would be best suited for the desired tracking? A. SCOR model B. United Nations Global Compact C. Balanced scorecard D. Blockchain Overall explanation The balanced scorecard can be used to evaluate organizational or supply chain performance. The SCOR model is tailored specifically to supply chain management, which is part of the organizational processes, but would not give a clear picture of overall performance. The United Nations Global Compact and blockchain are not tools tailored to tracking KPIs.

777. A new printing press costs $50,000 today and will bring in net cash inflows of $10,000 the first year, $15,000 the second year, $20,000 the third year, and $25,000 the fourth year. Assuming a 6% cost of capital, the present value (PV) of these cash inflows is $9,433.96 the first year, $13,349.95 the second year, $16,792.39 the third year, and $19,802.34 the fourth year. What is the net present value (NPV)? A. $20,000.00 B. $57,356.34 C. $9,378.64 D. $7,356.34 Overall explanation Since the present values of the future cash inflows are already calculated, add these PVs together to find their sum and then subtract the initial investment of $50,000: $59,378.64 - $50,000.00 = $9,378.64

778. A company outsources its manufacturing to a company that employs thousands of workers and has the capability to hire more at a moment's notice. Which competitive strategy does this capability sustain? A. Green initiatives B. Flexibility C. Employee empowerment D. Low cost Overall explanation Apple outsources its manufacturing (a traditional value chain activity) to a company that employs over 230,000 workers. This company has the capability to hire 3,000 more employees at a moment's notice

779. The traditional understanding of managing risk typically identifies which of the following strategic risk responses? A. Proactive, reactive, semi-reactive B. Simulation, discovery, mitigation C. Find, fix, repair D. Prevention, mitigation, recovery Overall explanation A simple structure for controlling risk uses three strategic approaches: prevention, mitigation, and recovery.

780. What are four viable mitigation options for a situation in which a failure becomes external? A. Apologizing, refunding, reworking, providing compensation B. Refunding, reworking, replacing, canceling all business C. Replacing, reworking, refunding, having a dinner meeting with purchasing agent D. Refunding, replacing, reworking, threatening a lawsuit Overall explanation Failure recovery strategies can involve a wide range of activities such as apologizing, refunding monies, reworking the product or service, or providing compensation.

781. What must leadership do when multiple important tasks remain for the company to pursue? A. Focus on a few goals while putting some others aside. B. Articulate each and every goal in priority sequence. C. Align bonus rewards by group based on departmental goals. D. Prioritize all important tasks. Overall explanation Strategy involves focus and choice. Choice means setting aside some goals in favor of others. When this hard work of prioritization is not done, weak strategy is the result.

782. A sales forecast for a product in a certain period is defined as the company's: A. sales quota. B. desired sales. C. shipments to customers. D. expected sales. Overall explanation A forecast is the expected level of sales, not the quota. Desired sales may exceed the expected sales, and customer shipments may not consume the forecast in the same period.

783. A demand-pull facility produces five versions of an end item with final assembly schedules. Which of the following elements must be accounted for when scheduling a dedicated final assembly line? A. Available capacity B. Historical yield C. Customer demand D. Tooling availability Overall explanation A pull facility will schedule based on demand.

784. Which of the following nonfinancial factors are critical to consider when setting up an offshore production facility? A. Local laws, differences in time zone, and local infrastructure. B. Local laws, quality of labor force, and local infrastructure. C. Local laws, quality of labor force, and differences in time zone. D. Quality of labor force, differences in time zone, and local infrastructure. Overall explanation Understanding local laws, the quality of the local workforce, and local infrastructure are all critical considerations when searching for a location.

785. When strategically aligning operational capabilities with market needs, caution must be exercised so that: A. operations capabilities are 100% aligned with all market forecasts. B. employee staffing is soft enough so that a good amount of overtime will be necessary. C. all capital projects are completely approved and aligned with the most optimistic market forecast. D. capabilities are not so tightly aligned as to offer little to no room for response flexibility. Overall explanation When assessing the potential for failure, operations should look to its line of fit concerning alignment to market needs. Too tight a fit risks market needs expanding beyond operational capabilities.

786. A company operates a strict pull system with its suppliers, with shipments every two, four, and eight hours. A third-party logistics supplier manages all incoming and outgoing shipments. Which of the following delivery performance measures is most likely to incorporate a tolerance to allow for uncontrollable conditions? A. Required carrier B. Required advance shipping notice C. Required date D. Required time window Overall explanation Weather and traffic conditions cannot be controlled, so acceptable time windows need to be provided, including tolerances.

787. When refurbishing an older building, the cost of investing in better insulation: A. may serve as an argument for the status quo. B. should be contrasted with the cost of new construction methodologies. C. must be contrasted with the likely significant energy savings that can be produced. D. becomes a barrier to the project's return on investment. Overall explanation If a building is well-insulated and properly engineered for heating, cooling, and lighting, significant savings can be produced as a result of the systems required for the building itself.

788. After receiving criticism from environmentalists concerning the negative side effects of excessive packaging, a major retailer decides to improve the carbon footprint of its supply chain in part by mandating that suppliers use smaller packaging. This has the side effect of enabling the retailer to put more product on its shelves. Which is a likely result of this change? A. Reducing the supply chain carbon footprint will result in positive environmental press. B. The suppliers will be unwilling to comply with this mandate because it will cost them money in the long run. C. The higher numbers of products carried and sold will result in a worse overall carbon footprint. D. The increase in profits from more inventory on shelves will offset the negative press that will likely continue. Overall explanation Sometimes unintended consequences have positive outcomes. For example, Walmart is recognized for its efforts to reduce packaging and improve the carbon footprint of its supply chain following negative press on the subject. However, they are pursuing footprint reductions largely because doing so allows them to put more product on the shelf, which means more products to sell.

789. What is the relationship between the number of weeks in the backlog and the number of weeks in the master scheduling demand time fence? A. They are equal. B. There is a direct correlation. C. Backlog weeks are greater. D. There is no correlation. Overall explanation The demand time fence indicates when production schedules should be firmed, so there is no correlation with backlog.

790. Which of the following is the best performance measurement to use to obtain higher profitability? A. On-time completion to schedule B. Volume production C. Productivity D. Utilization Overall explanation On-time completion to schedule means that what is scheduled is available when it is required, at a quality acceptable to the customer.

791. In an assemble-to-order environment, how can the execution and control function help ensure a valid material plan? A. By identifying alternate routings if the primary routing is unavailable B. By maintaining bottleneck flexibility through utilizations of at least 85% C. By achieving on-time start and completion dates for production orders D. By providing accurate efficiency and utilization factors for work centers Overall explanation In any environment, achieving start and completion dates best supports the material plan.

792. Which of the following best applies to the sales forecast development process as it relates to sales and operations planning? A. It enables forecasts to be extended to the demand horizon. B. It is constrained only by demonstrated capacity. C. It is a check and/or revision of the existing forecast. D. It recognizes that forecasting is an inaccurate process. Overall explanation The forecast is already in existence, but it should be reviewed and revised if needed.

793. Why does sales and operations planning (S&OP) address both monetary units and product families? A. Knowing both enables a cross-check to ensure consistency. B. Accounting needs monetary unit information, and production needs product information. C. Monetary units are an input, and product family plans are an output. D. The planning horizon covers both long- and short-term planning. Overall explanation The business plan is an input to the demand part of S&OP and is stated in monetary units

794. Strategic mid-level and front-line goals cannot be identified without first understanding: A. the major components of the corporate/business strategy. B. the targeted earnings per share. C. the needs of current and future employees. D. the overall marketing plan. Overall explanation Mid-level and front-line managers cannot craft unified strategic moves without first understanding the company's long-term direction and the major components of the corporate/business strategy.

795. Early due diligence concerning a backward integration initiative includes an analysis of both companies': A. corporate cultures. B. balance sheets. C. supplier relationships. D. cash flows. Overall explanation A corporate culture includes a set of assumptions and values that members of the company share. These common assumptions influence the way the company operates.

796. The most common sequence for processing products in a supply chain is: A. supplier, manufacturer, customer. B. distributor, retailer, supplier. C. retailer, supplier, manufacturer. D. manufacturer, customer, supplier. Overall explanation Goods in a supply chain originate with the supplier, who provides the raw materials and components to the manufacturer. In turn, the manufacturer produces the end product, which is then sold to the customer.

797. What must operations do when the overall strategy is to compete with low-cost, no-frills products? A. Use outsourcing as much as possible regardless of supply chain complexity. B. Leverage low labor costs in countries with low labor rates without the assistance of sophisticated technology. C. Use technology. Robots that replace people don't look for breaks, vacations, or raises. D. Compromise from time to time with low-cost/low-quality component suppliers. Overall explanation When a European car manufacturer acquired an existing automobile facility in an emerging nation just moving from central planning to market-driven planning, its hope was to build low-cost, no-frills cars. Leveraging existing platforms and a low cost design imperative, they succeeded. The facility was bare-bones with no robot technology, leveraging low labor rates.

798. Characteristics that encourage customers to choose one product or service over another are called: A. customer preferences. B. order winners, C. order preferences. D. order qualifiers Overall explanation Order winners are characteristics (e.g., a capability or quality) that cause customers to choose a firm's goods or services over those of its competitors. They can be considered a competitive advantage of the firm.

799. Which of the following is true of an aggregate forecast of a group of items? A. It may be divided by the number of SKUs to establish the SKU forecasts. B. It is of little value when stock keeping unit (SKU) forecasts are available. C. It is used to establish the economic order quantity. D. It is usually a better forecast than the SKUs forecasted individually. Overall explanation Forecasting product families is more reliable than forecasting individual items.

800. A large manufacturer/distributor is working to reduce water use in its production processes and to improve the water supply in emerging supply markets. What is this an example of? A. Getting in front of an issue that is likely to affect corporate image B. Regulations working for the greater good C. Migrating environmental standards D. Design for sustainability Overall explanation A manufacturer/distributor working to reduce the water intensity of its production processes and to improve water resources in developing countries is focused on design for sustainability.

801. Which of the following is the first level at which existing inventory is accounted for in the planning hierarchy? A. Master planning B. Business planning C. Sales and operations planning D. Detailed scheduling and planning Overall explanation Sales and operations planning accounts for inventory as part of the plan in order to determine production requirements.

802. Reporting metrics on parts reduction, recycled content, and total weight reduction including packaging is a good example of how: A. using life cycle analysis can result in resource and energy savings. B. component modularity can drive product design. C. the voice of the customer can facilitate savings. D. design for logistics can benefit an organization holistically. Overall explanation Targets for reducing the number of parts, increasing recycled content, and reducing the overall weight of products are good examples of how using life cycle analysis has helped companies to identify where resource and energy reductions can be made.

803. Which of the following entities or conditions impacts customer demand due to decisions that consumers and companies must make regarding financial resources? A. Quality B. Customers C. Competition D. Economy Overall explanation General economic conditions influence demand by consumers and companies. In times of economic expansion, demand increases. In times of recession, demand decreases.

804. A make-to-order company believes that reducing customer lead time will result in a competitive advantage and increased sales. The sales and operations planning process should authorize an increase in: A. work in process. B. finished product inventory levels. C. production. D. the sales forecast. Overall explanation Increasing sales will require production to produce more.

805. Which could increase the opportunity cost of holding inventory that is available for sale? A. Substituting lower-grade raw materials as inputs to products for sale B. Buying and selling more lots of inventory in the year C. Increasing the duration of the sales cycle D. Diverting some funds from sold goods into unrelated financial investments Overall explanation Inventory costs include opportunity costs, which is the value that the money invested in inventory could have produced if it had been invested in other value-producing activities. Opportunity costs grow larger the longer it takes to turn over inventory (convert it back to cash). Increasing the duration of the sales cycle will reduce inventory turnover and increase opportunity cost.

806. Which of the following is a reason for evaluating multiple sales and operations plans during the pre-S&OP meeting? A. To assess their financial implications B. Because the S&OP plan cannot be finalized until delivered to top management C. Because they are theoretical plans only and so can be changed at any time D. Because the forecast provided may not be accurate Overall explanation The S&OP process requires thorough analysis of alternative sales and operations scenarios to assess their financial implications.

807. A strategic decision has been made to expand a highly customer-centric organization into a foreign country. What should a solid risk assessment reveal? A. Local regulations will probably not be an issue, as the opportunity for new tax receipts usually wins the day. B. Locals should carry the major share of customer interactions. C. Processes that work in one country should work in another. D. Cultural interactions are likely a major source of potential failure. Overall explanation When a U.S.-based amusement company decided to expand its largely successful theme park operations to Europe, it brought American management styles, cultural tastes, labor practices, and marketing pizzazz to Europe. When the French stayed away in droves, the company accused them of cultural snobbery.

808. An organization's annual sales for a particular motor scooter total $50 million. Variable costs for the product over the year amounted to $30 million. It had $10 million in fixed costs for the year. What is the organization's contribution margin (CM) ratio for the year? A. 80% B. 40% C. 60% D. 20% Overall explanation The contribution margin (CM) is sales minus variable costs, or $50 million minus $30 million, which equals $20 million. The CM ratio is CM divided by sales, or $20 million divided by $50 million, which equals 0.4, or 40%. Fixed costs are not needed to calculate the CM ratio.

809. In a job shop environment, which situation is optimal from a capacity planning perspective? A. All work centers are fully loaded and no orders are overdue per the materials plan. B. Bottleneck work center hours are scheduled at less than or equal to full utilization. C. Key work center available hours are less than or equal to material plan standards hours. D. The required production rate is less than or equal to the production line design rate. Overall explanation Having all work centers loaded and no orders past due is the best possible scenario.

810. Under a high volume and low variety strategy, products usually compete with: A. high prices. B. skilled labor. C. manufacturing flexibility. D. low prices. Overall explanation Companies serving high volume and low variety markets usually have a competitive position that values low prices.

811. An effective quality process for product design includes which of the following activities? A. Determining the split of appraisal costs vs. prevention costs B. Analyzing the product's or service's sensitivity to the environment C. Aligning design features with demographic data for sales information D. Ensuring that the design is complex enough that it cannot be duplicated by competitors Overall explanation Analyzing the materials and processes used and their sensitivity to the environment will help the company achieve sustainability goals. Simple, standardized process designs are best.

812. Total productive maintenance (TPM) focuses on preventive maintenance plus: A. increasing direct labor efficiencies along with continuous education on rapid changeovers and total quality. B. continuing efforts to adapt, modify, and refine equipment to increase flexibility, reduce material handling, and promote continuous flows. C. releasing orders to the machine shop for tool manufacture or equipment maintenance. D. driving down costs on service parts while focusing on manufacturing setups to be product-specific. Overall explanation TPM is a system of maintaining and improving the integrity of production and quality systems through the machines, equipment, processes, and employees that add business value to the organization.

813. Which of the following describes the environment that exists when international competition has become significant? A. Mass customization is frequently used as a product differentiator. B. Operations must continuously apply cost-saving measures to all existing products to help increase market share. C. Even small advantages in product and service specifications can have a significant impact on competitiveness. D. Offshoring becomes a necessary alternative. Overall explanation From a market perspective, international competition has become increasingly intense. Even small advantages in product and service specifications can have a significant impact on competitiveness.

814. Which S&OP meeting addresses disagreements from different functional areas regarding the sales and operations plans? A. Demand planning meeting B. Pre-sales and operations planning meeting C. Executive meeting D. Supply planning meeting Overall explanation The executive meeting is used to address any disagreements that arise during the S&OP process that were not reconciled during previous steps.

815. How is inventory turnover calculated? A. Sales/inventory Investment B. Average Inventory/Standards Sales C. Cost of Goods Sold/Average Inventory Investment D. Sales/Average Inventory Investment Overall explanation Inventory Turnover = Cost of Goods Sold/Average Inventory Investment

816. A commercial door manufacturer is adding a second shift to enable its strategy of adding make-to-stock (MTS) manufacturing to its current make-to-order (MTO) manufacturing environment. MTO would be the first shift and MTS would be the second shift. When reallocating the current workforce and adding staff, what should be the most important decision criteria among those listed regarding who to place in which shift? A. Relative complexity of the MTS versus MTO operations and related differences in required skills B. Common desire of many employees who have seniority to want to work the first shift C. The training requirements for the MTS method and a list of staff needing the least training D. How to determine the least productive staff members so they can be laid off Overall explanation When determining how to reallocate staff, what is best for the business is the first consideration. Assessing the relative complexity level of each process can help determine the required skills and experience needed for each process. If one process is less complex, people with less experience could be moved there. At one organization that did this, management decided that the MTS products needed a lower skill level and less supervision than the MTO products. They split up their existing workforce to retain the more experienced operators, planners, and supervisors on the MTO shift and moved the less experienced workers and managers to the MTS shift.

817. Development of an effective work team involves which of the following guidelines? A. Direct firmly. B. Select and train. C. Avoid conflict. D. Measure results frequently. Overall explanation The key to effective work teams is to have the right personnel who are then trained in the processes of the operation or project they are assigned to.

818. Which organization is pursuing a multi domestic strategy? A. A services provider acquires similar businesses around the world, changes their names to reflect the provider's brand, and standardizes policies and services sold. B. A manufacturer makes multiple foreign acquisitions and produces components in different countries with standard processes, but products are assembled locally to appeal to local market preferences. C. A cereal manufacturer buys similar businesses in other countries. The manufacturer invests in improving the acquisitions' costs. Products remain the same. D. A manufacturer enters into distribution agreements with dealer networks in multiple foreign market to sell goods produced in the manufacturer's country. Overall explanation A multi domestic strategy allows for integration of capabilities and customization to local practices and tastes.

819. A company is experiencing a change in demand from steady to sporadic. It currently uses economic order quantity (EOQ) to determine purchase quantities for a key component. Which of the following models should it use in the future? A. Period Order Quantity B. EOQ C. Fixed Order Quantity D. Lean One-Piece Flow Overall explanation As a product moves from continuous to intermittent demand, a better inventory replenishment tool is a period order quantity, where inventory balances are reviewed periodically and quantity purchased up to a specific maximum quantity. In contrast, EOQ, lean one-piece flow, and fixed order quantity are all based on continuous demand characteristics.

820. Which of the following distribution lead time elements is a determinant of when a truck is loaded during the daily schedule for delivery of goods to a particular store? A. Hours to load trailer B. Hours to offload trailer C. Hours before goods spoil D. Transportation Distance Overall explanation The essential lead time element in this scenario is how long it will take the delivery to move between facilities. The minimum of spoil hours must at least be equal to the transportation lead time.

821. Which of the following statements applies to the lot-for-lot batch sizing rule? A. It generates orders equal to the net requirements for a given number of periods. B. It generates orders equal to the net requirements in each period. C. It may be used only with independent demand. D. It is used for serialized inventory to ensure traceability. Overall explanation Lot-for-lot is a lot-sizing technique that generates planned orders in quantities equal to the net requirements in each period.

822. Valid reasons to carry safety stock for a manufactured item include which of the following? A. The item’s replenishment time is short compared with the total end-product lead time. B. There are frequent engineering changes in the end products when this part is used. C. A lack of process control results in highly variable yields. D. It will maximize the inventory in the pipeline. Overall explanation As variability in production output occurs, the probability of insufficient supply increases, which can be addressed using safety stock. As the item’s replenishment time increases, so does variability and the need to cover for unplanned demand.

823. Which of the following reasons is most likely the cause for using safety lead time instead of safety stock? A. Carrying Safety stock is too expensive B. Demand variability is too biased C. Supply delivery reliability is a concern D. The part stocks out too frequently Overall explanation Using safety lead time will cause the order to be delivered earlier, minimizing the supplier delivery unreliability issue.

824. For which of the following situations would the periodic review system be most appropriate? A. A variety of goods in a retail store that are supplied by a single distributor B. Work-in-process that is controlled by a pull production system C. A variety of goods in a distribution center that are purchased from the manufacturers D. A component that is purchased directly from the manufacturer by an assembler Overall explanation A periodic review system is a form of independent demand management in which inventory levels are reviewed and an order is placed at specific intervals. Order quantities may vary but typically replace items consumed during the time period. The periodic review system is advantageous in retail settings stocked with many different items from a central location, because it consolidates deliveries and reduces shipping and handling costs.

825. Distribution and materials management should work together to determine which of the following? A. Utilization of personnel B. Safety stock policies C. Transportation budgets D. Engineering changes Overall explanation Safety stock policies are dependent on the customer service level desired, the cost of carrying the inventory, and the cost of stocking out.

826. An organization uses a fixed order quantity system. Which of the following will be the case when safety stock is depleted during the order lead time? A. The safety stock will remain depleted until a double order is placed in a future order period. B. The safety stock will be replenished when the order is received, but the next order will likely be placed sooner than usual. C. When the order is received, the total inventory will equal the safety stock plus the fixed order quantity. D. A special order for additional safety stock will need to be placed immediately. Overall explanation In a fixed order quantity approach, orders are made for the same fixed number of units, although the timing of the orders may vary. Since safety stock is not special inventory but just additional inventory, it will be immediately replenished upon receipt of the order, but the total inventory level will be lower than would be normal just after an order is received, so if demand continues without falling, the inventory level will reach the order point.

827. An inventory manager needs to check how many screws and washers are in stock. What is a simple, low-tech inventory control system that could be used in this instance? A. Periodic replenishment system B. Fixed reorder cycle system C. Visual review system D. Perpetual replenishment system Overall explanation In a visual review system, inventory reordering is based on actually looking at the amount of inventory on hand. This is related to two-bin systems. When the first bin is seen to be depleted in a two-bin system, an order will be placed.

828. A company uses lot-for-lot ordering for its distribution center. What will be the most likely result? A. Stockouts will be reduced B. Transportation costs will be reduced C. The company’s bottom line will improve D. Demand on the supplying warehouse will be erratic Overall explanation Even though lot-for-lot ordering will minimize the amount of inventory at the distribution center, it will most likely increase stockouts, decrease customer service, and increase transportation costs due to more shipments coming from the supply warehouse.

A company uses centralized planning at the manufacturing site for distribution system replenishment decisions. How is the reorder point typically established for this type of planning? A. When the projected available balance for a future given period is negative or below the safety stock level B. By a predetermined standard order point C. When the minimum level is reached in min/max planning D. There is no reorder point. Finished goods are allocated evenly through the distribution system as they are completed by manufacturing. Overall explanation Decisions about when to replenish distribution inventory made by centralized supply planners is an indication that the company is using a push system for distribution inventory. In such a system, the reorder point will typically be when the projected available balance for a future period is negative or below safety stock levels.

830. The reorder point technique is suitable for: A. Dependent items B. Independent items C. High-value items D. Make-to-order items Overall explanation The reorder point technique assumes that the demand of an item is independent of other items.

831. Which of the following is true of strategy development in most corporations? A. The CEO is the primary strategy architect, with little influence from others. B. Other senior executives help fashion major elements of the strategy. C. The business strategy is formulated first by department heads and then fine-tuned by the CEO and staff. D. Much "borrowing" through competitive benchmarking occurs. Overall explanation In most corporations, strategy is the product of more than just the CEO’s handiwork. Typically, other senior executives—business unit heads, the CFO, and the vice presidents of production, marketing, HR, and other functional departments—have influential strategy-making roles and help fashion the chief strategy components.

832. Market feedback suggests that a product is entering the decline stage of its life cycle. The vice president of manufacturing suggests a reassessment of the current make-to-stock supply strategy to learn if it is mismatched with current market requirements. What is this assessment an example of? A. Product Profiling B. Product positioning C. Demand time fence D. Demand planning Overall explanation Product profiling uses a graphical device to ascertain the level of fit between a manufacturing process and the order winning criteria of its products.

833. Greens is a fictional high-end gourmet shop that stocks and prepares unique foods for sale. Their clientele are a specific group of people who like to eat well, cook gourmet meals, or entertain guests. Greens offers a wide selection of gourmet products and focuses on excellence in customer service. They learn their customers by name, deliver products to their homes or businesses, and notify them when their favorites are available. Because of their business strategy, they have gained a loyal following with high customer satisfaction. What competitive strategy is Greens implementing? A. Focused differentiation B. Broad differentiation C. Low-cost provider D. Focused low-cost Overall explanation Greens’ strategy is not broad differentiation because it is focusing on a niche group within the grocery store market.

834. Which is an order winner characteristic that is typical in the growth phase of a product or service’s life cycle and that is challenging to maintain in this life cycle phase when sales are growing exponentially? A. Quality B. Competitive price C. Dependability D. Flexibility Overall explanation During the growth phase, a key order winner tends to be dependability, because a product needs to be available online/at a desired location and/or available within the desired lead time. This can be a challenge if the growth rate is steep.

835. Management agrees that a good way to win sales for the organization’s standard product, which competes in a highly variable demand market, is to switch from make-to-order to make-to-stock. The primary order winner for this product is most likely: A. Delivery lead time B. Cost C. Product quality D. Design flexibility Overall explanation In a make-to-stock environment, the delivery lead time would be from the time the order is received to the time the product reaches the customer. No manufacturing or assembly would be required, as there would be with a make-to-stock product.

836. Which of the following is true of internal initiatives that enhance existing order qualifiers? A. They should be driven by the voice of the customer B. They are unlikely to provide much competitive benefit C. They are most appropriately prioritized using customer feedback D. They will likely increase business Overall explanation Any further improvement in qualifying factors above the qualifying level is unlikely to gain much competitive benefit.

837. What happens once the final draft of a company’s strategy has been formulated? A. It must be filed with the securities and exchange commission B. It must next be published in the company’s annual report if the company is publicly traded C. All stakeholders have approximately 30 days to fine-tune it D. It is typically submitted to the company board of directors for review and approval Overall explanation The strategy-making efforts of top managers are complemented by advice and counsel from the company’s board of directors. Normally all major strategic decisions are submitted to the board for review, discussion, and official approval.

838. Why must top management coordinate with each other? A. So that rules-based groups are prevented from spending much time with creative groups B. So that key performance indicators at the associate level are common C. So that creative groups are physically separated from the rules-based groups and will not disrupt them D. So that diverse groups such as creative teams and rules-based teams operate with a common purpose Overall explanation Formal continuous improvement methods may be too rigid when applied to creative organizations like research and development. So two styles of management may coexist: one for creative groups and another for everyone else, as is described in Kotter’s Accelerate. Therefore, senior managers must coordinate their efforts so that separate and diversely managed units operate with a common purpose.

839. A company has identified a cost-based competitive advantage using value chain analysis and benchmarking. Which of the following is true? A. The value chain activity may be a candidate for continuous cost reduction efforts. B. This advantage should be used as a superior differentiator in all future marketing campaigns. C. This activity must be exploited by designing it into all new products. D. Every effort should be made to keep this advantage secret. Overall explanation Achieving a cost-based competitive advantage requires a determined management efforts to be cost-efficient in performing these tasks. The goal must be continuous cost reduction.

840. A company successfully incentivizes employees in a labor-paced environment to exceed scheduled output in scheduled time. This is an example of an employee wage policy: A. that is creating production value. B. that will be totally compatible with almost every unionized organization. C. that is bound to cause strife when engineering increases standard times by operation. D. that will likely put the company’s products at the top in this industry for quality. Overall explanation When designing the payroll system at one steel company, management decided to incentivize the employees with a 1% bonus rewarded for every 1% that their output exceeded the goals. The company consistently achieved their low-cost provider goals.

841. A company operates in a market characterized by low volume per product and a wide product range. It strives for a competitive edge by providing high-technology products designed specifically to meet the unique requirements of each of its customers. Which of the following characteristics most likely is the company’s order-winning criterion? A. Delivery reliability B. Design capability C. Delivery speed D. Price and quality Overall explanation The company’s order-winning criteria are focused around the product manufacturing characteristics of low volume and wide product range. This means that customers buy the company’s products because they are unique and are hard to find. They are also not sold in a mass market. As such, of the four criteria (design capability, delivery speed, delivery reliability, and price and quality) customers consider product design the most valuable order-winning criterion.

842. Which of the following is likely to be the most important order winner for a producer of custom-designed, low-volume products? A. Design capability B. Image C. Price/cost D. Delivery speed Overall explanation Companies that build custom-designed products normally will be competing based on the special capabilities or attributes of the product made to a specific customer specification.

843. The price for a product must fall within a certain range for a supplier to be considered by potential customers. This condition is known as an order: A. Premise B. Winner C. Qualifier D. Confirmation Overall explanation Order qualifiers are those competitive characteristics that a firm must exhibit to be a viable competitor in the marketplace. Order winners are characteristics that would cause a firm’s customers to choose them over the competition, and can be considered competitive advantages.

844. Why does the UN Global Compact single out supply chain partners as an important factor in a firm’s ability to comply with its 10 principles? A. Customers define which of the principles have the highest priority. B. If the organization uses unionized labor, all of its suppliers should, too. C. It motivates suppliers in countries with low labor costs toward compliance. D. It spreads the Compact’s reach, even though partner actions can’t impact the firm. Overall explanation In an extended supply chain, the actions of an organization’s suppliers may reflect positively or negatively on the organization, especially if they are the channel master or most visible partner in the network. Therefore, the Global Compact stresses the need to ensure that suppliers are compliant with the principles (or are making reasonable progress in that direction). When located in countries with lower labor costs, it is both more important to ensure compliance, while also harder to do so.

845. Considering sustainability as a strategic initiative offers which of the following advantages? A. Senior management can delegate the process to an "army of volunteers." B. Some larger initiatives can be planned in addition to addressing "low-hanging fruit." C. Investments in sustainable initiatives can be decentralized and unique. D. The organization can avoid having to make sustainability policies. Overall explanation Taking a strategic approach to sustainability promotes a more proactive perspective such as attention to future problems and opportunities. This can help avoid a problem in corporate sustainability programs: restricting the organization’s attention to "low-hanging fruit" that offers quick, but in the long term, small results.

846. What is an example of corruption that should be worked against if a company is following the UN Global Compact’s 10 principles? A. Racial discrimination B. Union membership C. Child labor D. Bribery Overall explanation Bribery is a form of corruption, and it is specifically listed in the UN Global Compact. Child labor and racial discrimination are both considered to be in violation of the UN Global Compact but are not considered forms of corruption. The UN Global Compact embraces the right of freedom of association and collective bargaining.

847. What must leaders be aware of when developing a company’s strategy policy? A. ISO 14001 requires strict adherence to their outline. B. It is acceptable to develop a separate and more specific sustainability policy. C. ISO regulators will likely be on site to validate the sustainability plan once it is published. D. All sustainability goals and objectives must be included. Overall explanation The overarching foundation of a company’s sustainability management system is a sustainability policy consistent with the company’s overall mission, vision, and core values. Many companies choose to have a separate and more specific sustainability policy, one that includes goals for both environmental stewardship and social well-being.

848. A critical step in developing a corporate social responsibility (CSR) strategy is to identify: A. significant uses of energy in the supply chain. B. areas where the interests of the firm and society overlap. C. regulations that have a significant financial effect on the firm. D. opportunities to reduce the operating costs of the firm. Overall explanation A company impinges upon society during its normal course of business, while external social conditions influence corporations. Therefore, a critical step in developing a CSR strategy is to identify these areas of overlap and, consequently, understand the mutual dependence of corporations and society as well as their shared values.

849. Which of the following describes the Global Reporting Initiative (GRI) guidelines concerning a company’s environmental performance? A. Framework around which a company can set its own goals B. Set of rules that the U.S. Environmental Protection Agency (EPA) enforces for U.S.-based companies and their tier 1 suppliers C. Preliminary set of rules that the U.S. Environmental Protection Agency (EPA) is considering codifying into law D. Mandatory set of European Environment Agency (EEA) rules that EU-based companies are required to follow Overall explanation The GRI framework sets out principles and performance indicators that organizations can use to measure and report their human rights, labor, environment, and anti-corruption practices and outcomes.

850. Which is an example of design for sustainability? A. Working with supply chain members to ensure that agricultural practices eliminate toxic chemicals B. Developing the next new solar panel so it can be released as the current model is starting to slow in sales. C. Developing a subcomponent that can be attached using the same standard nuts and bolts used in the rest of the product D. Deconstructing a competitor’s new LED lighting fixture to determine how to build one just like it as a "me too" product Overall explanation Nike is working to eliminate toxic chemicals from its supply chain, and this is an example of design for sustainability. While the other answers may have something to do with sustainability, designing for standard nuts and bolts would be better described as design for manufacturability. Deconstructing an LED lighting fixture is an example of reverse engineering. Developing a follow-on product for a product that is in decline is an example of product life cycle planning.

851. An executive suggestions that the organization’s strategy update should include a focus on sustainability as expressed by the voice of the customer. Which of the listed activities should be done before the others? A. Research potential sustainability technologies and solutions. B. Determine the available budget for sustainability initiatives. C. Scan the political and social environment for sources of social pressure related to sustainability. D. Find quick wins related to sustainability and create a project profile. Overall explanation Before adding sustainability or other goals to a strategy, it is vital to first scan the market to get a better understanding of the sources of social pressure as well as any related government regulations in the organization’s areas of operation. The other steps can occur once the requirements are better defined.

852. Which of the following actions by purchasing would reduce a manufactured product’s environmental impact? A. Encouraging customers to reduce their carbon footprint B. Working with key suppliers to reduce product packaging C. Requiring suppliers to sign a statement that they do not use child labor D. Reengineering the purchasing processes to reduce time and costs Overall explanation Reducing a product’s packaging would reduce the environmental impact of the product by reducing packaging production and disposal.

853. In what way can ISO 14001 compliance be misleading? A. ISO regulations can be interpreted in a variety of ways. B. A company’s compliance may have expired, but there is no way to verify that. C. ISO regulations are different for each country. D. Existing violations are permitted as long as there is a commitment to comply. Overall explanation ISO 14001 describes an environmental management system intended to continually improve the environmental performance of a company. However, companies set their own goals, so improvement is not standardized. As a result, third-party certification is often required by customers to ensure that suppliers are following stringent standards. Existing violations of environmental regulations are permitted as long as there is a clear commitment to comply.

854. Practices or guidelines that minimize the impact of an operation on the environment are part of a company’s policy on: A. sustainability. B. the reverse supply chain. C. hazardous material (HAZMAT). D. strategic diversity. Overall explanation Having a sustainability policy means that an organization’s activities and operations will not compromise the needs of future generations.

855. Which of the following describes the UN Global Compact Management Model? A. Inspiring sequential change management process that challenges us to examine our values and the way we react to change in our lives B. Choices made by a company’s top executives regarding how they define objectives, motivate effort, coordinate activities, and allocate resources C. Set of choices made by executives about how the work of management gets done D. Framework for guiding companies through the process of formally committing to, assessing, defining, implementing, measuring, and communicating the UN Global Compact and its principles Overall explanation The UN Global Compact Management Model is a practical yet comprehensive tool to help companies evolve their sustainability efforts.

856. A company has redesigned its packaging and is saving a large amount of plastic annually. This helps the environment, lowers costs, and makes kit assembly easier for workers, so it is best understood as an example of: A. a Global Reporting Initiative (GRI) requirement. B. common sense. C. cost improvement efforts. D. the sustainable "sweet spot." Overall explanation Saving a large amount of plastic annually is a sustainable strategy to benefit the environment, the organization’s economic interests, and helps make workers jobs easier, so it improves each area of the triple bottom line, which is called the sustainability "sweet spot."

857. A company monitors customer orders and inventory levels daily and generates production orders weekly. Those orders are processed the following week to maintain inventory at a fairly steady level. Which production planning method is being used? A. Hybrid B. Chase C. Level D. Replenishment Overall explanation Demand is being met with a one-week lag by varying production and maintaining stable inventory levels.

858. The sales forecast is disaggregated into individual forecasts at the distribution center level. What may this result in? A. Increases in the planners’ need for involvement B. Forecast errors at the detail level C. Decreases in safety stock levels D. Inconsistency between the total forecast and the distribution center forecasts Overall explanation Forecasts are more accurate at the aggregate level. It is necessary to break the aggregate forecast into individual forecasts at the distribution center level, but the detailed forecasts will be less accurate.

859. What does a large backlog indicate in an engineer-to-order environment? A. Engineering design is too slow. B. Job security is stable. C. Capacity is too low. D. Inventory turns are high. Overall explanation A backlog means job security and is a measure of the effectiveness of the sales process.

860. A resource plan is based on which of the following components? A. One lot size of each product B. One lot size of a typical product C. One unit of a typical product D. One unit of each product Overall explanation A bill of resources lists the required capacity and key resources needed to manufacture one unit of a selected item or family.

861. The partially completed figure below is needed to answer this and the following question. Currently there are no backorders. What is the level production amount that this organization should produce each quarter given the quarterly forecasts, the opening inventory (shown as period 0 ending inventory), and the desired ending inventory (shown as period 4 ending inventory) in the figure? Family B Quarter 0 1 2 3 4 SUM Forecast 50 100 200 70 420 Production (leveled) Ending Inventory 100 140 A. 95 units B. 80 units C. 115 units D. 105 units Overall explanation To determine the level production amount per quarter, first calculate total production as follows: Total Production = Total Forecast + Backorders + Ending Inventory – Opening Inventory = 420 units + 0 units + 140 units – 100 units = 460 units. Next determine the quarterly leveled production amount by dividing by the number of periods, or four: 460 units/4 quarters = 115 units. Note that this is shown in the figure after the answer to the next question. Family B Quarter 0 1 2 3 4 SUM Forecast 50 100 200 70 420 Production (leveled) 115 115 115 115 460 Ending Inventory 100 165 180 95 140

862. An organization’s sales and production plans are provided below. What production planning method is shown in this information? Period Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Sales Plan 50 50 60 60 80 90 70 50 40 40 40 40 Production Plan 50 60 60 70 70 70 70 50 50 50 50 40 A. Hybrid B. Chase C. Level D. Modified Overall explanation The hybrid method is a blended method in which production levels run at or close to full capacity during part of the planning period and at a lower level during the other part.

863. A demand-driven material requirements planning (DDMRP) system detects a qualified spike as part of its net flow position calculation for a strategic buffer zone. What will the system’s logic propose? A. Making an order to return the net flow position to the bottom of the green zone B. Making an order to return the net flow position to the top of the green zone C. Regenerating the MRP using only a decoupled explosion D. Regenerating the MRP only if the buffer size would enter the red zone Overall explanation The net flow position is the current on hand inventory plus inventory on order minus qualified sales order demand. Qualified sales order demand is the sum of orders due today plus qualified spikes. Qualified spikes are the accumulated day’s demand relative to a threshold typically specified as a percentage of the red zone. Identifying qualified spikes is important because these are areas of unusually high demand that would consume the buffer and remove its benefits. Instead when a spike or other variable lowers the net flow position to the bottom of the green zone, the system will propose making an order to return the net flow position to the top of the green zone.

864. The capacity planning technique used at the S&OP planning level is: A. input/output control. B. resource planning. C. detailed capacity requirements planning. D. rough-cut capacity planning. Overall explanation S&OP planning uses resource planning to check key resource availability.

865. The marketing director is complaining that even though material availability is not a problem, backorders are rising. The operations manager says that many of the workers who were laid off months ago are unavailable and the few new workers hired so far face a learning curve. Which of the following could explain why this situation is occurring? A. The organization has poor quality performance. B. The organization is using a chase strategy. C. The organization has failed to invest in employee training programs. D. The organization has only a single distribution warehouse. Overall explanation The chase production strategy is a production planning method that maintains a stable inventory level while varying production to meet demand. In this situation, demand has increased again, and, while materials are available, scaling up the production workforce is proving difficult. While employee training may also be needed, the cycle of layoffs and hiring is more to blame for this issue.

866. How does demand-driven material requirements planning (DDMRP) determine the timing of warehouse replenishment orders? A. Projected on-hand balance offset by lead time B. Lot-for-lot with central location decisions if there is a supply demand mismatch C. Daily reviews of buffer priorities based on net flow position D. Dynamic buffer calculation based on average daily usage Overall explanation DDMRP performs daily reviews of buffer priorities for replenishment order generation. This review looks at the net flow position. It also considers potential for expediting (based on current and projected available balance).

867. A production leveling strategy refers to: A. producing a minimum level and matching demand through subcontracting. B. matching demand somewhat and using inventory to meet demand. C. matching demand at any given time. D. producing to average levels. Overall explanation A level production method maintains a stable production rate while varying inventory levels to meet demand.

868. In demand-driven material requirements planning (DDMRP) systems how is the size of a replenishment order determined? A. Difference between the red + yellow + green zones and the assigned buffer profile B. Difference between the green zone and the red zone C. Difference between the top of the red zone and the net flow position D. Difference between the top of the green zone and the net flow position Overall explanation DDMRP buffers are segmented into three color zones (green, yellow, and red). Each zone serves a specific role in the buffering process. The green zone dictates the size and timing of replenishment orders. The yellow zone typically defines the average amount of replenishment in transit. The red zone is the defined safety stock amount in the buffer. The top of the green zone level (red + yellow + green) is the "order up to" level. A replenishment order is triggered by a net flow position (on hand plus on order minus qualified sales order demand) that is below the green zone level (at or below just red + yellow). The size of the replenishment order is the difference between the top of the green zone level (red + yellow + green) and the net flow position.

869. Which of the following production methods is most likely to be used in an engineer-to-order environment? A. Level B. Push C. Pull D. Chase Overall explanation The chase method would be most likely to be used in an engineer-to-order environment.

870. The most effective results of training are: A. the ability to organize, schedule, and plan work. B. changes in worker behavior, performance, and flexibility. C. improvement in teamwork, quality, and offering of ideas. D. work standardization and more efficient performance of specialized and repetitive tasks. Overall explanation The ability to organize, schedule, and plan work can be a result, but it is not as important. Improvement in teamwork, quality, and offering of ideas describes the benefits of an effective appraisal and rewards program. The inclusion of more efficient performance of specialized and repetitive tasks describes results that are not conducive to the state of worker self-control.

871. What is the term for the process of interpreting the production plan’s impact on critical key materials and capacity? A. Strategic business planning B. Master production scheduling C. Resource requirements planning D. Infinite scheduling Overall explanation Production planning is a long-term planning technique, and it is checked by means of resource requirements planning for key work centers.

872. A company uses a level production strategy to build inventory prior to a peak season. Which of the following inventory turns should be expected? A. Increasing prior to peak season, decreasing during peak season B. Decreasing prior to peak season, stable during peak season C. Decreasing prior to peak season, increasing during peak season D. Stable prior to peak season, increasing during peak season Overall explanation Sales are low prior to the peak season, and finished goods inventory is building. During the peak season, sales increase and finished goods decrease. Note: The question is asking about inventory turns, not inventory levels. When building inventory in advance of a peak season, the turns would be decreasing; then, when the peak season hits, sales are strong and inventory turns increase.

873. Which of the following actions is most appropriate when bias is detected in a forecast? A. Change the forecasting method or the parameters. B. Introduce sales programs to reduce the bias. C. Record the circumstances that created the bias. D. Delete the periods of demand that introduced the bias. Overall explanation When bias exists, the forecasting method or its parameters should be changed. Deleting the periods that introduced the bias would not be an acceptable practice, although there may be occasions where the demand history must be adjusted to account for exceptional circumstances. Introducing sales programs does not remove the cause of the bias in the forecast. Recording the circumstances that created the bias may be useful but is not the most appropriate course of action.

874. On average, 100 units of a product are sold per month. Last month sales exceeded 300 units. For purposes of forecasting, the excess amount would be considered: A. an outlier. B. an anomaly. C. a seasonal index. D. a sales promotion. Overall explanation

875. An overstated forecast results in an overestimate of which of the following elements? A. Backlog and load B. Load and inventory C. Inventory and capacity D. Capacity and backlog Overall explanation An overstated forecast will show an overestimated load on production and will drive component, subassembly, and finished goods inventory to be ordered or produced.

876. Which of the following is most directly affected by forecast inaccuracy? A. Safety stock levels of dependent demand items included in the forecast B. Planned finished goods inventory level in an MTS environment C. Leading indicators included in the extrinsic factors to determine the forecast D. Establishment of the firm planning time fence in the master schedule Overall explanation Planned finished goods inventory level in an MTS environment will cause levels to fluctuate based on degree and direction of inaccuracy. The other answers are incorrect for the following reasons: Establishing a firm planning time fence in the master schedule is incorrect, because this is not a criterion used to set time fences. Safety stock is not customarily set for dependent demand items. Internal processes like forecast accuracy don’t affect leading indicators.

877. Collaborative planning, forecasting, and replenishment (CPFR) is typically most effective when: A. a few trading partners are involved in the supply chain. B. many trading partners are involved in the supply chain. C. a firm has few significant competitors. D. there are many echelons in the supply chain. Overall explanation CPFR is a collaboration process whereby supply chain trading partners can jointly plan key supply chain activities. CPFR is more powerful when a few customers, rather than many, represent a large portion of a supplier’s business. The number of a firm’s competitors is not an important criterion for how effective CPFR will be.

878. What is a critical issue for management to control in forecasting? A. Bias B. Standard deviations C. Aggregation D. Trends Overall explanation Forecast error will most certainly occur, but forecast bias that comes about as a result of adjustments at a detailed level should be avoided.

879. Which is the root cause of forecast error? A. Errors in monitoring the forecast. B. Differences in lead times. C. Differences between sales and demand. D. Random variation around the average demand. Overall explanation All the other answers are not root causes of forecast error.

880. Using the information provided below, what is the mean absolute deviation? Period Forecast Demand Actual Demand 1 1200 1100 2 1200 1320 3 1200 1050 4 1200 1280 5 1200 1090 6 1200 1300 A. 0 B. 60 C. 100 D. 110 Overall explanation First calculate the absolute value of each error (without regard to plus or minus) and then sum them: 100 units + 120 units + 150 units + 80 units + 110 units + 100 units = 660 units. Next divide by the number of periods, or 6: 640 units/6 periods = 110 units MAD.

881. Forecast deviation per period is 12, –8, 15, 17, –22, and –3 units for each of the prior periods, respectively. What is the mean absolute deviation for these periods? A. 2.57 B. 3.33 C. 1.83 D. 12.83 Overall explanation To calculate the mean absolute deviation, first remove the plus and minus signs from each deviation and sum these absolute values: 12 units + 8 units + 15 units + 17 units + 22 units + 3 units = 77 units. Next divide by the number of periods, or 6: 77/6 = 12.83 (rounded).

882. Improving forecast accuracy contributes to which of the following actions? A. Increasing productivity B. Decreasing sales and operations planning frequency C. Decreasing delivery lead times D. Increasing inventory turnover Overall explanation An increase in forecast accuracy means more of the correct product is available to fill customer orders when they arrive.

883. A manufacturer forecasts annual sales of 70 units but actually sells only 5 units per month. What is the forecast error? A. 7.1% B. 14.3% C. 85.7% D. 116.7% Overall explanation Forecast error is the difference between actual demand and forecast demand, stated as an absolute value or as a percentage. In the above instance, the actual demand is 60 units, and the forecast error is 10/70 = 0.143 = 14.3%.

884. In its haste to roll out new products, marketing often sells product too early and promises delivery dates that are unworkable. What is a good way to prevent this type of failure? A. Track how often marketing sells product prematurely and use this information as justification for introducing remedial training. B. Systematically prevent any orders from being accepted until the product is fully released, monitor published lead times, and ensure that operations has a say in the release. C. Appease the affected customers with promises of future discounts. D. Punish the marketing people with a negative hit to their bonuses. Overall explanation It is always better to prevent a problem than to deal with the negative consequences after a problem occurs.

885. A computer manufacturer is developing a new laptop model to replace two current product lines. What source of inventory loss is most likely to impact the organization as a result? A. Obsolescence B. Shelf life C. Shrinkage D. Scrap Overall explanation The new laptop model is likely to cause the other two model lines to be obsolete, resulting in the devaluation of the inventory of those two lines.

886. Which term is defined as the actual output of production compared to the actual input of resources? A. Input/output control B. Utilization C. Productivity D. Efficiency Overall explanation Productivity is an overall measure of the ability to produce a good or a service. It is the actual output of production compared to the actual input of resources.

887. A manager who knows the available hours of a workstation as well as its efficiency and utilization can calculate the workstation’s: A. capacity. B. efficiency. C. rated capacity. D. workload. Overall explanation Rated capacity is calculated by the following formula: Rated Capacity = Available Time x Utilization x Efficiency

888. What is the efficiency percentage for the employee described by the following? A. Hours in attendance: 10 hours B. Direct hours on production: 8 hours C. Standard hours per piece: 1 hour D. Pieces produced: 10 pieces A. 80% B. 100% C. 125% D. 133% Overall explanation Based on the data, the actual direct hours of output (hours charged) is 8 hours. The standard direct hours of output = 1 standard hour per piece x 10 pieces produced = 10 hours. Efficiency = Standard Hours Produced/Hours Actually Worked = 10 standard hours/8 hours = 1.25 = 125%.

889. A production order is for a quantity of 250 pieces. Setup for the order is 2 hours, and the run time is 0.5 hours per piece. How much capacity will be required for this part? A. 127 hours B. 125 hours C. 123 hours D. 121 hours Overall explanation 0.5 hours x 250 pieces + 2 hours = 127 hours

890. Which measurement, presented as a percentage, describes how intensively a resource is being used to produce a good or service? A. Utilization B. Output C. Order winner D. Efficiency Overall explanation Utilization compares actual time used to available time. The information can be acquired through reviewing historical records on the actual use of the equipment and/or work center. This allows planners to include downtimes, breaks, delays, and maintenance in their calculations.

891. Consider the metaphor of a funnel with a certain amount of “product” in the funneling cone leading to a choke point. Which part of this metaphor would correspond to the capacity available? A. The diameter of the choke point. B. The internal area of the funneling cone. C. The quantity of “product” in the funneling cone. D. The rate at which “product” is added to the funneling cone. Overall explanation In the funnel metaphor, the capacity available is the rate at which the work center can produce output, so this would correspond to the diameter of the choke point. A wider diameter would let more “product” through faster and thus there would be a higher rate of output per time period.

894. Available time is most closely approached by: A. a lean manufacturing line using kanbans. B. a synchronous assembly line consisting of automated and manual operations. C. automated machining centers dedicated to a product family. D. a heat-treating furnace that operates 7/24/365. Overall explanation A continuously operating machine would be close to available time. Available time indicates the number of hours a work center can be used, based on management decisions regarding shift structure, extra shifts, regular overtime, observance of weekends, public holiday shutdowns, and the like. According to the definition, therefore, the only logical answer is the always in operation heat-treating furnace.

892. What is the best description of an open order? A. An order planned to be produced B. An assignment to specific orders not yet released C. An order released to production D. The amount of an order reserved for a customer Overall explanation An order released to production is a scheduled receipt, which is the same as an open order. The amount of an order reserved for a customer and an assignment to specific orders not yet released - both of these describe allocation. An order planned to be produced is a planned order release.

893. A work center receives the materials for 56 complete assemblies and processes them in 7 hours. What is this work center’s hourly load? A. 6 B. 7 C. 8 D. 56 Overall explanation Load is the amount of planned work scheduled for and the actual work released to a facility, work center, or operation for a specific span of time. It is usually expressed in terms of standard hours of work or, when items consume similar resources at the same rate, units of production.

895. A company is going to begin an aggressive sales promotion for a new make-to-stock product line that will affect most work centers. Capacity requirements planning (CRP) can best be used to determine: A. the number of units that can be made. B. whether the company is capable of meeting the forecast. C. whether material storage can handle the expected volume. D. the timing and impact of the forecasted load. Overall explanation CRP will help determine when the inventory buildup will have to start to prepare for the sales promotion.

896. A call center operates with 130 customer service representatives in an 8-hour period. The company receives 8,000 calls per day, and the average call takes 7 minutes. What is the utilization of the call center? A. 0.9 B. 0.91 C. 0.97 D. 1.03 Overall explanation Available time = 8 hours x 60 minutes per hour x 130 representatives = 62,400 minutes. Call time is 8,000 calls per day x 7 minutes per call = 56,000 minutes. Utilization = 56,000 / 62,400 = 0.897 which rounds to 0.9 or 90%.

897. A synchronized production principle that determines the size of the production batch as compared to other quantities is that the production batch is equal to: A. the work center activation quantity. B. the order quantity. C. a multiple of the transfer quantity. D. the bottleneck yield quantity. Overall explanation The production batch and the transfer batch need to be logically interrelated. The needs of production at a work center may dictate the production batch size; the transfer batch will then be some evenly divisible portion of the production batch so that each transfer batch can be exactly the same size. In other cases, such as in lean systems, the size of the transfer batch may dictate the size of the production batch, such as when the transfer batch is the same as or some multiple of the kanban quantity of the next work center.

898. Which of the following can cause problems within inventory loss mitigation strategies? A. Segregation of duties B. Operational and financial controls C. Special exceptions for controls D. Regular audit procedures Overall explanation Incomplete enforcement or special exceptions for controls can cause problems. Segregation of duties, operational and financial controls, and regular audit procedures all assist with the proper execution of inventory loss mitigation strategies.

899. A reseller of theater tickets has an inventory of two dozen tickets for a play that is scheduled to start in eight hours. Which of the following would be the most appropriate classification of the inventory of the tickets? A. Hedge B. Excess C. Distressed D. Obsolete Overall explanation Distressed goods are products that are damaged or close to their expiration date and cannot be sold at full price.

900. What is the purpose of having inventory at a distribution center? A. To improve customer service B. To decrease transportation costs C. To decrease safety stock D. To increase sustainability Overall explanation Keeping inventory closer to the customer improves customer service.

901. A company has made process improvements that have reduced shift lengths from ten to eight hours while maintaining production rates and material delivery schedules. What is the general effect on the level of raw material? A. It is increased by 20%. B. It is reduced by 20%. C. It is reduced by 25%. D. There is no change. Overall explanation The daily production rate and material delivery schedules are the same, so levels will not change.

902. At which of the following levels should inventory be held to better serve the consumer market for a retail commodity product? A. Raw/component parts B. Work in process C. Partially assembled products D. Packaged finished goods Overall explanation A product that is a commodity and is sold through retail would be stocked in the completed packaged state for purchase.

903. Products that are close to their expiration date and cannot be sold at full price are known as: A. inactive inventory. B. scrap. C. obsolete inventory. D. distressed goods. Overall explanation Distressed goods are products that are damaged or close to their expiration date and cannot be sold at full price.

904. What is the term for an array of inventory broken out into different categories based on Pareto’s law? A. ABC classification B. Group technology C. Value analysis D. Days of supply Overall explanation An ABC classification of inventory represents a group of items in decreasing order of annual monetary volume (price multiplied by projected volume) or other criteria. This array is then split into three classes: A, B, and C.

905. At which level of production planning can one perform planning without also considering how to manage inventory? A. Material requirements planning B. It is not possible to manage the one without the other at any level C. Master scheduling D. Business planning and sales and operations planning Overall explanation Inventory either results from or supports production, sales, marketing, and customer service. Yet it also represents costs. It is not possible to manage one without the other at any level.

906. Using the information provided below, what was the work in process (WIP) at the end of period 4 if it was 35 prior to period 1? A. 20 units B. 30 units C. 40 units D. 75 units Overall explanation Opening balance = 35 units, plus actual input of 1,800 units = 1,835 units, less actual output of 1,760 units = WIP of 75 units.

907. At what point during the order cycle is inventory considered to become in-transit inventory? A. After order picking and packing are completed B. After the carrier schedules a window for delivery C. After the driver signs the bill of lading D. After the items have been allocated to the order and the vehicle is loaded Overall explanation Once the carrier vehicle is loaded, the driver signs the bill of lading that documents exactly what goods are being transported. At that point, the driver can start delivery to the desired location(s). What the carrier is now transporting is called in-transit inventory.

908. An assembly line consists of a combination of paced automated operations and manual operations. Which of the following would interfere with achieving an average time? A. Rework on the line B. Mixed-model scheduling C. Line balancing D. Cross-training Overall explanation Rework would slow down all units on the line.

909. Waste in a manufacturing environment is the result of: A. poor design that fails to optimize the manufacturing process. B. anything that does not add value to a product. C. quick changeover. D. failure to use poka-yoke in production processes. Overall explanation The goal of lean and just-in-time techniques is to remove waste and redundancy in all processes. The litmus test is simple: Any activity that does not add direct value to the process is waste and should be eliminated.

910. A company maintains a stable workforce and has varied production rates. Overhead is allocated based on direct labor. Which of the following is true if overhead is under-absorbed in month 2 as compared to being over-absorbed in month 1? A. Direct labor is more efficient. B. Production volume is less. C. Overhead is less. D. Product unit cost is less. Overall explanation Fewer direct hours due to lower production volume will cause overhead to be under-absorbed.

911. Which of the following types of costs includes transportation, customs duties, and insurance in addition to the purchase price? A. Item B. Delivery C. Setup D. Acquisition Overall explanation Item cost is the price paid for a purchased item, which consists of the cost of the item and any other direct costs associated with getting the item into the plant. The other options are elements of item cost.

912. Which financial document shows assets, liabilities, and owners’ equity? A. Profit and loss statement B. Balance sheet C. Cash flow statement D. Income statement Overall explanation The balance sheet is a financial statement showing the resources owned, the debts owed, and the owner’s share of a company at a given point in time.

913. Which of the following is true of variable costs? A. They are operating costs that vary directly with a change of one unit in the production volume. B. They are persistently rising general price levels brought about by rising input costs. C. They are increases in the price of a standardized good/service over a specific period of time. D. They are expenses that do not vary with the production volume. Overall explanation Variable costs are those costs that vary depending on a company’s production volume; they rise as production increases and fall as production decreases.

914. The primary objective of lean production is to reduce: A. lead times. B. labor costs. C. waste. D. inventories. Overall explanation Lean production aims to eliminate all non-value-added activities (waste) from product design and production and management of the supply chain and customers. Although the reduction of inventories, costs, and lead times may be goals within a lean production program, none of these are, by themselves, the primary objective of lean production.

915. In order to maintain real-time inventory records, every transaction can be recorded in what type of document or electronic record? A. Lot-for-lot B. SKU C. Inventory bin D. Perpetual inventory record Overall explanation A perpetual inventory record tracks inventory levels at each stock keeping location. When a transaction occurs that either adds or subtracts inventory, the inventory levels in the record are updated immediately.

916. A distribution manager is asked to minimize freight expenses. Which of the following business activities would likely conflict with these efforts? A. Expediting B. Training new employees C. Packaging D. Order entry Overall explanation Expediting increases freight costs due to premium freight charges.

917. In lean manufacturing, costs are reduced by reducing: A. mismatches between work pace and machine-designed pace. B. interruptions to the product workflow. C. waste. D. variability. Overall explanation In lean manufacturing, costs are reduced by reducing waste within a system. Note that variability is one of the causes of waste, so it is often addressed in lean manufacturing, but because waste reduction is the primary objective that results in cost reduction, variability is not the best answer.

918. Which of the following tools is best for identifying quality problems in a process? A. Check sheet B. Cause-and-effect diagram C. Gantt chart D. Flowchart Overall explanation The cause-and-effect diagram is a tool for analyzing the main causes and sub causes leading to an effect. It is also referred to as the Ishikawa diagram.

919. Management is primarily a skill that keeps a complicated system of people and processes functioning well. Which of the following is true of leadership? A. It involves managing the managers. B. It is a set of processes that creates organizations or adapts them to significantly changing circumstances. C. It is involved in looking to the future using market trends, demographic change, and worldwide political events. D. It is more oriented toward working with marketing and corporate financiers. Overall explanation Leadership is a set of processes that creates organizations in the first place or adapts them to significantly changing circumstances.

920. Attribute sampling has rejected a lot of 200 of a purchased part. There is an immediate need for 50 items for the current week and for 50 more the following week. The supplier has indicated that a new shipment can be made in two weeks for 200 units. Which of the following actions should be recommended by the quality department? A. Perform 100% inspection until 100 acceptable items are obtained. B. Return the material and expedite a replacement quantity. C. Return the material and add a two-week safety lead time to future orders. D. Reject the material and update the supplier part record accordingly. Overall explanation Since sampling was used, there may be enough parts in the entire lot to be used for the two-week period.

921. Which of the following is the least important objective of preventive and predictive maintenance? A. Preventing conflict with production for access to tools and equipment B. Clean workplace C. On-time delivery D. Quality Overall explanation Preventive and predictive maintenance will create some contention for access to tools and equipment. Quality, on-time delivery, and a clean workplace are important benefits of preventive and predictive maintenance.

922. Which of the seven new tools of quality would be best for mapping out a plan to improve compliance with waste hierarchy policies while helping to ensure that the process avoids known common pitfalls? A. Relationship diagram B. Process decision program chart C. Matrix diagram D. Matrix data analysis chart Overall explanation A process decision program chart visually captures things that might possibly go wrong in a plan being developed. The chart can identify measures that should be taken in order to avoid undesirable consequences.

923. A quality-designed product will help prevent which of the following? A. Need for continuous improvement B. Competitive pricing C. Increased service-related costs D. Lot traceability issues Overall explanation A quality design can help lower total system cost, which would include the amount of service after the sale.

924. Why is it appropriate to use the Pareto principle in problem solving for defects? A. The principle helps the problem-solving team eliminate the high and low figures from consideration. B. There are usually multiple defects, and the principle helps rank those to be solved. C. The principle helps the team with problem definition. D. There are usually multiple causes for the largest defect. Overall explanation The Pareto principle is used for prioritizing or ranking a range of items to separate the vital few from the trivial many. By ranking defects by volume of occurrence, the principle enables planners to easily identify the significant problems from those that occur infrequently.

925. Which of the following is true of major improvements, which are sometimes also known as breakthrough improvements? A. They should be quick to implement. B. They are generally not successful. C. They typically depend on one or two highly skilled people. D. They are rarely inexpensive. Overall explanation Change strategies can be categorized in two general groups: continuous improvement and breakthrough improvement. Breakthroughs are rarely inexpensive and are often disruptive of existing work processes, and they frequently involve changes in product/service or process technology. Continuous change assumes more and smaller incremental improvement steps.

926. Organizations that require transformation must have leaders who not only inspire and motivate; the leaders must also: A. deliver public interviews and participate in political events for public relations building. B. develop the vision, empower people to accomplish the vision, and inspire change. C. become vocal supporters of specific causes as a means to show the company in a good light. D. use the output from consensus opinions of their direct reports in creating strategy. Overall explanation The transformational leader develops a vision, empowers people to accomplish the vision, and inspires people to change.

927. Who must be involved with continuous improvement efforts? A. Upper management B. All personnel C. Upper and middle management D. Production line workers Overall explanation Continuous improvement must involve everyone, including managers and workers

928. It is the responsibility of quality team members to execute which of the following in a project? A. Maintaining contact with the sponsoring body B. Ensuring that meetings start and finish on time C. Proposing theories of quality problem causes and ideas for remedies D. Orchestrating the team’s activities Overall explanation Quality team members are expected to lend their knowledge of process activities and probable remedies to quality problems to the project effort.

929. Which of the following is a graphical tool for ranking causes from most significant to least significant? A. Cause-and-effect diagram B. Control chart C. Pareto chart D. Scatter chart Overall explanation A Pareto chart is a graphical tool for ranking causes from most significant to least significant. Cause-and-effect diagrams (sometimes known as fishbone diagrams) are a tool for analyzing process dispersion. Scatter diagrams are a graphical technique to analyze the relationship between two variables, plotted on a graph. Control charts offer a graphic comparison of process performance data.

930. An end customer’s expectations of how a product should perform, its features, reliability, and the ease of maintenance (where applicable) are elements of which measure of quality? A. Value-based B. Transcendent C. User-based D. Product-based Overall explanation User-based quality is based on the expectations of the ultimate user: Does the product function as expected, and is it reliable and durable? This consideration could also be based on other elements, such as warranty, price, and perceived quality.

931. Which of the following statistical process control tools shows the extent and type of variation in a set of data? A. Flowchart B. Histogram C. Pareto chart D. Scatter plot Overall explanation A histogram charts the type of variance as well as the frequency distribution.

932. The cost associated with providing defective or substandard products or services is known as the A. cost of complaints. B. rework cost. C. cost of poor quality. D. scrap rate. Overall explanation The cost of poor quality is the cost associated with providing poor-quality products or services.

933. All of the following statements about Pareto analysis are true except: A. It may be used to prioritize activities. B. It is the basis for determining kanban quantities. C. It is the basis for ABC inventory classification. D. It is used to identify those few quality problems that make up most of the quality costs. Overall explanation Pareto charts prioritize or rank a range of items to separate the vital few from the trivial many. They have no value for determining kanban quantities.

934. A design for a product or service that plans for intended performance in harsh environments is called: A. protective design. B. robust design. C. sustainable design. D. environmental design. Overall explanation Robust design is design for a product or service that plans for intended performance even in the face of a harsh environment.

935. End-of-line inspection often fails to improve quality for which of the following reasons? A. It disregards the causes of poor quality. B. It requires extensive personnel. C. Inspectors do not understand quality improvement techniques. D. It excludes quality circles. Overall explanation When a product is inspected at the end of the production process, inspectors do not have a window into the possible causes of defects occurring back in the process. Continuous inspection during the production process does not require more personnel, only trained operators, and it includes quality circles.

936. Which of the following best defines reverse logistics? A. Function of planning, scheduling, and controlling activities related to mode, vendor, and movement of inventories into and out of an organization B. Items returned to the manufacturer as defective, obsolete, overages, etc. C. Distribution network that deals with change of ownership of goods and services, including the activities of negotiation, selling, and contracting D. Complete supply chain dedicated to the reverse flow of products and materials for the purpose of returns, repair, remanufacture, and/or recycling Overall explanation Reverse logistics is a complete supply chain dedicated to the reverse flow of products and materials for the purpose of returns, repair, remanufacture, and/or recycling.

937. Which step of the reverse logistics process would be most helpful in supporting an organization’s sustainable waste hierarchy claims? A. Dispose B. Transport C. Retrieve D. Sort Overall explanation The sort step involves logging in the returned products, inspecting them, and sorting them. The data collected at this point can be used for reporting purposes, such as the weight of the material recycled.

938. Which of the following describes reverse logistics? A. Flow of products and materials for the purpose of returns, repair, remanufacture, or recycling B. Building process schedules that start with the last stage and proceed backward C. Returning trucks full instead of empty to save transportation costs D. Customer supplying the transportation instead of the supplier Overall explanation Reverse logistics is a supply chain dedicated to the reverse flow of products and materials for the purpose of returns, repair, remanufacture, and/or recycling.

939. What is the term for a complete supply chain dedicated to the opposite flow of products and materials for the purpose of returns, repair, remanufacture, and/or recycling? A. Reverse logistics B. Green supply chain C. Recycling D. Sustainable supply chain Overall explanation Reverse logistics is a complete supply chain dedicated to the reverse flow of products and materials for the purpose of returns, repair, remanufacture, and/or recycling.

940. What is an important metric for reverse cash flows in the reverse supply chain? A. Total cost of ownership of the reverse supply chain B. Pareto analysis of reasons for returns C. Total cost of returns in aggregate by product family D. Total cost of returns by end item Overall explanation The total cost of returns in aggregate by product family will indicate the magnitude of the reverse cash flows. The aggregate product family level will provide the right level of detail for decision making. The total cost of ownership and Pareto analysis are good metrics but do not relate to reverse cash flows in particular.

941. What is a key benefit of considering in product design how the product would be retrieved if it needs to be returned? A. The number of returns can be reduced. B. The cost of reverse logistics can be included in product costing. C. The forward supply chain can be shortened. D. The waste hierarchy can be focused on "avoid." Overall explanation The first step in the reverse logistics process is product retrieval. The mechanism for retrieval must be considered in product design. This allows the cost of reverse logistics to be included in product costing. Doing so will also likely reduce the cost of reverse logistics.

942. Once a returned item is received at the returns facility, what is the first decision point? A. Determine whether to approve or reject the return authorization. B. Determine returns processing cost versus disposal cost. C. Determine if it is a recall, a defective item, or is acceptable. D. Determine whether to return to stock or to donate, liquidate, recycle, or dispose. Overall explanation Recall items, acceptable condition items, and defective items each have their own decision process after items are received. The decision to accept or reject a return authorization should have occurred before the return was initiated.

943. The connection(s) between the execution phase and the rest of the manufacturing planning and control (MPC) system is (are) which of the following? A. Capacity and material requirements plans B. Strategic plan and business plan C. Master production schedule D. Capacity plan and business plan Overall explanation Execution deals with the execution of both capacity and material requirements plans. Capacity and material plans alone would be insufficient. The business plan’s interface is with S&OP.

944. How is a strategic plan different from a business plan? A. A strategic plan is tactical in nature. B. A strategic plan contains the company’s vision, mission statement, goals, and objectives. C. A strategic plan seeks to define priorities. D. A strategic plan contains a capacity resource plan. Overall explanation A strategic plan contains the company’s vision, mission statement, goals, and objectives. A business plan is a statement of long-term strategy and revenue, cost, and profit objectives usually accompanied by budgets, a projected balance sheet, and a cash flow statement.

945. Which scenario would tend to promote diversifying the supply base the most? A. The procurement functional is moving from being decentralized to being a centralized shared service center. B. The organization is working toward becoming a lean manufacturer and needs materials just in time. C. A key input material has come under economic sanctions in the primary sourcing country of origin. D. A non-governmental organization (NGO) has rapidly formed to apply social pressure on the organization to source sustainably. Overall explanation Sanctions will have consequences for organizations and supply chains with facilities, suppliers, or customers in affected locations if the materials involved are part of the sanctions. Sanctions can have far-reaching effects on economies and supply chains. The other answers would tend to promote consolidation of suppliers rather than diversification. Transitioning to more sustainable sourcing may require eliminating some non-compliant suppliers. Moving from decentralized to centralized procurement will likely result in supplier consolidation. Lean procurement tends to work toward fewer but more trusted suppliers.

946. In which of the following stages of a product’s life cycle is a product-focused manufacturing organization most appropriate? A. Introduction and decline B. Growth and maturity C. Maturity and decline D. Introduction and maturity Overall explanation A product-focused approach occurs mostly at the introduction and decline stages of the product life cycle. In the introduction stage, the product is new and will often require fixes as well as the addition of new features and options overlooked during product design. In the decline stage, the company will often try to revive sales by revamping the product or adding new features and options. In contrast, products in the growth and maturity stages have minimal, if any, changes to product structures. The focus is squarely on marketing and sales issues.

947. Threats to a company’s future well-being often take the form of: A. a stock market adjustment. B. the entry of lower-cost foreign competitors. C. burdensome, oppressive regulations. D. a smear campaign orchestrated by a nefarious competitor. Overall explanation Threats to a company’s future well-being often stem from the emergence of cheaper or better technology or the entry of lower-cost foreign competitors.

948. The strongest threats relating to competition in an established industry are likely to come from: A. increasing level of rivalry among buyers and suppliers. B. shortened product life cycles. C. holding company mergers and acquisitions. D. existing competitors or new technology innovators. Overall explanation Established companies in an industry already have the resources to compete and are the most likely source of new competition. New technology innovators may come up with a new business model for the industry and if the model is very promising, it could gain enough investors to overcome the barriers to competition.

949. The strategic management of any operation: A. is the key driver of operations, regardless of the operation’s past performance. B. will be determined by the ability of the facility to react to short-term changes in schedule or product mix. C. cannot be separated from how well operational resources are managed at the detail level. D. should not be constrained by past operational efficiencies or quality performance. Overall explanation Operational knowledge is vital to establishing an operations-based strategic advantage. A superior understanding of what one’s processes can do at the limits of their capability allows the organization to better provide products and services, due to confidence in knowing for sure that the processes can deliver. Well-controlled processes will also have fewer errors and waste and therefore higher efficiency (lower costs, higher quality).

950. Which of the following terms pertains to the design, planning, execution, control, and monitoring of supply chain activities with the objective of creating net value, building a competitive infrastructure, leveraging worldwide logistics, synchronizing supply with demand, and measuring performance globally? A. Supplier partnership B. Supplier relationship management C. Supply chain management D. Strategic planning Overall explanation Supply chain management is the management process that oversees all of the stated activities related to the supply chain.

951. An important component of analyzing the driving forces of an industry is to determine whether the forces will lead to an increase or decrease in which of the following? A. Technology change B. Competitive intensity C. Industry costs D. Internal strengths Overall explanation One step in analyzing an industry’s driving forces is to determine whether the prevailing forces are acting to make the industry environment more or less attractive, including whether they are making competition more or less intense.

952. The shared perception of the organization’s future, or what the organization will achieve, is known as its: A. strategic plan. B. mission. C. sales and operations plan. D. vision. Overall explanation An organization’s vision describes the organization as it would appear in a future successful state. The strategic plan defines which actions will be taken by an organization to support its mission and achieve its goals. The mission statement is a short statement of why an organization exists (i.e., it outlines the organization’s purpose for existing). Sales and operations planning is related to an organization’s ability to match its supply with demand.

953. The edge a company has over its rivals in attracting customers and defending against other similar businesses is known as: A. a competitive advantage. B. an order qualifier. C. the voice of the customer. D. total quality management. Overall explanation Competitive advantages differentiate a company from its competitors in such a way that the company wins more business.

954. One of an organization’s core values is that “we share bad news early.” Which is necessary to see this value in practice? A. The value is published in the employee handbook. B. The mandate comes from the top. C. The value is included in the mission and vision. D. Leaders and managers model the behavior. Overall explanation Core values serve as business and ethical principles for all members in the business, but they function only when they are mirrored in the behavior of leaders and managers.

955. What factors are considered in determining industry attractiveness? A. Profitability and supplier collaboration B. Supplier collaboration and relative strength of seller versus rivals C. Supplier collaboration and cumulative competitive pressure D. Profitability and cumulative competitive pressure Overall explanation Profitability and cumulative competitive pressure are factors considered when determining an industry’s attractiveness.

956. The distribution center servicing a corner store chain initiated isolating food groups by storage temperature. This action represents competing on: A. superior-quality products. B. product speed. C. products at lower costs. D. varying product volumes. Overall explanation From a competitive perspective, isolating food groups by storage temperature facilitates the company’s ability to deliver quality products.

957. Skills or knowledge sets that are difficult for competitors to emulate and provide for future growth are: A. human resource department responsibilities. B. income statement components. C. balance sheet components. D. core competencies. Overall explanation Core competencies are the skills or knowledge sets that enable a firm to provide the greatest level of value to its customers in a way that is difficult for competitors to emulate and that provides for future growth.

958. A company seeks to maximize the life span and utilization of all products delivered. From this perspective, which of the following would an elevator company do? A. Sell the elevators and service contracts. B. Sell the elevators as a service, maintaining ownership itself. C. Sell the elevators and provide free service. D. Sell the elevators at a breakeven or a loss and manage service as its key revenue generator. Overall explanation The concept of natural capitalism divides the world’s resources into four basic areas: natural, human, manufactured, and financial capital. Under this philosophy, an elevator company would see the elevator as a service, maintaining ownership itself.

959. During the declining phase of a product’s life cycle, what are distributors most likely to do? A. Continue stocking at a normal rate until there is no inventory. B. Discontinue stocking all inventory. C. Stock the product only at centralized or targeted warehouses. D. Stock the product at all warehouses to ensure that it is available. Overall explanation Distributors are most likely to limit stock to a central or specific location to minimize the investment across the entire distribution network.

960. In the five forces model of competition, if switching suppliers is relatively simple, then supplier rivalry is said to: A. enable risk pooling. B. decrease. C. increase. D. inhibit innovation. Overall explanation The less costly it is for buyers to switch purchases from one seller to another, the easier it is for sellers to steal customers from rivals.

961. Which task is completed at the end of the periodic inventory process? A. Physical inventory B. Inventory adjustment C. Cycle counting D. Item segmentation Overall explanation Inventory adjustment takes place at the end of a periodic inventory count, once discrepancies between actual counts and inventory records are scrutinized.

962. Maintaining physical control of point-of-use is accomplished by: A. cycle counting. B. limited access. C. procedures. D. receipt and issue transactions. Overall explanation Procedures limit the input and control the output based on demand.

963. Which of the following primarily focuses on ensuring that inventory records accurately represent the value of inventory? A. Perpetual inventory B. Periodic inventory C. Cycle counting D. Audit Overall explanation The main purpose of periodic inventory is to satisfy financial auditors that the inventory records represent the value of the inventory.

964. What is the most likely reason for establishing a financial tolerance when cycle counting? A. A tolerance requires an override from management, so the cause for error can be found. B. Exceeding the tolerance enables cost accounting to get involved to verify asset value. C. An inventory shortage beyond the tolerance requires material review board involvement. D. The adjustment meets the 80-20 rule for items requiring material planning re-explosion. Overall explanation Tolerances provide an opportunity to recheck the count and then track the history of the usage, adjustments, and receipts to determine the cause of the error.

965. What is a key factor for determining the size of a new warehouse? A. Number of forklifts required to perform material-handling operations B. Minimum square feet required to receive local tax breaks C. Utility and other overhead costs for the facility D. Inventory and throughput requirements necessary to provide customer service Overall explanation There are many factors to consider when establishing a warehouse, but knowing what is required to provide customer service is foremost.

966. What information should a traceability system be able to provide? A. Available-to-promise B. Transfer of ownership C. Capable-to-promise D. Arrival date Overall explanation Traceability provides the "who," among other things, which indicates the parties involved and the transfer of ownership between them. While the ongoing location of an item can be known with traceability, the arrival date can only be estimated.

967. Which inventory audit technique relies on a dedicated, trained staff who counts small amounts of inventory every workday? A. Cycle counting B. Physical inventory C. ABC segmentation D. Periodic inventory Overall explanation Cycle counting is a continuous inventory audit practice that relies on dedicated, trained staff whose job is to count small amounts of inventory each workday. Cycle counting is a form of physical inventory along with periodic inventory, which does not take place on a daily basis. ABC item segmentation is often used when cycle counting but is not the actual name of the inventory audit technique.

968. Loss caused by scrap, theft, deterioration, or evaporation is known as: A. yield. B. shrinkage. C. attrition. D. waste. Overall explanation Shrinkage is the reduction of actual quantities of items in stock, in process, or in transit.

969. How can distribution management improve inventory accuracy? A. By allowing data entry only by qualified individuals B. By making sure that all inventory is secured in the warehouse C. By weighing every box that arrives and comparing the total to the planned weight D. By clearly defining transaction points as inventory flows through the distribution channel Overall explanation Determining where transactions take place during the flow keeps records up-to-date and accurate.

970. Which of the following performance measures is most appropriate for a lean enterprise? A. Management involvement B. Inventory accuracy C. Schedule attainment D. Labor utilization Overall explanation Even though all are necessary, attaining the schedule eliminates the most waste by making sure that the right amount of inventory is available at the right time for both internal and external customers.

971. Which often has the advantages of providing better response to customer wishes, lowering cost, speeding decision making, and helping to get people who are directly aware of problems more involved in solving them? A. Allowing customers to provide feedback in their own words B. Getting upper managers out on the shop floor on a daily basis C. Getting middle managers more involved in everyday decision making D. Allowing people further down the management structure to make decisions independently Overall explanation Allowing people further down the management structure to make independent decisions, or employee empowerment, can have all of the advantages listed in the question. The other answers may provide some but not all of these advantages.

972. Which of the following techniques is used in a push system but not in a pull system to ensure that inventory is available for an order prior to release to a work center? A. Point-of-fit staging B. Point-of-use staging C. Safety stock D. Kitting Overall explanation Kitting is the process of constructing and staging kits to verify that parts are available. This would not be necessary in a pull environment, as parts would be pulled.

973. Which of the following terms refers to a philosophy of production that emphasizes minimizing the amount of all the resources (including time) used in the various activities of the enterprise? A. Lean B. Six sigma C. Theory of constraints D. Flow Overall explanation Lean involves identifying and eliminating non-value-adding activities in design, production, supply chain management, and dealing with customers.

974. Which of the following techniques best shows the measure of variability within boundaries? A. Check sheet B. Run chart C. Scatter diagram D. Control chart Overall explanation Control charts provide limits for checking that a process is within a tolerance or boundary.

975. Which quality management technique measures controllable and uncontrollable process variables and their effects on managing satisfactory outputs from the process? A. Design for manufacturability B. Design for quality C. Design for the environment D. Design of experiments Overall explanation Design of experiments is a quality management technique used to evaluate the effect of carefully planned and controlled changes to input process variables on the output variable. The objective is to improve production processes.

976. Attending a seminar at which a person from a competing company reveals how they improved part and raw material inventory turns is an example of: A. benchmarking. B. a disloyal employee revealing trade secrets. C. best-in-class metric analysis. D. industrial suicide. Overall explanation Benchmarking compares a company’s costs, products, and services to that of a company, often a competitor, thought to have superior performance.

977. Which workplace layout would be best for an organization that has each worker use a sewing machine to make a complete item, such as a backpack, as quickly as possible? A. Connected islands B. Islands C. Cells D. Connected islands with full work control Overall explanation In this case, each worker with a sewing machine can be an island. Workers in each island produce at their own pace and usually as quickly as they can. Since the workers are not dependent on other islands, there is no need to add conveyors or use cells.

978. A company with customer-specific configurations can minimize the impact of demand changes by achieving flexibility in: A. lot sizes. B. delivery lead times. C. changeovers. D. inventory levels. Overall explanation Being able to change over from one configuration to another will increase the ability to meet changes in demand faster.

979. Quality function deployment (QFD) is an example of: A. reduction of variability. B. the cost of quality. C. total employee involvement. D. quality at the source. Overall explanation Quality at the source is the responsibility to provide 100% acceptable quality material to the consumer of the material. QFD provides a benchmark for determining what is considered acceptable quality.

980. A corporation has decided to give its factory employees more control and flexibility over the execution of their day-to-day duties. This allows them to decide when to begin certain processes rather than following a detailed schedule dictated by management. What is this an example of? A. Diversity management B. Employee involvement C. Employee empowerment D. Employee incentives Overall explanation Employee empowerment is the practice of giving non-managerial employees the responsibility and the power to make decisions regarding their jobs or tasks. It transfers some managerial responsibility to the employee. Empowerment can range from corporation-level decisions to workstation decisions (e.g., scheduling, quality, purchasing decisions).

981. The A3 methodology is used as a tool for which of the following? A. Documenting manufacturing costs B. Replacing the plan-do-check-action (PDCA) process C. Tracking statistical process control D. Solving problems Overall explanation A3 is a problem-solving methodology. The method typically involves a team using simple communication to describe and track problem solving on metric "A3" (11 inch x 17 inch) paper.

982. A supplier provides 100% acceptable quality products. This is: A. quality function deployment. B. quality at the source. C. statistical quality control. D. perceived quality. Overall explanation Quality at the source is a producer’s responsibility to provide 100% acceptable quality material to the consumer of the material.

983. Which is a primary use of a control chart? A. Detecting special causes of variation B. Determining the specification limits C. Calculating the cost of implementing quality systems D. Finding the highest frequency of an event Overall explanation Control charts show the upper and lower limits of normal variation for a process and are used to detect special causes as opposed to random, or common, causes. Control charts do not show specification limits: instead, they show statistical control limits.

984. Which of the following are examples of fringe benefits that can be used to enhance employee motivation? A. On-site workout facilities and sharing executive financial packages B. On-site child care and sharing company financial data C. Sharing sales associates’ goals and commissions and flextime D. Personal travel services and sharing top management’s personal goals and objectives Overall explanation Some nonfinancial rewards companies use to enhance employee motivation are: * Providing additional perquisites and fringe benefits such as on-site child care. * Providing public recognition. * Promoting from within when possible. * Implementing employee suggestions. * Sharing financial data with employees.

985. Implementing which of the following processes is mandatory for laying a foundation for a lean production environment? A. Kaizen B. Lean six sigma C. What-if analysis D. Five Ss Overall explanation The five Ss are five core principles used to create a workplace suitable for lean production, named for the fact that the original Japanese terms all begin with the letter S: seiri (tidiness), seiton (orderliness), seiso (cleanliness), seiketsu (standardization), and shitsuke (discipline). These terms can be translated into English as sort, set in order, shine, standardize, and sustain.

986. What is the term for the actual customer descriptions in words for the functions and features customers desire for goods and services? A. Quality function deployment B. Concurrent engineering C. Simultaneous engineering D. The voice of the customer Overall explanation The voice of the customer (VOC) is the actual customer descriptions in words for the functions and features customers desire for goods and services. In the strict definition, as relates to quality function deployment, the term "customer" indicates the external customer of the supplying entity.

987. What is a benefit of cross-training employees? A. Additional problem-solving ideas generated due to cross-trained knowledge B. Retaining proprietary knowledge in-house C. More consistent salary levels D. Reduced need to hire from outside Overall explanation Cross-training simply means improving employee proficiency levels in roles outside of their current responsibilities. The more trained people on the continuous process improvement team, the more ideas that can be generated for solving the problem. Different skills, backgrounds, and expertise provide a broader base for generating solutions.

988. Which of the following is the least likely use of Pareto chart analysis in DMAIC? A. Selection of the “vital few” projects for improvement in the define phase B. In the improve phase, determining the relationship between time in storage and loss of potency of an active ingredient C. In the measure phase, identifying the “vital few” categories of symptoms of errors in sales order documentation D. In the analyze phase, tabulating the percentage of total shutdown time accounted for by each of 11 steps required to shut down in order to remove a hot mold from the molding machine Overall explanation The need for correlation analysis is best met by tools such as scatter diagrams, not a Pareto chart.

989. What is the parts-per-million defect target level for a company pursuing six sigma? A. 0 B. 2 C. 3.4 D. 6 Overall explanation The six sigma approach includes producing only 3.4 defects for every one million opportunities or operations.

990. Which of the following actions provides visibility of flow in a lean production environment? A. Installing lights to warn people of approaching robotic vehicles B. Posting customer complaints C. Attaching large parts identification tags to containers D. Displaying performance measures over time in the work areas Overall explanation A smooth flow of materials, information, and people in an operation is central to lean production. High visibility of flow aids in recognizing potential improvements.

991. A company has multiple divisions essentially performing the same functions. What would be a good first step related to continuous improvement and benchmarking? A. Benchmarking one division’s processes against another’s B. Ensuring that management avoids benchmarking one division against another, as this will likely cause ill feelings C. Having the divisions benchmark other companies’ activities in these areas in hopes of developing one common company-wide process D. Jointly forming a cross-functional team to come up with a proposal for a company-wide process Overall explanation When a company has multiple divisions or organizational units performing much the same functions at different locations, it can be useful to look at "best-in-company" practices as a benchmark for improvement.

992. Which of the following is an advantage of multiple sourcing? A. Upward pressure on price if there are few other buyers B. Greater economies of scale C. More cooperation of new product development D. Less vulnerability to supply disruptions Overall explanation More suppliers means less vulnerability to supply chain issues. Single sourcing is more likely to produce more cooperation because it is likely to be a reason for entering into a single source relationship. Greater economies of scale or leverage are likely to occur if purchasing is concentrated in a single supplier. If there were few buyers and multiple suppliers, the price pressure would be downward.

993. By implementing a supplier certification program, a company should be able to eliminate: A. receiving paperwork. B. incoming inspection for parts from the supplier. C. safety stock. D. quality audits of the supplier. Overall explanation Certifying a supplier means that parts would not have to be inspected.

994. Having suppliers that are certified via ISO 9000 or some other quality standard means that: A. single-source relationships can be established. B. processes are defined and followed. C. product quality is assured. D. suppliers fully understand customer needs. Overall explanation Under ISO 9000, processes are defined and followed.

995. Visibility into suppliers’ systems can allow an organization to prepare its own system to manage production and logistics. Which of the following is an example of this? A. Collecting data for the next sales and operations planning meeting B. Making decisions on a supplier’s viability C. Adjusting production schedules in response to delayed material delivery D. Finding processes a supplier can eliminate to reduce costs Overall explanation Visibility into a supplier’s system allows the organization to react more quickly to supplier delivery changes.

996. Which of the following is a key principle of lean purchasing? A. Single-source suppliers are used. B. Suppliers stock inventory at their location. C. All packaging is returned to the supplier. D. Blanket orders are used. Overall explanation All of these may be used in a lean environment, but most will not be possible without the key element of single-source supplier partnerships.

997. Which of the following approaches will have the least effect in reducing the cost of transactions? A. Kanban system B. Backflushing to floor stock balances C. Blanket purchase order with multiple receipts D. Vendor scheduling Overall explanation Blanket order receipts still require transactions.

998. Which of the following considerations is necessary when selecting suppliers to be a major part of a supply chain? A. Member of a related strategic alliance B. Empowerment to improve to part designs without being directed to do so C. Certified as a third-party logistics provider D. Annual sales patterns and financial stability Overall explanation Effective buyer-supplier collaboration requires financially stable providers who have the technical capability to add value to designs while effectively communicating. Changing designs without this back and forth communication is not a best practice.

999. For what type of materials is tactical buying used? A. Quality-critical B. High-value C. Strategic D. Nonstrategic Overall explanation Tactical buying is used for items with stable pricing, ready availability, and controlled lead times. The other answers are more related to strategic sourcing.

1000. Certification of suppliers enables a company to take advantage of what kind of stocking location? A. Point-of-use B. Random C. Automated storage retrieval D. Floor stock Overall explanation The supplier is able to deliver directly to the point-of-use location, since there is no need for incoming inspection.

1001. A company has been a preferred supplier for several parts for a number of years. Which of the following information is of most importance on a purchase order? A. Required part number B. Required order due date C. Required terms/conditions D. Required order quantity Overall explanation With a preferred supplier, most of the information is already known, except for the due date for the next order.

1003. Which situation is the best candidate for outsourcing? A. The outsourced component is highly integrated into the overall product design. B. The component is critical to manufacturing flow. C. The outsourced product involves valuable proprietary information. D. The process is not used by the customer often but requires costly equipment. Overall explanation Outsourcing can be effective when the process would require more capital investment than is merited by the demand for the component. Products using proprietary information raise risks, and a supply problem with critical or highly integrated components could be very damaging.

1005. Which of the following considerations of a supplier rating system would be most critical for the supplier because it is often out of their control but they will be judged based on its impact? A. Clearly pre-published lead times B. Ability to compare suppliers with each other C. Accurate drawings for unique customer parts D. Performance reporting by year results Overall explanation Accurate drawings will improve the supplier’s pricing and quality. typically the buyer is responsible for providing these drawings.

1002. What is the first step in the purchasing cycle? A. Receiving and analyzing purchase requisitions B. Issuing purchase orders C. Selecting suppliers D. Determining the right price Overall explanation The purchasing cycle consists of the following steps: 1. Receiving purchase requisition 2. Selecting suppliers 3. Determining the right price 4. Issuing purchase orders 5. Ensuring that delivery dates are met 6. Receiving goods and closing the order 7. Approving suppliers’ invoice for payment

1004. What is an often-overlooked element in the decision to outsource? A. Part of the firm’s productive capacity that will become idle if not used to produce the item B. Continuous improvement opportunities C. Process of comparing the item’s purchase cost to the item’s manufactured cost D. Company’s workforce retention policies Overall explanation A key factor in the decision to continue manufacturing a product or to outsource it is that part of the firm’s productive capacity that will become idle if not used to produce the item.

1006. The replacement of internal capacity and production with that of a supplier’s is known as: A. capacity buying. B. outpartnering. C. buying down. D. outsourcing. Overall explanation Outsourcing is the process of having suppliers provide goods and services that were previously provided internally.

1007. What is a key reason for asking purchasing to be involved in the design of a new product? A. A number of key components will need to be purchased. B. Buyers have design expertise with the product family. C. There will be a need for buyers to understand specifications. D. Purchasing has established relationships with key suppliers. Overall explanation Early involvement with key suppliers can help as the product is designed.

1008. Which of the following factors is most important when partnering with a supplier? A. Mutual trust B. Cultural diversity C. Available capacity D. Geographic proximity Overall explanation Partnering implies a long-term commitment between buyer and seller to achieve specific goals. The relationship should be one of mutual trust and cooperation.

1009. An action message indicates that a part needs to be de-expedited by one week, but the buyer opts to not notify the supplier. The supplier shipped to meet the original request date, and the part has a receipt tolerance of required date minus two days and plus zero days. When the supplier’s performance is evaluated, the shipment will show as: A. on time. B. two days too early. C. five days too early. D. This is irrelevant, as only quantity tolerances are rated. Overall explanation Lack of notification to the supplier of the need for a delay means that the original required date is compared to the actual receipt date.

1010. A manufacturer is looking to expand into a new facility. What type of purchase would it be executing if it purchases new manufacturing equipment to outfit the facility? A. Capital expenditures B. Materials, supplies, and services C. Property purchase D. MRO purchase Overall explanation Property, plant, and equipment purchases are known as capital expenditures.

1011. Long-term agreements with suppliers may include which of the following types of special arrangements? A. Additional complexities to paperwork systems B. Clauses preventing either party from early contract exit C. A supplier’s certification of the buyer’s use of the product D. Specially designed returnable containers Overall explanation A long-range supplier contract could specify collaborative tools such as reusable bins. Contracts should have exit clauses. Paperwork should be simplified. Supplier certification certifies that the supplier meets certain predetermined standards.

1012. If a large seasonal order from a major retailer is grouped with regular monthly orders from smaller customers, what will be the effect of producing to the total average demand in comparison with preparing these as separate forecasts? A. The major customer’s service level will suffer. B. Production costs will be higher. C. Average annual inventory will be higher. D. Demand will be less lumpy. Overall explanation When a large order is grouped with a number of smaller orders it will mask the lumpiness in demand that actually exists. If the organization produces to a level schedule, it will need to produce far in advance of demand and this will raise average annual inventory levels. However, the total amount of production is not necessarily higher than demand. In addition, the major customer’s service level may not suffer (it will only suffer if the large order cannot be filled on schedule).

1013. Which of the following is useful for businesses in becoming virtual supply chains in order to reduce costs and improve due-date performance? A. Business process reengineering (BPR) B. Business continuation plan (BCP) C. Business-to-business commerce (B2B) D. Business-to-consumer commerce (B2C) Overall explanation Business-to-business commerce (B2B) is business between companies conducted over the internet.

1014. Which of the following statements about pyramid forecasting is most accurate? A. It strives to overcome the instability of aggregate forecasts. B. It disaggregates item demand to project demand for a product family. C. It enables senior management to influence the aggregate forecast. D. It facilitates management review of item-level forecasts. Overall explanation Pyramid forecasting enables senior management to coordinate and integrate the forecast and ensure consistency between the forecast and any company constraints or goals.

1015. In the multilevel bill of material below, item A is the parent of two children, one of which has two children of its own. Which item(s) represent independent demand? A. Item A B. Item B C. Items B and C D. Items D and E Overall explanation The demand for items D and E is dependent on the number of item B, which is in turn dependent on how many items A’s are to be produced.

1016. Forecasts are usually: A. incorrect. B. based on historical data. C. within a reasonable percentage. D. overstated. Overall explanation Forecasts attempt to look into the unknown future and, except by sheer luck, will be wrong to some degree. Errors are inevitable and must be expected and planned for.

1017. In which form of exponential smoothing is the smoothing constant automatically adjusted as part of forecast error measurement? A. Second-order smoothing B. Capacity smoothing C. Double smoothing D. Adaptive smoothing Overall explanation Adaptive smoothing is a form of exponential smoothing in which the smoothing constant is automatically adjusted as a function of forecast error measurement.

1018. Which of the following is a type of weighted moving average forecasting technique in which past observations are geometrically discounted according to their age? A. Exponential smoothing B. Delphi method C. Qualitative D. Seasonality Overall explanation Exponential smoothing is a type of weighted moving average forecasting technique in which past observations are geometrically discounted according to their age. It gives more weight to the most recent demand information.

1019. A company is introducing a new product that is expected to have service and warranty demand for one of the components. What is the best way to account for the part demand? A. Over plan the end item in the master production schedule to account for the service demand. B. Purchase extra quantities of the component as a one-time buy. C. Carry safety stock at the end-item level from a forecast. D. Forecast the component independent demand at the master production schedule level. Overall explanation Independent demand must be forecasted. Risk is minimal, as the component can also be used in production.

1020. Statistical forecasting provides the best solution in which of the following situations in an MTS environment? A. When sales volume is high and forecast variance is low B. When sales volume is low and forecast variance is low C. When sales volume is high and forecast variance is high D. When sales volume is low and forecast variance is high Overall explanation Statistical forecasting works best in an MTS environment when sales volume is high and forecast variance is low. The other answers are incorrect because, although statistical forecasting can be used, when volume is low the benefit of the forecast is not as great, and perhaps the company should think of an MTO strategy; when sales volume is low and forecast variance is high, the company should definitely consider making to order; and statistical forecasting would work only when forecasting at the aggregate level and when assembling to order.

1021. What technique involves aggregating and disaggregating forecast demand? A. Pyramid forecasting B. Focus forecasting C. Trend forecasting D. Demand forecasting Overall explanation Pyramid forecasting enables management to review and adjust forecasts made at an aggregate level and keep lower-level forecasts in balance.

1022. An organization had a forecast for June of 125 units but 140 units actually sold. What is the exponential smoothing forecast for July if the alpha smoothing constant is 0.2? A. 137 units B. 128 units C. 53 units D. 130 units Overall explanation New Forecast = α × Latest Demand + (1 – α) × Previous Forecast = (0.2 × 140) + ((1 – 0.2) × 125) = 128

1023. The deseasonalized demand forecast is 500 units for the next year. If the seasonal index for the first quarter is 1.25, what is the forecast for next year’s first quarter? A. 156 units B. 178 units C. 625 units D. 100 units Overall explanation First, find the period deseasonalized demand by dividing the annual deseasonalized demand by the number of periods: 500 units / 4 quarters = 125 units. Next, multiply the deseasonalized first quarter demand by the seasonal index: 125 x 1.25 = 156.25, rounded to 156 units.

1024. In determining a forecast for a distribution center, which of the following dates should be used? A. Month-end dates B. Customer-requested dates C. Order promise dates D. Order receipt dates Overall explanation The customer requested date is the date when the actual demand occurs. The shipping, delivery, or promise dates may be different.

1025. How often is the forecast information used in the sales and operations planning process updated? A. Weekly B. Monthly C. Quarterly D. Annually Overall explanation The sales and operations plan and the inputs to it are updated on a rolling monthly basis.

1026. Which is the best way listed for supply to influence the accuracy and reliability of forecasts? A. Shorten supply and manufacturing lead times. B. Influence marketing to reduce forecast error by sharing stories of consequences. C. Use error metrics for forecasts and review forecast methods whenever error thresholds are exceeded. D. Supply has no control over forecasting error and reliability. Overall explanation Forecasting is primarily the responsibility of demand management (e.g., sales and marketing). This includes setting and monitoring error metrics. However, improving forecast accuracy is not just a responsibility of demand management. Supply can also influence forecast accuracy. Finding ways to shorten supply and manufacturing lead times enables forecasts to be for shorter periods, which improves accuracy.

1027. Which of the following techniques is best for relating one set of forecast economic data to another set of economic data? A. Trend analysis B. Regression analysis C. Exponential smoothing D. Moving averages Overall explanation Regression analysis is a statistical technique for determining the best mathematical expression describing the functional relationship between one response and one or more independent variables.

1028. Which of the following performance objectives refers to the time that has elapsed between the beginning and the end of the sales transaction? A. Dependability B. Flexibility C. Quality D. Speed Overall explanation There are five generic performance objectives: quality, speed, dependability, flexibility, and cost. Speed refers to the time that has elapsed between the beginning and the end of the sales transaction, and is focused on delivery lead time. The importance of speed varies depending on the industry - some industries will depend on getting products to customers as quickly as possible. Achieving speed requires the analysis of all transaction steps, in order to identify any opportunities to shorten the steps and/or the gaps between steps.

1030. What is needed to determine the gap between customer expectations and customer perceptions of a product-service package the organization sells? A. Market development B. Market penetration C. Market research D. Marketing Overall explanation Performed properly, market research provides background information on the gap between customer expectations and customer perceptions of a product or service.

1031. A manufacturer’s decision to extend the degree of forward integration should be influenced by its desire to do which of the following? A. Reduce the uncertainty of demand. B. Reduce the number of processes to be controlled. C. Reduce the uncertainty of demand and erect barriers to potential competitors. D. Reduce the uncertainty of demand, erect barriers to potential competitors, and reduce the number of processes to be controlled. Overall explanation Forward integration provides a greater level of control of forward supply channel processes.

1032. Which of the following is typically an advantage of implementing a multidomestic/multicountry strategy rather than a global strategy? A. Marketing can be adapted to the local culture. B. Brand recognition is increased. C. Plants can be located where total costs are lowest. D. Economies of scale are achieved. Overall explanation In a multidomestic/multicountry strategy, a company varies its product offering and competitive approach from country to country to be responsive to differing markets. In a global strategy, product variations are minimized from country to country.

1033. What generalization about vertical integration is often true? A. It poses fewer risks than outsourcing. B. It usually works best when it occurs in the downstream direction. C. It is usually driven by capacity needs. D. It aims at lowering both costs and risks of production. Overall explanation Vertical integration provides greater control over the supply chain, which can lower costs and risks.

1034. Which organization is pursuing a multidomestic strategy? A. A manufacturer enters into distribution agreements with dealer networks in multiple foreign market to sell goods produced in the manufacturer’s country. B. A services provider acquires similar businesses around the world, changes their names to reflect the provider’s brand, and standardizes policies and services sold. C. A cereal manufacturer buys similar businesses in other countries. The manufacturer invests in improving the acquisitions’ costs. Products remain the same. D. A manufacturer makes multiple foreign acquisitions and produces components in different countries with standard processes, but products are assembled locally to appeal to local market preferences. Overall explanation A multidomestic strategy allows for integration of capabilities and customization to local practices and tastes.

1035. Early due diligence concerning a backward integration initiative includes an analysis of both companies’: A. corporate cultures. B. supplier relationships. C. balance sheets. D. cash flows. Overall explanation A corporate culture includes a set of assumptions and values that members of the company share. These common assumptions influence the way the company operates.

1036. Tailoring the company’s competitive approach and product offering to fit specific market conditions in each host country would be an example of: A. a broad differentiation strategy. B. a focused low-cost provider strategy. C. a localized multicountry strategy. D. a focused differentiation strategy. Overall explanation A localized or multicountry strategy is one in which a company varies its product offering and competitive approach from country to country in an effort to be responsive to differing buyer preferences and market conditions.

1037. A company with a long history in the marketplace is considering acquiring a start-up that has technology the company believes will expand its business. What is one of the major obstacles the company will have to overcome if the acquisition occurs? A. Bringing the new employees into the 401(k) plan B. Explaining the acquisition to the board of directors C. Mismatch of organizational cultures D. Explaining the acquisition to the financial media Overall explanation There may be a mismatch of organizational cultures, which can extend from the leaders downward through the entire organization. A workforce used to more decision-making authority and fewer rules will not adapt smoothly to a more regimented organization. The other answers are insignificant compared to the culture issue.

1038. For a make-to-stock company, what strategy would be appropriate for growth in an existing market when the organization doesnߴt want to increase its aggregate inventory levels and its products are still in the growth phase? A. Market penetration B. Market development C. Diversification D. Product development Overall explanation In the Ansoff product-market growth matrix, four quadrants are formed using existing markets and new markets on one axis and existing products and new products on the other axis. The company wants to grow in existing markets, and this could involve either market penetration or product development. Product development would expand aggregate inventory if new product lines are added. Replacement products are also not needed due to the current products being in the growth phase. Therefore, market penetration is the growth strategy.

1039. Which method of setting the price of a good or service is the most realistic way to do it given today’s global economy? A. Determine the desired total cost per unit and add the desired profit margin to find the price. B. Determine the necessary price and then subtract the total cost per unit to determine the resulting profit margin. C. Determine the desired profit margin, add actual variable costs per unit, and then sum them to find the price. D. Choose a costing approach that results in the best profit margin and then use it to find the price. Overall explanation

1040. The IT function develops a strategy that calls for increasing use of cloud services. When this comes to the attention of the CEO, the CEO is unhappy. What is the most likely source of the problem? A. There is no robust test plan. B. Top management is not directly involved and is not monitoring progress. C. The functional strategy is not aligned with the business strategy. D. No proven project management tactics are used during implementation. Overall explanation Some report that the typical IT project failure rate is between 35% and 75%. Often reasons cited are connected to managerial, implementation, or organizational factors. One of the main strategic issues is the degree of alignment and integration between IT strategy and the general strategy of the firm.

1041. An organization’s annual sales for a particular motor scooter total $50 million. Variable costs for the product over the year amounted to $30 million. It had $10 million in fixed costs for the year. What is the organization’s contribution margin (CM) ratio for the year? A. 20% B. 40% C. 60% D. 80% Overall explanation The contribution margin (CM) is sales minus variable costs, or $50 million minus $30 million, which equals $20 million. The CM ratio is CM divided by sales, or $20 million divided by $50 million, which equals 0.4, or 40%. Fixed costs are not needed to calculate the CM ratio.

1042. Which lead/lag strategy tends to increase cash requirements? A. Lead capacity only B. Lag capacity only C. Both lead capacity and lag capacity when lag capacity is combined with inventory stockpiling D. Both lead capacity and lag capacity regardless of the inventory strategy Overall explanation The strategy that tends to increase a company’s cash requirements is to lead capacity and to lag capacity when lag capacity is combined with inventory stockpiling.

1043. Production has determined that a particular order will be late due to a purchased part being past due. Which of the following scenarios is most likely to occur in a job shop environment? A. The order is cancelled and re-created when the purchased part arrives. B. Material planning delays the order due date by one week. C. The order is completed up to the point where the part is needed. D. Another order takes its place in the dispatch sequence. Overall explanation In a job shop, multiple jobs pass through functional departments in lots, and each lot may have a different routing. Multiple jobs would be using the same machinery, so if one could not be produced, another job would move ahead of it in sequence.

1044. A supplier delivers books to electronic readers using 5G technology, eliminating distributors. What is this an example of? A. Advances in Wi-Fi B. Extensible markup language (XML) C. Large area networking (LAN) D. Disintermediation Overall explanation Disintermediation is the process of eliminating an intermediate stage in a supply chain.

1045. A company has a mandate to meet schedule dates. Capacity requirements planning has identified a capacity overload, and it appears that the product will be shipped late. Which of the following actions should be done first? A. Checking with production to see if the date can be met B. Rescheduling the due date to resolve the overload C. Checking with the customer to select a different date D. Checking with purchasing to see if materials can be expedited Overall explanation The first action should be checking with production to see if overtime or other work priorities can be changed to meet the date.

1046. During a discussion centered on lead and lag, a CEO approves a capital equipment expansion. This is an example of the CEO implementing the firm’s: A. continuous improvement strategy. B. business acumen. C. capacity strategy. D. approved budget. Overall explanation One of the strategic choices that a firm must make as part of its manufacturing strategy is the capacity strategy, such as lead, lag, and tracking.

1047. Which of the following types of processes best supports the widest range of production volume and permits a company to most easily adjust its capacity to match demand? A. Jobbing B. Line C. Continuous D. Batch Overall explanation Batch production is a manufacturing technique in which parts are accumulated and processed together in a lot. Batch processes also enable companies to easily adjust resources to produce different products.

1048. What can happen when management fails to articulate a concise operational strategy that is aligned with overall corporate strategy? A. Company-wide solutions will become a viable substitute for the weak operational strategy. B. IT security will likely fall victim to corporate espionage. C. Departmental "specialists" will tend to optimize their own areas of control without consideration for the rest of the organization. D. Enterprise resources planning (ERP) system accuracy will continue to be reliable because employee training is part of ERP system startup. Overall explanation In the absence of a more explicit operations strategy, specialists in areas such as inventory control or process technology will tend to develop their own "systems" protecting their own organizational positions.

1049. Material requirements planning has overloaded a work center in a make-to-order company. What is the most easily adjusted factor that would also have the least impact on other orders? A. Setup hours/order B. Scheduled date/part C. Standard hours/person D. Overtime hours/part Overall explanation Overtime is the easiest to adjust and has the least impact on other orders.

1050. A company is debating whether to add production capacity or outsource the additional volume. The process they must go through is called a: A. capital expenditure request. B. total cost decision. C. core competency evaluation. D. make-or buy decision. Overall explanation A make-or buy decision is the act of deciding whether to produce an item internally or buy it from an outside supplier. Factors to consider in the decision include costs, capacity availability, proprietary and/or specialized knowledge, quality considerations, skill requirements, volume, and timing.

1051. Which manufacturing environment may be best suited for a product in its introduction phase if it is feasible to do so even if more economies of scale may be needed if demand develops? A. Assembly line B. Engineer-to-order C. Flow D. Job shop Overall explanation The job shop layout allows for the incorporation of new product into existing work centers. If this environment is feasible for production of the item, it can help avoid capital investments in methods that have better economies of scale (e.g., an assembly line) until it is know that demand exists. Some products will not have this as an option and a capital investment may be needed to develop the necessary manufacturing environment from the start.

1052. How does an engineer-to-order product differ from products in other production strategies? A. The demand lead time is comparable to that for assemble-to-order products. B. Each customer order results in a unique set of part numbers, bills of material, and routings. C. Once the product is designed, it is typically sold as a standard product offering. D. It is produced upon receipt of the customer order. Overall explanation With engineer-to-order products, customer specifications require unique engineering design, significant customization, or new purchased materials. Each customer order results in a unique set of part numbers, bills of material, and routings.

1053. In a push environment, operators produce panels consisting of electrical components wired together. A supervisor is most likely to maintain a queue at the assembly work center to: A. maintain an on-time schedule. B. maintain a high efficiency level. C. keep equipment productive. D. keep personnel fully occupied. Overall explanation In a push system, keeping personnel fully occupied is of primary importance to supervisors.

1054. Authorizing work in a push system in a make-to-order environment assumes which of the following available items? A. Material B. Information C. Capacity D. Tooling Overall explanation Equipment tooling is assumed.

1055. A manufacturing company implementing a focused factory strategy has likely come to what conclusion? A. A focused factory will outperform a plant attempting a broader set of objectives. B. A focused factory will gain significantly from bill-of-material modularization. C. A focused factory will likely suffer higher costs due to under-capacity utilization if more diversified. D. A focused factory is more likely to recover from a market downturn. Overall explanation The focused factory idea holds that a plant focusing on a narrow range of products aimed at a particular market will outperform a plant attempting a broader set of objectives.

1056. Using both a master production schedule and a final assembly schedule is most likely to achieve the highest on-time customer performance level for which of the following environments? A. Make-to-order B. Assemble-to-order C. Engineer-to-order D. Make-to-stock Overall explanation Assemble-to-order promises product within a window of time and typically has a shorter lead time than engineer- or make-to-order, which have less flexibility and more variance. A final assembly schedule is typically not used in a make-to-stock environment.

1057. Which of the following is the most likely manufacturing environment for a bicycle? A. Engineer-to-order B. Assemble-to-order C. Remanufacture D. Make-to-order Overall explanation According to the Dictionary, an assemble-to-order production environment is one in which "a good or service can be assembled after receipt of a customer’s order. The key components... used in the assembly or finishing process are planned and usually stocked in anticipation of a customer order. Receipt of an order initiates assembly of the customized product." In the question’s example, a bicycle manufacturer will likely have all of the components for their various bicycle models already produced. When a customer orders a new bike, their chosen model (and any features) will be assembled from components in stock.

1058. Which of the following manufacturing situations most likely uses both a master schedule and a final assembly schedule (FAS)? A. Synchronized production of small motors B. Repetitive manufacturing of toasters C. Remanufacture of automotive engines D. Assemble-to-order personal computers Overall explanation Many personal computer manufacturers partially build their computers but wait for the final order from the customer before adding items such as a hard drive, RAM memory, graphics cards, and similar items.

1059. In a product-based layout, A. a wide variety of different products can be produced. B. there is little build-up of work-in-process (WIP) inventory. C. work centers are located according to equipment type. D. workflow is lumpy. Overall explanation There is little build-up of WIP inventory in a product layout. The other answers are incorrect because workstations are located in a line formation for a product layout; work tends to flow at a regular rate in a product layout; and product layouts are not flexible enough to handle more than a limited variety of products.

1060. From the customer’s perspective, what does delivery lead time consist of? A. Time from start of the order preparation to use of the product B. Time from receipt of the customer order to the delivery of the product C. Time from requirement for a product to receipt of the product D. Time from placing an order to use of the product Overall explanation Delivery lead time is the time from the receipt of a customer order to the delivery of the product.

1061. A mass production shop with a continuous layout where products follow the same process is also known as: A. a job shop. B. discrete. C. intermittent. D. a flow shop. Overall explanation In a flow shop, the machines and the operators process a standard, uninterrupted material flow. The same operations are performed for each production run. The layout is designed to facilitate a product flow.

1062. Which of the following descriptions of the decoupling point does not apply in all manufacturing environments? A. Strategic decision that determines customer lead time and inventory investment B. Where inventory is placed to create independence between processes or entities C. Latest point in the supply process at which a supplier holds inventory in expectation of a customer order D. Location of subassemblies awaiting final assembly Overall explanation The location of subassemblies awaiting final assembly is the correct answer, because it describes the decoupling point only in an ATO manufacturing environment. All of the other answers apply to all manufacturing environments.

1063. In which facility would product unit costs most likely be reduced through a setup reduction program? Production Volume Product Variety Production Lead Time Operations per Product Production Resources Facility A High High Long Many Many Facility B High Low Short Few Many Facility C Low High Long Many Few Facility D Low Low Short Few Few A. Facility A B. Facility B C. Facility C D. Facility D Overall explanation Low production volume means that a lot of small orders are released, high product variety means that a number of different products can be produced, and many operations per product means that a lot of setup is being performed.

1064. Which of the following ranks manufacturing environments from longest to shortest delivery lead time? A. Assemble-to-order, engineer-to-order, make-to-stock, make-to-order B. Make-to-order, assemble-to-order, engineer-to-order, make-to-stock C. Make-to-stock, assemble-to-order, make-to-order, engineer-to-order D. Engineer-to-order, make-to-order, assemble-to-order, make-to-stock Overall explanation Delivery lead time is the time from the receipt of a customer order to the delivery of the product. Engineer-to-order environments are theoretically the slowest to fulfill. Time is required not only to build the product but to custom-design it to meet the customer’s unique requirements.

1065. An organization consistently wins awards for the designs of its products, but customer satisfaction scores don’t seem to reflect this product superiority. What is likely the root cause of this issue? A. Even better competitor products B. Fickle customers C. Poor service provision D. Order winners becoming order qualifiers Overall explanation The combination of the product and its associated services is sometimes called the product-service package to indicate that the two are inseparable, especially in the mind of the customer. The customer may like a product itself, but if it has poor associated services, the customer will still likely not be satisfied.

1066. Which of the following is an assumption in a push system? A. The receiving work center authorizes material to be sent. B. The receiving work center is not ready for the material when it arrives. C. The receiving work center is ready for the material when it arrives. D. The receiving work center does not have the capacity to receive incoming material. Overall explanation The schedules for the release and routing of materials in a push system assume that receiving work centers or departments will be ready for them when they arrive

1067. What is the goal of a focused factory? A. Increased diversity of what can be produced B. Increased supervisory involvement C. Reduced functional departments D. Reduced production lead time Overall explanation Repetition of and concentration on a very limited product usually increases efficiency, which impacts lead time.

1068. A fundamental principle of lean production is to focus on: A. buffering the constraint. B. operator and process flexibility. C. product-specific work cells. D. strict adherence to the master schedule. Overall explanation Lean Production focuses on increasing flexibility within manufacturing.

1069. A project team’s members openly disagree with and challenge each other at team meetings. How should the project manager handle this? A. Find a team member who can intervene to settle disputes. B. Let the disputes develop since they will contribute to a stronger product. C. Enforce the project’s ground rules and refocus the team on its objectives. D. Allow more time at project meetings for project members to get to know each other. Overall explanation The team members are in the storming phase of team formation. The project manager should enforce rules about how team members behave and handle disagreement. Refocusing on the project’s objectives can help the team unite behind shared goals. Allowing more time for project members to get to know each other is a tactic for managing the formation phase. Letting disputes develop may encourage conflict that undermines the team’s work and doesn’t necessarily contribute to stronger product (and may actively work against this). Finding a team member who can intervene is incorrect because a project manager should not delegate a core responsibility such as managing team dynamics.

1070. Group members engaged in continuous improvement activities often encounter which of the following obstacles? A. Management involvement B. Meeting schedules C. Training requirements D. Conflicting goals Overall explanation Individuals and departments may have conflicting goals or hidden agendas or conflicting interpretations of the business goals.

1071. At the close of a project to design a new process for operations, an important unit manager refuses to cooperate in implementing the process. What is the most likely cause for this problem? A. A personality conflict with the project manager B. Failure to engage the unit manager earlier in the process C. Poor quality in the new process D. Insufficient budget to meet all stakeholder needs Overall explanation The most likely problem when a customer rejects a deliverable is that this critical stakeholder was not involved early in the project and engaged throughout the project. The other choices are all possible but would have appeared and been addressed earlier.

1072. A vehicle assembly plant would be classified as which type of manufacturing process? A. Batch B. Job C. Continuous D. Repetitive Overall explanation Repetitive manufacturing is dedicated to a single product or a small range of products, where products are passed through the same sequence of operations.

1073. At a periodic review, a project manager notes that a sub-team has added features to the deliverable that were not in the scope statement. What will be the most likely result? A. The project’s schedule or budget may be affected. B. The project’s sponsors may cancel the project. C. The customer will be displeased by the change. D. The quality of the deliverable will be improved. Overall explanation This is an example of scope creep, which can affect the project’s schedule and budget without necessarily improving customer acceptance of the deliverables. Not all changes improve quality. The other answers are incorrect because the customer agreed to a deliverable with certain features; the customer may be happy but may not be or may not care; and it is more likely that the project’s variance will be accepted than that the project will be canceled at this stage.

1074. Which of the following is most appropriate as a key performance indicator from the customer’s perspective in a balanced scorecard for an enterprise? A. Average product manufacturing time B. Scrap cost for the period C. On-time delivery performance D. Total revenue growth Overall explanation The customer perspective in a balanced scorecard helps managers evaluate how customers see the company. Customers are typically most concerned with a product’s price, quality, sales service quality, and delivery time.

1075. Which of the following performance metrics refers to an operation’s ability to provide a products or services to customers inexpensively? A. Cost B. Dependability C. Quality D. Speed Overall explanation There are five generic performance objectives: quality, speed, dependability, flexibility, and cost. The cost objective refers to the goal of lowering the costs of individual units in order to increase profit and/or improve competitive advantage.

1076. Which is a key aspect of selecting organizational supply chain performance metrics for an improvement initiative that is leveraging ASCM’s Supply Chain Operations Reference Model Digital Standard (SCOR DS) as a guiding framework? A. Organizations select the level 4 metrics listed in the SCOR DS that apply to their industry using the SCOR-DS practices as a guide. B. Organizations select their own level 4 metrics for supply chain support processes such as demand generation or product development to show how these integrate with the primary supply chain metrics. C. Some metrics will need targets that drive superior performance relative to competitors while other metrics will only need to drive equivalent performance. D. Organizations use levels 1 through 3 calculation methods in SCOR DS without modifications so that any organization using SCOR DS metrics will be comparable. Overall explanation Organizations select the metrics that will drive them toward superior performance in priority areas and equivalent performance in lower priority areas relative to competitors or other benchmark organizations. Organizations then adapt the SCOR DS metrics as needed to enable them to be calculated using the data that are actually available in their databases (or will be after they make improvements). Organizations need to make their own level 4 metrics; they are not provided in SCOR DS. In SCOR DS, support processes such as demand generation or product development are out of scope.

1077. Which of the following customer service measures is appropriate for mature make-to-stock products? A. Finished goods inventory turnover B. Capacity planning using overall factors (CPOF) C. Total manufacturing cycle time D. Line-item fill rate Overall explanation The line-item fill rate measures the performance by line. The percentage of orders shipped on schedule would be a good complementary metric.

1078. In the case where a customer is located far from the supplier and shipping costs and the potential for damage are creating problems, a plan to co-locate a customer’s operation within the supplier’s facility will: A. likely improve multiple customer performance metrics. B. likely become a source of employee dissatisfaction when cross-company salaries and benefits are discussed off-site. C. likely give the supplier a chance to raise prices significantly, since they know that they have all of the customer’s business. D. always lead to backward integration. Overall explanation Improved supply reliability could reduce customer inventories (safety stocks and quarantined for return), improve customer performance to schedule and on time delivery to customers, and reduce expediting and downstream costs. This could result in improvements in multiple performance metrics for the customer.

1079. Which of the following performance objectives refers to an operation’s ability to offer different configurations of a product and react to requests for changes from a customer? A. Cost B. Quality C. Flexibility D. Speed Overall explanation There are five generic performance objectives: quality, speed, dependability, flexibility, and cost. Flexibility has two dimensions: volume/mix and agility. That is, an operation’s ability to produce different types and/or varieties of products or services, and also how quickly the operation is able to respond to requested changes.

1080. Using a 365-day year, what is the inventory turnover if the cost of goods sold is $100,000 and the average inventory is $55,000? A. 0.55 B. 1.8 C. 2 D. 18 Overall explanation Inventory turns are calculated by dividing the cost of goods sold by the average inventory; 100,000/55,000 = 1.8.

1081. The current ratio is used to appraise the ability of a company to: A. sustain its current rate of sales. B. satisfy its current debt out of current assets. C. issue more founders’ stock. D. attain its current year-end earnings-per-share goal. Overall explanation The current ratio, used to appraise the ability of the company to satisfy its current debt out of current assets, is calculated as follows: (Current Assets/Current Liabilities)

1082. Which of the following is a typical measure for the SCOR DS reliability performance attribute? A. Perfect customer order fulfillment B. Actual versus theoretical throughput time C. Time to increase activity rate D. Average lateness of orders Overall explanation Perfect customer order fulfillment is a typical measure for the SCOR DS reliability performance attribute.

1083. A major multinational customer reported to its paper supplier that the supplier’s inkjet paper product was curling under conditions of low humidity. Later, the plant was supplying acceptable paper, but plant productivity, scrap, and rework levels were poor and the major customer produced statistical proof that the supplier’s process was out of control. They addressed these factors and eventually returned to an in-control state, which helped them return to an acceptable contribution margin. Which of the following best indicates the correct sequence of generic performance objectives that this organization used to recover from this catastrophic failure? A. Quality, cost, schedule, speed, profit B. Quality, cost, flexibility, speed, dependability C. Cost, flexibility, dependability, speed, quality D. Quality, speed, dependability, flexibility, cost Overall explanation The paper supplier focused on quality and speed to quickly get the products to an acceptable level (using inspection at first). They then developed new processes to enhance dependability and flexibility, which eventually also helped improve their contribution margin (cost).

1084. What ratio can be used to determine a company’s ability to pay its liabilities by converting assets in the near term? A. Inventory turnover B. Current ratio C. Debt ratio D. Accounts receivable turnover Overall explanation The current ratio reflects the ability to pay debts from assets that can be quickly converted to cash, unlike long-term assets or inventory, which is reflected in the debt ratio. Accounts receivable indicates the organization’s ability to collect payments from customers, and inventory turnover indicates the speed with which assets are converted into revenue.

1085. The quick asset ratio is a financial calculation best used to: A. measure a firm’s financial stability. B. assist with cash flow rate planning. C. learn if a company is top-heavy with regard to capital equipment. D. measure a firm’s equity valuation. Overall explanation The quick asset ratio, a measure of a firm’s financial stability, is calculated as follows: (Current Assets – Inventory)/Current Liabilities

1086. What is the objective of performance measurements? A. To provide benchmarking for other companies B. To provide information for finance C. To reward employees for jobs well done D. To determine if the operation is meeting or exceeding expectations Overall explanation Measurements are put in place to determine if the operation is meeting or exceeding expectations.

1087. Which is a key reason to use the SCOR DS model? A. Ensuring the targets for all metrics seek superior performance relative to competitors B. Maximizing the number of metrics available to decision makers C. Measuring performance improvement success against benchmarked competitive priorities D. Determining order winners, order qualifiers, and the location of the push-pull frontier Overall explanation Part of the definition of the SCOR DS model is as follows: "Use of the model includes analyzing the current state of a company’s processes and goals, quantifying operational performance, and comparing company performance to benchmark data." Once an organization’s metrics have been calculated, they are compared against internal standards and possibly industry or best-in-class benchmark data. An organization uses the results to drive performance improvements. However, an organization needs to determine its competitive priorities and work toward superior or advantage performance relative to competitors in those areas. Since trying to prioritize all areas at once would dilute any strategy due to the inherent tradeoffs, they seek only parity in other benchmarked areas.

1088. Which tool is best suited to tracking the business activities associated with satisfying a customer’s demand, from a supply chain management perspective? A. UNGC B. United Nations Global Compact Management Model C. SCOR DS D. Performance Standards Overall explanation The SCOR DS model describes the business activities associated with satisfying a customer’s demand, which include plan, source, transform, order, fulfill, return, and orchestrate.

1089. What does the Dictionary define as the activities and techniques of maintaining the desired level of items? A. Traceability B. Inventory control C. Lot control D. Incoterms Overall explanation The Dictionary defines inventory control as "the activities and techniques of maintaining the desired levels of items, whether raw materials, work in process, or finished products."

1090. On the basis of the information below, increasing revenue by $1,000,000 would result in what amount for gross profit? Revenue (Sales = $2,000,000 Cost of Goods Sold Direct Material = $600,000 (30%) Direct Labor = $200,000 (10%) Overhead (constant) = $500,000 (25%) Gross Profit = $700,000 (35%) A. $1,000,000 B. $1,050,000 C. $1,300,000 D. $1,700,000 Overall explanation Increasing revenue by $1,000,000 would increase the cost of goods sold to $1,700,000 (overhead does not increase), resulting in gross profit of $1,300,000.

1091. In what way can a poorly designed product add to total product costs? A. Product design can result in inefficient use of storage in warehouse settings. B. Cheaply made parts can break after the warranty period ends. C. Lack of standardized parts can reduce efficiency in the manufacturing process. D. Parts requirements can result in streamlined material flows. Overall explanation The lack of standardized parts can reduce efficiency in the manufacturing process, causing increased product costs. Note that inefficient warehouse storage would affect holding or carrying costs, not product costs, which relate to the actual production of a product.

1092. What is the term for the target costs of an operation, process, or product including direct material, direct labor, and overhead charges? A. Standard costs B. Average costs C. First in, first out D. Last in, first out Overall explanation Standard costs are the target costs of an operation, process, or product including direct material, direct labor, and overhead charges.

1093. Which of the following statements is true for a company that uses the first-in, first-out method of evaluating inventory in a market where prices are decreasing? A. The replacement value of products will be overstated. B. The replacement value of products will be understated. C. The cost reported will be an average of the old and the new. D. The difference between the old and the new will be stated as a variance. Overall explanation In a period of rising prices, replacement is at a higher price than the assumed cost. This method does not reflect current prices, and replacement will be understated. The reverse is true in a falling price market. For example, an opening purchase order arrives for 10 units at $2.00 and a second purchase order arrives for 10 units at $1.00. The price is falling and is therefore lower than the assumed cost. Therefore, the replacement cost of the item will be overstated.

1094. Why is stockout duration important when considering the customer service level? A. Stockout duration is immaterial as it is not related to the number of exposures to stockout. B. Stockout duration is assumed to be constant, so variability affects the customer service level. C. Stockout duration is most likely associated with the number of orders shipped late. D. Stockout duration is important because customer service isn’t 100% until all line items ship. Overall explanation Stockout duration is the amount of time an item is stocked out and is not available for sales. Stockout duration directly impacts the number of orders that are shipped on time.

1095. An organization uses absorption costing and assigns overhead to products based on their direct materials costs. In quarter 1, direct materials cost for one family of products was $2,000,000 in total and fixed costs were $400,000. In quarter 2, fixed costs for the family of products remained the same but the materials manager reduced direct materials cost by 20% without altering total unit production. In the first quarter, the total direct materials cost was $4,000,000 for the family of products. In the second quarter, it was $3,600,000. Unit sales in both quarters for the family of products was 10,000 units. Which of the following best summarizes the impact of reducing these materials costs? A. The change increases the fixed overhead rate and the total unit cost. B. The change decreases the fixed overhead rate and the total unit cost. C. The change increases the fixed overhead rate, but the total unit cost is reduced. D. The change decreases the fixed overhead rate, but the total unit cost is increased. Overall explanation In absorption costing, fixed costs are usually allocated to units of output on the basis of direct labor hours, machine hours, or materials costs. In this case, the organization uses direct materials costs. The calculations are as follows: * The fixed overhead rate is calculated by dividing the fixed overhead by the direct materials costs. In quarter 1, this was $400,000/$2,000,000 = 0.20. Reducing the direct materials costs by 20% would be a reduction of $400,000, resulting in $1,600,000 in direct materials costs. * The quarter 2 fixed overhead rate is $400,000/$1,600,000 = 0.25. * In quarter 1: ($4,000,000 x 0.2)/10,000 units = $80 unit fixed overhead. Unit direct cost is $4,000,000/10,000 = $400. The quarter 1 total is $480 per unit. * In quarter 2: ($3,600,000 x 0.25)/10,000 = $90 unit fixed overhead. Unit direct cost is $3,600,000/10,000 = $360 per unit. The quarter 2 total is $450 per unit. Therefore, while the material cost reduction increased the fixed overhead rate (and the unit fixed overhead amount), the total unit cost went down.

1096. Which of the following factors comprise the cost of goods sold? A. Sales, general, and administrative costs B. Direct and indirect labor, direct material, and factory overhead C. Direct labor, direct material, and factory overhead D. Direct labor and direct material Overall explanation The cost of goods sold is a critical component of the income statement and consists of the elements needed to produce finished goods (labor, material, and factory overhead).

1097. A company produces some of its 20 top sellers every day. It has a customer service policy of 99.5%, with next-day air shipments for each order. What is the most likely reason for not carrying safety stock on its highest-volume products? A. Not carrying safety stock improves inventory turns. B. It is acceptable to have stockouts because the service level policy is not 100%. C. Producing some of each item every day guarantees no stockouts. D. Stockout duration will be short and few orders will be affected. Overall explanation If a stockout were to occur, the inventory would be replenished within 24 hours. Shipments can still occur by the next day due to the daily production of top sellers, so this will be a delay of only one additional day. The organization must be operating under the assumption that a one-day delay will still result in satisfied customers.

1098. Which of the following terms refers to a systematic approach to identifying, analyzing, and addressing an organization’s exposure to uncertainty within the supply chain? A. Buffer management B. Producer’s risk C. Risk management D. Safety factor calculation Overall explanation Risk management is a systematic approach to identifying, analyzing, and addressing an organization’s exposure to uncertainty within the supply chain.

1099. As a product or service matures, the organization’s collective knowledge of risk prevention and mitigation will: A. facilitate reduction in errors of both commission and omission. B. cause the complete elimination of all risks for all products and services. C. prevent all intrusions to the facility from any regulatory agency. D. successfully eliminate all existing risks associated with the product or service. Overall explanation As errors of commission and omission are reduced due to increased experience in the organization, the implementation of operational strategy needs to address learning, capturing and reporting the value of the buildup of operations knowledge, the momentum of foundational knowledge, and resource and process change.

1100. How is a business plan different from a strategic plan? A. A strategic plan is a statement of mission and vision and a business plan is a near-term projection of a company’s financials. B. A strategic plan is strategic in nature while a business plan is operational in nature. C. A business plan translates the strategic plan’s objectives into detailed objectives for the next few years. D. A strategic plan is a key input to the sales and operations plan and this plan in turn is a key input to the business plan. Overall explanation A strategic plan contains the company’s vision, mission statement, goals, and objectives. A business plan is a statement of long-range strategy and revenue, cost, and profit objectives usually accompanied by budgets, a projected balance sheet, and a cash flow (the incorrect answer about the business plan being a near-term projection of a company’s financials refers to these projected, or pro forma, statements; however, this is not a good characterization of a business plan because these pro forma statements are not the only component of the business plan). The business plan forms a bridge between the strategic and tactical levels. It translates the strategic business objectives into specific business objectives for the next two to three years.

1101. Which is an important feature in total productive maintenance? A. Operators regularly report maintenance productivity to management. B. Inspectors ensure that every machine is ready for work each day. C. Skilled mechanics are not used for any machine maintenance. D. Operators are responsible for most routine machine maintenance. Overall explanation In total productive maintenance, machine operators take responsibility for most of the routine maintenance on their equipment, thus receiving a motivating sense of ownership. Meanwhile, skilled mechanics will still perform more involved maintenance or repair as needed; machine operators are trained to ensure that their machines are ready; and reporting maintenance productivity to management is not related to total productive maintenance.

1102. What is a good policy concerning a company’s internal rate of return (IRR)? A. Exceed the costs of material, labor, and overhead prior to approval. B. Reverse-engineer competing products whenever possible. C. Approve the project if the IRR exceeds the cost of capital. D. Set margins based on competitive analysis. Overall explanation The IRR is the rate of compound interest at which the company’s outstanding investment is repaid by the proceeds from a project.

1103. Which of the following may be necessary to prove feasibility when seeking capital investment approvals? A. Calculating the payback period or internal rate of return B. Outsourcing production until the project is complete or the machine comes up to speed C. Investigating interest rates from various lending institutions D. Leveraging the existing overhead rates prior to completion Overall explanation To finance a large, expensive project or capital investment, it is often necessary to calculate the payback period or internal rate of return.

1104. What sources of demand are considered when performing demand planning? A. Demand from all sources B. Demand from internal customer orders only C. Demand from external customer orders only D. Demand from the sales forecast only Overall explanation Demand planning is the recognition of demand from all sources, including forecasted demand and actual orders from internal and external customers.

1105. When defining product families, which of the following is most important? A. Product load profile B. How the product is made C. Market strategy D. Package size Overall explanation Product families are ideally based on how the product is made and market strategy. If there is not alignment between these, then the dominant choice is the market strategy. How the product is made is an attractive choice, but market strategy is the best answer. If product groupings do not line up with the resources used in production, non-aligned resources are created. The other answers are incorrect because package size alone and product load profiles do not influence the determination of product families.

1106. A product is subject to only a distributor sales channel. Which of the following is used to identify the necessity of providing feedback to distributors regarding the feasibility of meeting their demand as forecasted for a seasonal product? A. Aggregate forecast of all distributors B. Sales and operations planning C. Customer relationship management D. Master scheduling of end items Overall explanation Sales and operations planning provides a snapshot into how well the sales and operations plans are progressing.

1107. A make-to-order company believes that actions they took to reduce customer lead time will result in a competitive advantage and increased sales. The sales and operations planning process should authorize an increase in: A. work in process. B. forecast bias. C. finished product inventory levels. D. production. Overall explanation Increasing sales will require production to produce more.

1108. Which information could be evaluated prior to the end of the month in order to streamline the sales and operations planning process? A. Forecast accuracy B. On-time performance C. Finished goods levels D. New product review Overall explanation No history exists for new products, so the information can be reviewed any time. The other information is all dependent on end-of-period figures.

1109. During the S&OP process, performing a financial evaluation of alternative strategies includes which of the following? A. Number and productivity of workers, cost of changing work levels, and inventory costs B. Cost of changing work levels and inventory costs C. Number and productivity of workers, cost of changing work levels, inventory costs, and priority sequence of load D. Inventory costs only Overall explanation "Cost of changing work levels and inventory costs" would be correct if it were to include the number and productivity of the workers, which does have a financial impact. "Inventory costs" is incorrect because, in addition to excluding the number and productivity of workers, it also excludes the cost of changing work levels, which has an impact on the financial alternatives. "Number and productivity of workers, cost of changing work levels, inventory costs, and priority sequence of load" is incorrect because it includes the priority sequence of the load, which is determined at the execution level of MPC and not during the S&OP process.

1110. What is the objective of sales and operations planning? A. To hold sales accountable for the forecast month to month B. To provide a means for the master scheduler to validate the schedule C. To provide an integrated plan for sales and manufacturing D. To integrate the master schedule with the business plan Overall explanation Even though S&OP may accomplish some of the other areas indirectly, its primary objective is to tie the sales, inventory, and production plans into one plan.

1111. What must management do in order to ensure that the operational performance of the business is measured by the production plan? A. Change the plan only annually. B. Publish the plan to all employees. C. Communicate expectations of the plan. D. Use the management-by-walking-around philosophy. Overall explanation Since the production plan has been agreed to by sales, manufacturing, and finance, short-term company objectives are inherent in the plan. Everyone needs to understand what is expected in order to achieve the plan.

1112. Which of the following is most likely to occur in a company that does not use a formal sales and operations planning process? A. Inventory turns will be used to plan production for the next month. B. The potentially available demand quantity will not be recognized. C. Conflicting processes will exist individually within the various departments. D. Senior executives will develop the plans required for operation. Overall explanation Each department will have its own plan for tracking plan to actual, but the plans will not be integrated.

1113. Which is a characteristic of the production plan? A. It is a plan that both the production and sales and marketing departments agree to. B. It works with individual products. C. It cannot be used for order promising or capable-to-promise. D. It facilitates forecasting. Overall explanation The master production schedule uses the sales and operation planning process as a primary input in the form of the agreed-upon production plan. The Dictionary states within its definition of master scheduling that “the sum of the MPSs [master production schedules] for the items within the product family must equal the production plan for that family.” The MPS is where this agreed-upon plan between the production and sales and marketing departments is put into effect. The other answers are incorrect because forecasts are an input to the MPS; the production plan is at the product family, not the end-item level; and the MPS is used for order promising.

1114. A disagreement between sales and production when modifying the sales and operations plan is most likely to be caused by which of the following? A. Sales not considering production’s overdue orders B. Product mix sales always being inaccurate C. Sales volume being consistently overstated D. No capacity for a two-week shutdown in July Overall explanation An overstated sales plan will result in an overstated production plan, causing production to overplan resources.

1115. For this production plan example, what is the expected planned inventory for June? Assumptions: Period Jan Feb Mar Apr May Jun Forecast 400 450 600 750 500 400 Planned Production 500 500 500 500 500 500 Planned Inventory * A production line is to run 500 units per month. * Opening inventory is 250 units. * Sales are forecasted as shown. * Calculate the expected planned inventory for each month A. 50 B. 150 C. 600 D. 400 Overall explanation Period Jan Feb Mar Apr May Jun Forecast 400 450 600 750 500 400 Planned Production 500 500 500 500 500 500 Planned Inventory 350 400 300 50 50 150 The expected planned inventory for June is 150. January: 250 + 500 - 400 = 350 February: 350 + 500 - 450 = 400 March: 400 + 500 - 600 = 300 April: 300 + 500 - 750 = 50 May: 50 + 500 - 500 = 50 June: 50 + 500 - 400 = 150

1116. What should be included in the pre-S&OP meeting? A. Discussion of customer service improvement plans B. Solution for imbalances of supply and demand C. Definition of product families to be used for planning D. Determination of reasons for quality problems Overall explanation In the pre-S&OP meeting, decisions on demand and supply balance are made, problems are resolved, issues are identified, and alternatives are developed. Findings are then sent to the executive S&OP group.

1117. A sales forecast for a product in a certain period is defined as the company’s: A. shipments to customers. B. desired sales. C. expected sales. D. sales quota. Overall explanation A forecast is the expected level of sales, not the quota. Desired sales may exceed the expected sales, and customer shipments may not consume the forecast in the same period.

1118. Which of the following approaches can streamline the sales and operations planning review process? A. Report only out-of-tolerance conditions, with further detail available. B. Delegate the reviews among the demand team. C. Generate reports that show full detail and associated aggregations. D. Add additional months to the rolling plan only when necessary. Overall explanation It is most important to identify and assess out-of-tolerance conditions.

1119. Which of the following new product characteristics will most affect the choice of a product family for sales and operations planning (S&OP)? A. Volume B. Mix C. Design D. Life cycle Overall explanation S&OP plans families of items within a production environment and process choice, so the design of the product would determine which production process it would be similar to.

1120. S&OP fundamentals include which of the following? A. Disaggregating volume into a master schedule and product family planning B. Supply and demand planning and product family planning C. Supply and demand planning and mix planning D. Product family planning and mix planning Overall explanation Supply and demand planning and product family planning are fundamental to S&OP. Disaggregating volume into a master schedule and mix planning are fundamental to master scheduling, not S&OP.

1121. What is the best definition of participative design/engineering? A. Taking a serial approach to product development B. Doing several development tasks in parallel C. Increasing time to market to decrease risk of poor launch D. Relying on a single engineer to perform all development Overall explanation Participative design/engineering focuses on parallel processes in order to reduce time to market and changes later in the process. Participative design/engineering is not a serial approach, nor an approach intended to increase time to market. All involved departments and key suppliers participate.

1122. A company sells a broad range of herbs and spices for health and cooking. The weekly order to the distribution center replenishes the individual items sold each week due to lack of storage capacity. The order may be modified by the store based on upcoming sales promotions or seasonality. Which of the following measures of customer service is of most value to the store? A. Order cycle time B. On-time shipment C. Line items shipped complete D. Correct items shipped Overall explanation While the correct items are shipped, the quantities may be incomplete. The order may arrive on time but not have the proper items or quantities.

1123. Distribution replenishment requirements enter a manufacturer’s planning hierarchy in which of the following planning processes? A. Distribution schedule B. Master production schedule C. Production plan D. Demand management Overall explanation Distribution requirements are part of the overall demand.

1124. A customer contacts a manufacturer’s salesperson and wants to purchase all production supply and capacity for a given item. Which of the following values will the salesperson need to obtain from his company to respond to his customer? A. Capable-to-promise B. Rough-cut capacity plan C. Available-to-promise D. Master schedule Overall explanation Capable-to-promise is the process of committing orders against available capacity as well as inventory. This process may involve multiple manufacturing or distribution sites.

1125. Which of the following components should be addressed by a world-class customer service strategy? A. Customer backlog and backorder balancing B. Customer concerns only C. Customer, employee, shareholder, and supplier concerns D. Customer call volume and wait times Overall explanation A world-class customer service strategy will be strongest if customer, shareholder, employee, and supplier concerns all are addressed.

1126. Which of the following describes the process of order entry? A. Accepting and translating what a customer wants into terms used by the manufacturer or distributor B. Qualifying the customer’s creditworthiness and ship-to information and assigning a salesperson C. Completing the entire cycle of the sales order, from creation to closure and payment D. Releasing the shop order into manufacturing to produce the product Overall explanation Order entry is the process of accepting and translating what a customer wants into terms used by the manufacturer or distributor.

1127. Multiple functional groups work on a new product design at the same time, as opposed to working in sequence, which reduces cycle time. This is referred to as: A. collaborative engineering. B. process engineering. C. project engineering. D. concurrent engineering. Overall explanation With concurrent engineering (also called participative design/engineering), multiple functional groups work on a new product design at the same time. This reduces cycle time.

1128. Records state that finished goods inventory has 100 items in stock when there are actually 110. The first 100 customer orders are accepted and scheduled for immediate shipment. The next 50 customer orders are scheduled and promised for shipment the following week based on the next scheduled receipt. What is the customer service level for the orders scheduled for shipment? A. 91% B. 100% C. 111% D. Not enough information to determine answer Overall explanation The 100 that were promised this week will all be shipped, so this is a 100% customer service level for the time period.

1129. Which of the following scenarios is most indicative of a participative design environment? A. Standard parts are used in order to reduce inventory costs. B. Product design is performed in parallel with process design. C. Product designs are lowest in cost due to combined engineering. D. Parts are low in cost and lead time and high in quality. Overall explanation Participative design/engineering means that the product and the process are designed in parallel.

1130. Which of the following is a measure of customer service? A. Capacity utilization B. Percentage of orders shipped on time C. Inventory turns D. Master schedule fill rate Overall explanation The percentage of customer orders shipped on time is perhaps the most important metric in the business and a key measure of customer service.

1131. Which of the following statements is true of forecast demand in the master production schedule as it relates to material requirements planning? A. Forecast demand is ignored within the cumulative lead time. B. Forecast demand is ignored beyond the cumulative lead time. C. Forecast demand is treated like any other gross demand. D. Forecast demand is treated like safety stock replenishment. Overall explanation Demand is demand, no matter what the source.

1132. Analysis shows that the top 22 percent of an organization’s customers provide over 75 percent of the organization’s revenues. What should be the top priority? A. Providing excellent service to top customers to increase their loyalty B. Shedding approximately the bottom 20 percent of customers C. Focusing marketing on top customers to cross-sell and up-sell to them D. Continually trying to acquire new customers Overall explanation Customer value usually starts out as negative and then grows over time as customers make repeat purchases. Customer lifetime value analysis can help show that maintaining customer loyalty is far cheaper than continually trying to acquire new customers. Therefore, rather than just using the knowledge of which customers are more valuable to market more things to these segments, it is important to determine how to develop greater loyalty from these segments.

1133. In which environment is the demand management function least likely to provide customers with promise dates? A. Make-to-stock B. Engineer-to-order C. Assemble-to-order D. Make-to-order Overall explanation In a make-to-stock environment, customers buy directly from the available inventory, so customer service is determined by whether the item is in stock or not.

1134. Demand management includes which of the following activities? A. Taking orders, making delivery promises, shipping orders, and following up to ensure that delivery takes place B. Forecasting, determining safety stock, quoting new orders, and shipping product C. Forecasting, order processing, making delivery promises, and interfacing with the marketplace D. Order processing, making delivery promises, shipping product, and following up to ensure that delivery takes place Overall explanation Demand management includes forecasting, order processing, making delivery promises, and interfacing with the marketplace.

1135. Which of the following elements related to closing the demand/supply loop is most likely to be included within rough-cut capacity planning? A. Final assembly B. Bottleneck work centers C. Theoretical capacity D. Constraining operations Overall explanation Rough-cut capacity planning is at the key or bottleneck work center level.

1136. The master production schedule (MPS) serves as the basis for communication between which two functions? A. Purchasing and sales B. Sales and marketing C. Sales and manufacturing D. Manufacturing and purchasing Overall explanation The production plan from sales and operations planning (involving sales, manufacturing, and others) is the input to the MPS and the output is an MPS for each end item given information on the desired sales mix (sales provides mix forecasts or other information on the desired sales mix).

1137. A company produces desk clocks as a product family, with 20 different end items. The overall production plan has been set at 8,000 units per month. Which of the following actions should the master scheduler take to develop the master production schedule? A. Finalize the production quantity based on rough-cut capacity planning. B. Schedule a mix of the 20 end items such that the total equals 8,000 units. C. Schedule a mix of the 20 end items, minus the quantity already in stock. D. Schedule a quantity greater than 8,000 units to allow for demand changes. Overall explanation The total of the end items should equal the production for the product family.

1138. What is the term for the process of validating the master production schedule against available demonstrated capacity? A. Sales and operations planning B. Resource requirements planning C. Rough-cut capacity planning D. Capacity requirements planning Overall explanation Rough-cut capacity planning is the process of converting the master production schedule into requirements for key resources, often including labor, machinery, warehouse space, suppliers’ capabilities, and in some cases money.

1139. A manufacturer of laptops knows roughly which components will be included in each laptop configuration they offer. To facilitate master scheduling and material planning, the necessary components and subassemblies can be grouped together in a particular type of document, even though specifics of an order have not yet been received. What is this document called? A. Forecast B. Planning schedule C. Planning bill of material D. Business proposal Overall explanation A planning bill of material is intended to simplify planning. It is an artificial grouping of items and components used to plan lead times for products that will need to be assembled- or made-to-order, the specifics of which will not be known until an order is received.

1140. The level of detail for the master production schedule is: A. at the product family level. B. at the raw material level. C. developed for individual items. D. identical to that used in the production plan. Overall explanation The master production schedule is at the individual item level.

1141. The purposes of a modular bill of material include which of the following? A. Providing for easier material requirements planning processing B. Minimizing inventory for unique components C. Facilitating forecasting D. Translating the sales and operations plan to the master production schedule Overall explanation A modular bill of material is a type of planning bill that is arranged in product modules or options. It is often used in companies where the product has many optional features.

1142. Rough-cut capacity planning checks whether critical resources are available to: A. keep track of past-due orders. B. support the preliminary master production schedules. C. create work center load capacity profiles. D. establish the takt time of the work cells. Overall explanation Rough-cut capacity planning checks whether critical resources are available to support the preliminary master production schedules. Critical resources include bottleneck operations, labor, and critical materials.

1143. The information needed to develop a master schedule will come from which source? A. Production activity control B. Capacity requirements plan C. Material requirements plan D. Forecast of individual end items Overall explanation The capacity requirements plan, production activity control, and material requirements plan relate to capacity planning, execution, and priority planning activities that follow the master scheduling process. Therefore, to develop a master schedule, you will need the forecast of individual end items.

1144. An overload condition has been identified in the current period in spite of having a well-balanced final assembly schedule and material plan. What is the first action to be taken by production? A. Adjust capacity planning parameters. B. Schedule overtime to get back on schedule. C. Delay orders that caused the overload. D. Determine the reason for the overload. Overall explanation The immediate need is to resolve the existing overload using overtime.

1145. What is the best reason for using planning bills of material in master scheduling? A. Planning bills do not require actual engineering or manufacturing bills of material. B. The company is make-to-stock, and planning bills match planned production levels. C. Material procurement or production occurs prior to knowing actual end items. D. A single bill can be used no matter how many products are in a product family. Overall explanation Planning bills are used to get necessary components on order prior to knowing the actual configuration. In other words, planning bills enable flexibility in what will be produced.

1146. When a customer orders a laptop online and selects from a variety of different options, such as RAM, hard disk space, color, etc., an order entry system will select the right options from what source to produce a bill of material (BOM) for this product? A. Product family B. Inventory list C. Design template D. Modular BOM Overall explanation An order entry system for an assemble to order (ATO) product will generate a BOM for this custom configuration of options from the modular BOM options. An inventory list would not limit order entry to the options that are valid for the product and design templates are not used in the ATO environment.

1147. Using the information provided, which periods would have a master production schedule quantity? Note: The safety stock level is 10 units and the lot size is 30 units. OH Demand Time Fence Planning Time Fence Period 1 2 3 4 5 6 7 8 Forecast 20 20 20 20 20 20 20 20 Customer Orders 19 20 21 21 25 24 20 18 PAB 15 ATP MPS A. 1, 2, 3 B. 1, 2, 3, 4, 6, 7 C. 1, 2, 4, 5, 6, 8 D. 1, 3, 4, 7 Overall explanation OH Demand Time Fence Planning Time Fence Period 1 2 3 4 5 6 7 8 Forecast 20 20 20 20 20 20 20 20 Customer Orders 19 20 21 21 25 24 20 18 PAB 15 26 36 15 24 29 35 15 25 ATP MPS 30 30 30 30 30 30

1148. Which of the following changes is most likely to directly impact the master schedule? A. Reducing the lot size quantity by one-half B. Extending the planning time fence by four periods C. Increasing safety stock from demand for one period to demand for two periods D. Shortening the demand time fence by one-half Overall explanation Increasing safety stock will have the effect of pulling orders forward in the schedule, which may result in overload conditions or material shortages.

1149. Master scheduling is a balancing act between which of the following? A. Forecast and inventory B. Inventory and customer service C. Supply and demand D. Forecasts and orders Overall explanation The master scheduler’s job is to find creative ways to balance supply and demand.

1150. An item is being replaced on a BOM. The effectivity of the original item ends when the new item’s effectivity date begins. What does this action illustrate? A. Phantom bill of material B. Parent-child relationship C. Horizontal dependence D. Engineering change process Overall explanation A parent-child relationship exists between items at different levels on the BOM, making this answer incorrect. Horizontal dependency exists between two items on the same level in the BOM; thus, this answer is incorrect. A phantom BOM rarely is stocked and has a lead time of zero; its parent consumes it during manufacture, and is therefore also an incorrect answer.

1151. What is the discrete available-to-promise amount for week 3 of the master schedule shown in the figure below, assuming that the system does not allow actual orders to exceed the master production schedule (MPS)? Master Schedule: Make-to-Stock Chase Production Example Beginning Inventory = 60 Units Lot Size = 100 units Week 1 2 3 4 5 6 Forecast 60 70 50 80 60 40 Customer Orders 58 65 46 63 30 0 Projected Available Balance 60 0 30 80 0 40 0 Master Production Schedule 100 100 100 Available to promise 2 35 ? 70 A. 26 units B. 54 units C. 0 units D. -9 units Overall explanation To calculate the discrete method available-to-promise (ATP), use the following calculation: ATP for Periods Containing MPS = Scheduled MPS Receipt – Sum of Customer Orders Before Next Period Containing Scheduled MPS Receipt. For week 3: 100 units – (46 units + 63 units) = – 9 units. However, because this would result in a negative value, an additional rule needs to be applied, which is to reduce the prior period’s ATP level by the shortfall and add it to this period. So 9 units are removed from the week 2 ATP and added to the week 3 ATP, resulting in an answer of 0 units ATP for week 3. Note also in the figure below that the ATP for week 2 is now reduced by 9 units Master Schedule: Make-to-Stock Chase Production Example Beginning Inventory = 60 Units Lot Size = 100 units Week 1 2 3 4 5 6 Forecast 60 70 50 80 60 40 Customer Orders 58 65 46 63 30 0 Projected Available Balance 60 0 30 80 0 40 0 Master Production Schedule 100 100 100 Available to promise 2 26 0 70

1152. When might it be appropriate for lean production systems to use time fences? A. When planning the parts of production with longer lead time than the required customer lead time B. When the master schedule is broken into daily time buckets C. When a heijunka box is used to break the time slots equal to takt time D. It is not appropriate to use time fences in lean because all orders are based on customer demand. Overall explanation The portion of production in which lean uses demand-pull signals will operate on orders rather than forecasts and so will not use time fences. It will be purely reactive to demand. For elements with longer lead times than the required customer lead time, lean will still use master schedules and capacity planning on this push side of operations. For these push elements, lean can benefit from using time fences, because schedule stability in turn promotes production stability.

1153. In a bill of material, the path that adds up to the greatest number of lead time periods defines the: A. cumulative lead time. B. delivery lead time. C. lead time offset. D. demand lead time. Overall explanation Cumulative lead time for an item consists of the longest lead time path for a given bill of material. Delivery and demand lead times are subsets of the cumulative lead time. The lead time offset is a technique used in MRP where a planned order receipt in one time period requires the release of that order in an earlier time period based on the lead time for the item.

1154. Using the information provided below, what is the projected available balance in period 4? * Order quantity: fixed order quantity of 100 units * Safety stock: 10 units * Lead time: 1 period Period 1 2 3 4 5 6 7 8 Gross Requirements 36 42 50 45 55 55 55 55 Scheduled Receipts Projected Available Balance 80 Net Requirements Planned Order Receipt Planned Order Release A. 0 units B. 7 units C. 100 units D. 107 units Overall explanation Period 1 2 3 4 5 6 7 8 Gross Requirements 36 42 50 45 55 55 55 55 Scheduled Receipts Projected Available Balance 80 44 102 52 107 52 97 42 87 Net Requirements 3 13 Planned Order Receipt 100 100 100 100 Planned Order Release 100 100 100 100

1155. For this question, use the following example for an MTS environment. Note that the MPS receipt scheduled in period 1 was carried over from a previous plan. What will be the PAB in period 5? * On hand: 20 units Period 1 2 3 4 5 6 7 8 Forecast 20 20 20 20 20 20 20 20 Actual Orders 18 15 27 10 10 8 6 5 PAB 42 MPS Receipts 40 * Planning time fence: After period 7 and before period 8 * Lot size: 40 units * Safety stock: 5 units * Demand time fence: After period 2 and before period 3 A. 5 B. 40 C. 17 D. 21 Overall explanation Period 1 2 3 4 5 6 7 8 Forecast 20 20 20 20 20 20 20 20 Actual Orders 18 15 27 10 10 8 6 5 PAB 42 27 40 20 40 20 40 20 MPS Receipts 40 40 40 40

1156. Time fences should be viewed as a way to: A. maximize production. B. measure the likely impact of changing the master production schedule. C. avoid changing the master production schedule. D. evaluate production effectiveness. Overall explanation The time fence is not a barrier to change, merely an indicator of the point at which effort, time, and cost will start to becoming significant if making a change.

1157. Item A is produced using the following components, and each has lead times as shown: A (1 week), B (2 weeks), C (2 weeks), D (5 weeks), E (3 weeks), F (1 week), and G (5 weeks). If the following potential answer choices represent all of the possible paths through the product tree, what is the longest cumulative lead time for use in calculating the planning horizon? A. A-C-E-F B. A-D C. A-C-G D. A-B Overall explanation Since all of the possible paths are shown, there is no need to refer to a bill of material diagram to answer this question. Instead, to determine the longest cumulative lead time, calculate the cumulative lead time for each path shown. A-C-G = 1 week + 2 weeks + 5 weeks = 8 weeks. A-C-E-F = 1 week + 2 weeks + 3 weeks + 1 week = 7 weeks. A-B = 1 week + 2 weeks = 3 weeks. A-D = 1 week + 5 weeks = 6 weeks. The highest total is the longest cumulative lead time (since these are all of the possible paths), which is A-C-G.

1158. The portion of inventory and planned production that can be committed to customer orders typically is referred to as the: A. on-hand balance. B. available-to-promise quantity. C. projected available balance. D. excess quantity. Overall explanation Available-to-promise inventory is the uncommitted portion of a company’s inventory and planned production maintained in the master schedule to support customer orders.

1159. Which of the following tools is used to specify periods when various types of changes can be made to the master schedule? A. Pegging of requirements B. Time fences C. Sales and operations planning (S&OP) D. Firm planned orders Overall explanation Time fences are guidelines established to note where various changes in operating procedures may take place.

1160. Which of the following is a point in the master scheduling process planning horizon that marks a boundary inside of which changes to the schedule may affect component schedules, capacity plans, customer deliveries, and cost? A. Available-to-promise B. Planning time fence C. Demand time fence D. Projected available balance Overall explanation The planning time fence is a point in the planning horizon of the master scheduling process that marks a boundary inside of which changes to the schedule may affect component schedules, capacity plans, customer deliveries, and cost. Demand time fence is not as good an answer because changes inside the demand time fence are almost certain to have adverse effects in a well-planned process.

1161. If the projected available balance would go negative in a period, what should be done? A. Do nothing, as this is normal and expected. B. Change the forecast. C. Schedule a master production schedule receipt for that period. D. Change the plan to have a higher beginning inventory balance. Overall explanation When the projected available balance in the master schedule would go negative, an MPS receipt needs to be scheduled for one or more lots of production.

1162. Which of the following statements is accurate? A. Item A is the parent of items B and E. B. Item D and E are the parents of item B. C. Items C and E are components of item A. D. Item A is the parent of items B and C. Overall explanation In this bill of material (BOM), item A is the parent of items B and C. Item B is the parent of items D and E. Items B and C are components of item A, and items D and E are components of item B. An item can have only one parent. However, a parent can have any number of children in a single BOM.

1163. Using the information provided below, what are the net requirements for period 7? Period 1 2 3 4 5 6 7 8 Gross Requirements 40 10 30 50 50 20 30 40 Scheduled Receipts Projected Available Balance 130 Net Requirements Planned Order Receipt Planned Order Release * Order Quantity 40 * Safety Stock 10 * Lead Time 3 Periods A. 0 B. 20 C. 30 D. 50 Overall explanation Period 1 2 3 4 5 6 7 8 Gross Requirements 40 10 30 50 50 20 30 40 Scheduled Receipts Projected Available Balance 130 90 80 50 40 30 10 20 20 Net Requirements 0 0 0 10 20 0 30 30 Planned Order Receipt 40 40 0 40 40 Planned Order Release 40 40 0 40 40

1164. A component is defined on only one bill of material at level 6, but it also has independent demand. Which of the following statements is true? A. As a service part, the low-level code is 0. B. As a service part, the low-level code is 6. C. It is treated as a phantom subassembly. D. The item cannot be planned by material requirements planning due to the independent demand. Overall explanation The low-level code of a component does not change based on how it is used as long as it has a parent item.

1165. Why will material requirements planning check for available inventory of a purchased part in an engineer-to-order environment? A. Because the part may be in stock for another customer order and can be reallocated to this order B. Because checking for available inventory can identify inventory inaccuracies C. Because a previous order of the part may have residual inventory from lot size or price break D. Because it is possible that the item was stocked at one time and is now considered non-stock Overall explanation If there was a minimum purchase quantity or a price break, there may have been excess inventory. A cancelled customer order could also result in residual inventory.

1166. Which is an objective of material requirements planning? A. Keep priorities current. B. Keep the factory busy. C. Determine the forecast. D. Minimize inventory investment. Overall explanation The objective of MRP is to keep priorities, or due dates for end items and components, current. Keeping the factory busy is an objective of capacity planning; determining the forecast is an input to the master production schedule; and minimizing inventory investment is an overall objective of aggregate inventory management.

1167. Material requirements planning has identified 20 C-item purchase orders that should be de-expedited by two weeks. Each order averages a two-month supply. Which of the following actions is most appropriate for the planner to take? A. Release the de-expedite message to the buyer and the supplier. B. Release the de-expedite message to the buyer. C. Release change orders to the buyer and the supplier. D. Receive the materials on the original due date. Overall explanation These are C items and of low value. It will cost more to de-expedite 20 purchase orders than to simply receive them, as there will be little impact on carrying cost.

1168. Which of the following types of orders will production have the most of for planning and scheduling in an assemble-to-order environment? A. Released orders B. Planned orders C. Work-in-process orders D. Customer orders Overall explanation Planned orders extend through the planning horizon.

1169. Increasing the yield of a product reduces: A. kanban size. B. queue time. C. finished goods inventory. D. product cost. Overall explanation If yield is increased, fewer materials and less operation time are necessary, which reduces the cost of the product.

1170. Gross requirements for a period on the material requirements planning grid are 100 units for unit A. Two units of A are needed to make one unit of Z. If net requirements are 80 units, what was the available inventory of A? A. 60 units B. 20 units C. 40 units D. Not enough information was provided to answer the question Overall explanation Net Requirements = Gross Requirements – Available Inventory. This equation can be rearranged as Available Inventory = Gross Requirements – Net Requirements, resulting in 100 units – 80 units = 20 units. The information on how many As are used for the Zs is not needed to answer this question.

1171. Good measures of material requirements planning performance include evaluations of which of the following factors? A. Percentage of orders with overloaded schedules B. Percentage of assembly orders with no scrap C. Percentage of MRP components showing bias D. Percentage of orders started on time Overall explanation Percentage of orders started on time is a valid measurement of how well material requirements planning has started orders on time to meet the schedule. Other metrics include the number of orders that were delivered to manufacturing without shortages, and the percentage or order due dates met.

1172. Because bills of material (BOMs) identify the exact materials used in production and can include component and subcomponent cost information, they are also useful for which other department? A. Finance B. Returns C. Sales D. Marketing Overall explanation Bills of material are useful for finance because they help determine the direct materials used in the product. BOMs can summarize cost information for all components and subcomponents. The bill may also be helpful in calculating direct labor and provide a means of allocating overhead.

1173. A firm planned order is used to: A. schedule a purchase order contract with a supplier. B. allocate material prior to the release of a customer or shop order. C. override the standard planning parameters that have been defined. D. manage target inventory levels. Overall explanation Firming a planned order can be used to change a particular lot size or lead time that has been defined as a standard and to prevent material requirements planning from manipulating the order.

1174. During MRP record balancing, if no safety stock is specified, when is the first net requirement triggered? A. When projected available first becomes negative B. When projected available is less than the lot size C. When projected available is less than the gross requirements for the next period D. When projected available first becomes zero Overall explanation The first net requirement is triggered during MRP record balancing when projected available first becomes negative. The other answers are incorrect because carrying no inventory until there is an item needed is a major advantage of MRP; because MRP generates the net requirement in the next period; and because lot size has no relation to net requirement calculation.

1175. What is the term for the intersection of a row and a column in an MRP grid? A. Time bucket B. Bucketless display C. Time period D. Manufacturing cell Overall explanation The cell formed by the intersection of a row and a column is a time bucket, which summarizes the designated number of days of data for that line.

1176. A purchased component has a net requirement in period 4. It has a 6-period lead time and no scheduled receipts. Which of the following actions will be the result of material requirements planning (MRP)? A. The planned order is overdue and the planner will need to delay the master production schedule. B. The planned order release is scheduled for period 1 and is due in period 4. C. The planned order release is scheduled for period 2 and is overdue for release. D. The planned order release in period 1 is rescheduled for receipt in period 6. Overall explanation MRP will assume that the plan can be executed and will provide an action to release the overdue planned order. A second action message may be given to expedite.

1177. Based on the information below, in what week would a planned order release be generated to satisfy the net requirement? Lead time: 3 weeks Order quantity: 100 Net requirement exists in: week 6 Net requirement quantity: 150 A. Week 1 B. Week 2 C. Week 3 D. Week 6 Overall explanation Because the net requirement exists in week 6, the planned order release is offset by the lead time of three weeks. Thus, the planned order release will be generated in week 6 – 3 weeks = week 3.

1178. What source of inventory loss results from material outside of specifications that makes rework impractical? A. Obsolescence B. Shrinkage C. Scrap D. Shelf life Overall explanation Scrap is defined in the Dictionary as "material outside of specifications and possessing characteristics that make rework impractical."

1179. What is the set of priority planning techniques for planning component items below the end-item level? A. Capacity planning B. Master scheduling C. Material requirements planning D. Production activity control Overall explanation Master scheduling is a set of priority planning techniques used at the end-item planning level, whereas material requirements planning plans at the component level. Capacity planning addresses the availability of resources to meet priority requirements. Production activity control consists of techniques used to implement the priority plan established by the MRP process.

1180. In a make-to-order environment, what is most likely to be used to convert product demand into material requirements planning over the planning horizon? A. Customer orders B. Customer order forecast C. Customer order ship dates D. Customer order quantity Overall explanation Even in make-to-order environments, some forecasting is required to extend requirements over the planning horizon.

1181. A supplier has notified a buyer that an order for a component will be two weeks late due to a material shortage. Which of the following actions should the material planner take? A. Identify affected parent orders and reschedule each by two weeks. B. De-expedite the order to synchronize required dates. C. Expedite the order to the required date. D. Perform bottom-up replanning based on pegging and available inventory. Overall explanation The planner first needs to identify the effect of a late shipment on parent requirements.

1182. What should a planner use to override the material requirements planning (MRP) logic for the quantity or date of a planned order? A. Scheduled receipts B. Firm planned orders C. Planned order releases D. Demand time fences Overall explanation MRP automatically recalculates planned orders as requirements change. A firm planned order allows the planner to maintain a certain quantity and date to prevent MRP from recalculating.

1183. Which of the following is a required input of the material requirements plan (MRP)? A. Delivery orders B. Capacity constraints C. Backlog D. Inventory data Overall explanation Inventory data is an input to the MRP netting logic. The other responses are not used by MRP.

1184. What is an advantage of using an advanced planning system (APS) in a make-to-order environment with multiple production facilities and warehouses? A. An APS system can validate resource availability. B. An APS system can plan distribution resources. C. An APS system can determine what the company is capable of promising. D. An APS system can calculate the capacity required. Overall explanation Using sophisticated software, APS systems can check availability of raw material, supplier capacity, and work center capacity to determine what orders the company can accept in a make-to-order environment.

1185. Some companies have created electronic scorecards to gather statistics on topics such as inventory, sales, costs, and forecasts. This is often referred to as a: A. information technology strategy. B. wide area network (WAN). C. enterprise resources planning (ERP) system. D. decision support system (DSS). Overall explanation A DSS assists managers in selecting and evaluating courses of action by providing a logical, usually quantitative, analysis of the relevant factors.

1186. As manufacturing planning and control has become more complex, the need for integration of knowledge and decision making has resulted in which of the following computer systems? A. Enterprise resources planning B. Manufacturing execution systems C. Manufacturing resource planning D. Collaborative planning, forecasting, and replenishment Overall explanation As the needs of organizations have grown in the direction of a truly integrated approach toward materials management, the need for integrated systems has arisen. As these systems have grown both in size and in integration of functionality, they have come to be referred to by the term "enterprise resources planning (ERP)."

1187. Why are information technology investment approvals and proof of payback uniquely difficult? A. Costs and benefits are uncertain, intangible, and often disbursed throughout the company. B. New IT systems are continuously being upgraded by the supplier, so training costs are difficult to identify. C. The people involved with the purchase are often not the people who need or use the system. D. The purchase decision for IT systems is often a subjective process not based on reality. Overall explanation Conventional financial evaluations used in conjunction with new IT systems are complicated because costs and benefits are uncertain, intangible, and often disbursed throughout the company.

1188. Engineering has suggested that a company’s products would provide more value to customers if the products were capable of identifying and automatically reporting problems to service and repair associates. What would be the most likely effect of this strategy? A. Facilitating a move to higher selling prices B. Increasing customer uptime, reducing customer repair costs C. More frequent on-site service, thus increasing costs overall D. Enhancing the product’s order-qualifying features Overall explanation An elevator company has diagnostic capabilities built into each system so that a worldwide 24-hour remote electronic monitoring system can detect any one of 325 problems with an elevator or escalator installed at a customer’s site. After notification, the system can analyze and diagnose the problem. It then may make the call to a company service person at the nearest location and assists the mechanic in identification of the part(s) in question. This system helps keep outage times to less than three hours. Design is in the loop too, so that they can assess and update as necessary for recurring problems (continuous improvement). Customers also have access to the performance history of each of their elevators and escalators.

1189. Which of the following technologies would be the best fit for a pharmaceutical company that needs precise information related to temperature control throughout the supply chain? A. Blockchain B. Drones C. Wearable technology D. Cloud computing Overall explanation Blockchain, which provides a secure method for tracking data from multiple data sources across a supply chain, would be the best fit for the company.

1190. An organization wants to reduce the cost of its order processing systems by automating help provided to customers who have common ordering problems. What would be the best technology solution for this organization? A. Augmented reality B. Sensors and telematics C. Internet of Things D. Robotic process automation Overall explanation Robotic process automation does not refer to actual robots but instead to the use of software "bots" to automate repetitive interactions with customers or other automated systems.

1191. Which of the following is a technique for analyzing and planning logistics and manufacturing during short, intermediate, and long-term time periods? A. Advanced planning and scheduling B. Sales and operations planning C. Master scheduling D. Production planning Overall explanation Advanced planning and scheduling (APS) deals with the analysis and planning of logistics and manufacturing during short, intermediate, and long-term time periods.

1192. What are the main components of advanced planning and scheduling (APS)? A. Demand planning, production planning, production scheduling, distribution planning, and transportation planning B. Demand planning, sales and operations planning, master production scheduling, material requirements planning, and distribution planning C. Demand planning, production planning, production scheduling, material requirements planning, and final assembly scheduling D. Forecasting, sales and operations planning, production scheduling, distribution planning, and transportation planning Overall explanation The five main components of APS systems are demand planning, production planning, production scheduling, distribution planning, and transportation planning.

1193. What is the term for a schedule of end items to finish the product for specific customers’ orders in a make-to-order or assemble-to-order environment? A. Dispatch list B. Build sequence C. Final assembly schedule D. Shop floor schedule Overall explanation The final assembly schedule identifies the end items necessary to complete a specific customer’s order. A dispatch list is used to identify the priority and sequence of manufacturing orders at a workstation. The build sequence lists the order of jobs to be worked on at a workstation. The shop floor schedule is the actual assignment of starting or completion dates to operations or groups of operations to show when these must be done if the manufacturing order is to be completed on time.

1194. The final assembly schedule (FAS) is differentiated from the master production schedule (MPS) because demand: A. is configured per customer order. B. is defined by a bill of material. C. consists solely of shippable end items. D. may be satisfied from finished goods.

Overall explanation The FAS is only for shippable items.

1195. If a company is familiar with high-volume manufacturing, what is the caution when introducing a new low-volume product line? A. The low-volume products will require separate forecast planning horizons. B. Different process technologies, labor skills, and planning/control systems will be required with low-volume operations. C. The low-volume products will require separate focused facilities. D. The high-volume products will have higher margins than new products with lower volumes.

Overall explanation Since high-volume operations concentrate on standardization and repetition, they are likely to need different process technologies, labor skills, and planning/control systems than those needed for low-volume operations.

1196. What is a primary reason for using an alternative means of transportation when a part is late? A. To meet the promised date B. To save shipping expense C. To meet the due date D. To ensure part delivery

Overall explanation The promise date may or may not be the actual due date, but it is the one that was communicated.

1197. When expediting purchased parts that are needed from the supplier before the original due date, a buyer should first try to do which of the following? A. Offer to pay a premium. B. Offer to de-expedite another part that is needed later than the original due date. C. Increase safety lead time by one week. D. Buy all the parts from an alternate source.

Overall explanation When expediting work at a supplier, an effective method is to reduce the supplier’s load on some other order. Since the supplier has limited capacity, rescheduling might mean that the supplier will accept the expedite without adding costs.

1198. What can make producing an unrealistic final assembly schedule (FAS) a worse problem than producing an unrealistic master production schedule (MPS)? A. An FAS is the last step of the MPS, so there is less time to make corrections. B. An FAS is based entirely on actual customer orders. C. The shorter planning horizon for an FAS magnifies the impact of forecasting error. D. An FAS is based entirely on forecasts.

Overall explanation The consequences of an unrealistic FAS can potentially be more severe than those of an unrealistic MPS because an FAS is based entirely on actual customer orders and has no forecasted component, meaning any change will directly impact a customer order.

1199. Production orders are riskiest to dispatch without knowing: A. operator availability. B. information availability. C. purchased part availability. D. equipment availability.

Overall explanation Purchased parts are from an outside source and are hardest to control.

1200. A component has three qualified suppliers, but none has been designated as the primary supplier. Which of the following lead times should be used by material requirements planning in order to ensure delivery reliability? A. Shortest B. Historical C. Average D. Longest

Overall explanation The longest lead time ensures that sufficient lead time is provided if that supplier is selected. If one of the other suppliers is selected, they receive an order and additional lead time for delivery.

1201. In a job shop environment, the technique that results in a short-term, planned set of projected completion times for operations and simulated queue levels is: A. capacity requirements planning. B. operations sequencing. C. constraint-based scheduling. D. infinite loading.

Overall explanation Operations sequencing is a technique for short-term planning of actual jobs to be run in each work center based upon capacity and priorities. The result is a set of projected completion times for the operations and simulated queue levels for facilities.

1202. Increasing lead times in an effort to get more work done and meet the schedule will most likely result in: A. decreased production lead time. B. decreased planned order releases. C. increased capacity. D. increased queue times.

Overall explanation Increasing lead time will cause increased work in process, which will increase queues.

1203. Which is an advantage of back scheduling? A. Takes advantage of excess capacity. B. Avoids inventory buildup and cost. C. Commits resources as early as possible. D. Levels the workload.

Overall explanation Back scheduling enables manufacturing to avoid committing resources until needed, thus avoiding a buildup of inventory and cost.

1204. The portion of setup that is charged to the order includes: A. storing tools from the previous job. B. installing tooling. C. verifying information. D. obtaining tools.

Overall explanation Tool installation is performed when the equipment is not operating and is costed as internal setup time.

1205. Which of the following describes central point scheduling? A. It proceeds sequentially from the initial period to the final period while observing capacity limits. B. It uses both forward and backward scheduling, starting from the scheduled start date of a particular operation. C. It automatically or manually interrupts the process to allow the scheduler the opportunity to review. D. It requires every piece in a lot to be finished at one work center before any piece in the lot can be processed at the succeeding work center.

Overall explanation Central point scheduling employs both forward and backward scheduling, starting from the scheduled start date of a particular operation.

1206. Which of the following would have the most impact on the use of a production activity control (PAC) system? A. Grouping production equipment into focused work cells B. Implementing modular bills of material for items with options C. Changing the rate of production in a continuous manufacturing process type D. Adding a new workstation that uses the work center manufacturing process type

Overall explanation

1207. What is the throughput per year if sales revenue equals $250 million and totally variable costs equal $100 million for the year? A. $350 million per year B. $100 million per year C. $150 million per year D. $2.5 million per year

Overall explanation The Dictionary definition of throughput says in part, “If the goal units are money, throughput is an amount of money per time period. In that case, throughput is calculated as revenues received minus total variable costs and then divided by units of the chosen time period.” Revenues are $250 million minus $100 million of totally variable costs = $150 million. This amount divided by one year equals $150 million per year.

1208. Which production activity control scheduling technique often involves searching orders for ones that have the same setups as the last batch but just for one or more particular work centers? A. Lean scheduling B. TOC drum-buffer-rope C. Priority sequencing D. MRP-based scheduling

Overall explanation The TOC (theory of constraints) drum-buffer-rope scheduling method approaches job sequencing by considering how to maximize throughput at bottleneck work centers first. One way this is done is by searching orders for the same setup as the last batch at bottleneck work centers and moving those to the top. Non-bottleneck work centers still use priority sequencing rules.

1209. Which of the following may prevent effective shop floor control? A. Lack of valid due dates B. Lack of frequent rescheduling C. Lack of rarely needed tooling D. Lack common exceptions

Overall explanation Lack of valid due dates can inhibit control of the shop floor.

1210. A company operates in a pull environment with final assembly lines in synchronous mode. Subassemblies maintain buffers ranging from hours to days. What would be a global production performance measurement? A. Planned throughput rate compared to actual rate B. Planned order completions compared to actual completions C. Planned number of setups compared to actual setups D. Standard hours compared to actual hours

Overall explanation All work centers can measure throughput rate and relate to the rates of the final assembly lines they support.

1211. What information do item master files provide to production activity control? A. Operations required and sequence of work centers used B. Shop order quantities and order due dates C. Part number and description D. Shop floor pick lists for the shop order packet Overall explanation The item master files provide the part number and description; quantity on hand, available, and on order; manufacturing lead times and lot size quantities.

Overall explanation Operation overlapping may be used to reduce manufacturing lead time by moving pieces to the second work center before the first operation has completed the entire quantity on the order.

1212. Overlapping is used to compress lead time by: A. consolidating setups. B. grouping operations to run concurrently. C. starting the second operation before the first has completed the full quantity. D. choosing alternate routings so that orders can run concurrently.

1213. What information does capacity requirements planning (CRP) provide to production activity control (PAC)? A. Materials to purchase and their lead times B. Shop floor load information C. Planned and released orders D. CRP is done by the point PAC starts, so no information is needed.

Overall explanation CRP is used to calculate load on work centers based on planned and released orders from material requirements planning (MRP). Past-due orders, rework orders, and work in process are also inputs to the load calculation. This information on load is a key input to scheduling in PAC. It should be clear that MRP and CRP need a great deal of accurate data (both static and dynamic) from the shop floor to determine load.

1214. What will happen if internal setup tasks are converted to external tasks (for example, organizing tools and materials for setup while the machine is still running a batch)? A. Setup time will be reduced and the operation’s throughput and velocity will be increased. B. Setup time will be increased and the operation’s throughput and velocity will be reduced. C. The complexity of the setup will be increased, thus increasing the lead time to make a product. D. The overall lead time for the product won’t be affected.

Overall explanation Converting internal setup tasks to external tasks is one of the five steps for reducing setup time. Reducing setup time increases operations velocity and throughput.

1215. Which of the following statements about finite capacity loading is true? A. It does not require the ability to determine priorities when loading jobs. B. It is a simpler process than infinite capacity loading. C. It does not require knowing the capacity available in each time period. D. It requires recalculating load when the schedule is missed.

Overall explanation Missed schedules result in load that must be accounted for when determining available capacity.

1216. What is the term for the splitting of a set of operations of a specific order into subgroups so that each can be run on a different machine? A. Job splitting B. Group splitting C. Operation splitting D. Order splitting

Overall explanation Dividing a lot into two or more sublots and simultaneously processing each sublot is known as operation or lot splitting.

1217. In a company that regularly has a past due order condition, backward scheduling in material requirements planning and forward scheduling in an assemble-to-order environment have what in common? A. Both techniques calculate the same critical path. B. Both techniques use the same required dates. C. Both techniques use the same lead times. D. Both techniques identify the same start dates.

Overall explanation Both will use either a standard or calculated lead time.

1218. Which of the following scheduling techniques is used in an assemble-to-order environment for customer order promising? A. Rate-based B. Backward C. Mixed-model D. Forward

Overall explanation Forward scheduling enables current orders to be accounted for when determining a new order’s ship date.

1219. The following information is available about jobs in a work center. It is now day 150. Using the priority rule of critical ratio, what is the desired job sequence? Job Arrival Sequence Processing Time (Hours) Date Due Workdays Remaining A 1 5 156 4 B 3 3 153 3 C 2 2 152 1 D 4 4 152 3 E 5 1 155 2 A. A, B, C, D, E B. C, E, B, D, A C. D, B, A, C, E D. E, C, B, D, A

Overall explanation The critical ratio is the time remaining divided by the work remaining; the time remaining is the date due minus the current day. * Job A time remaining = 156 – 150 = 6 days; critical ratio = 6/4 = 1.5 * Job B time remaining = 153 – 150 = 3 days; critical ratio = 3/3 = 1 * Job C time remaining = 152 – 150 = 2 days; critical ratio = 2/1 = 2 * Job D time remaining = 152 – 150 = 2 days; critical ratio = 2/3 = 0.7 (rounded) * Job E time remaining = 155 – 150 = 5 days; critical ratio = 5/2 = 2.5 Sorted in order from lowest to highest critical ratios: D (0.7), B (1), A (1.5), C (2), E (2.5)

1220. Dispatching a production order results in: A. balancing input with output at the work center. B. changing the planned start date to the actual start date. C. ensuring that required resources are available. D. sequencing the production order for work.

Overall explanation Dispatching sequences the orders.

1221. Which of the following reporting points is of most use when determining run times? A. Setup complete B. Production order complete C. Partial quantity complete D. Move complete

Overall explanation Run time is calculated by multiplying the run time per piece by the size of the order. Knowing when the order is completed can provide the run time per piece.

1222. Which of the following is least likely to focus on throughput? A. Lean manufacturing B. Theory of constraints C. Activity-based costing D. Total quality management

Overall explanation Activity-based costing is focused on the actual costs incurred for one item.

1223. A shoe manufacturer receives two orders minutes apart. The first order, A, is for 100 trainers in ten colors to be delivered in three weeks. The second order, B, is for 200 white trainers to be delivered in two weeks. The manufacturer assigns order A to be completed first. What is this dispatching rule called? A. First come, first served B. Earliest job due date C. Shortest process time D. Earliest operation due date

Overall explanation With first come, first served (FCFS), jobs are done in the order in which they are received, regardless of due dates and processing times. This dispatching rule works well if schedules are well-designed and stable.

1224. Based on the schedule below, what can be concluded about situation B? A. Operation 10 is not a setup operation if operation 20 is a run operation. B. Total job duration has been increased due to operation overlap. C. The percentage of operation overlap is different from that in situation D. D. It is impossible to overlap operation 10 with operation 20.

Overall explanation Situation B is characteristic of an overlap operation. Note that operation 20 has started while operation 10 is only halfway through the job. Therefore, operation 10 cannot be a setup operation.tart date and/or due dates for each operation.

1225. Starting with the due date for the order is an example of: A. backward scheduling. B. process scheduling. C. finite scheduling. D. forward scheduling.

Overall explanation Backward scheduling starts with the due date for the order and works backward from the last operation to determine the required

1226. In a service environment with a sufficient labor force, what is often still a labor scheduling constraint when attempting to balance supply and demand in the short term? A. Skilled labor pool shortage B. Equipment capacity C. Overscheduling D. Cross-training

Overall explanation For service industries, assigning labor schedules is the primary way that supply and demand are balanced in the short term. Equipment capacity can still play a role (e.g., too many cooks in the kitchen), however.

1227. Earliest job due date is an example of: A. dispatching. B. available-to-promise. C. a chase strategy. D. infinite scheduling.

Overall explanation Earliest job due date is one of the dispatching rules used to determine which job should be run first at an operation.

1228. Which of the following actions should a dispatcher perform in an environment where there is excess capacity in order to meet a shortage at a downstream operation? A. Paying a premium B. Splitting the lot C. Expediting D. Paying overtime

Overall explanation The dispatcher should split the lot so the required quantity is done in less time.

1229. When measuring shop floor performance, which method will encourage not producing unwanted product? A. Efficiency B. Schedule completion C. Utilization D. Productivity

Overall explanation Schedule completion encourages performance to plan.

1230. In what environment is queue time often the majority of lead time? A. Process flow production B. Job shop C. Repetitive manufacturing D. Kanban pull system

Overall explanation Queue time is typically over 90% of the manufacturing lead time in a job shop. You could contrast this with repetitive or process flow production where there might be very little queue time.

1231. Which of the following measurements is typically calculated for each production order? A. Efficiency B. Run time C. Internal setup D. Utilization

Overall explanation Run time is the only one dependent on the lot quantity.

1232. It is determined that it is not possible to complete all the jobs at a work center on time. To solve the problem, the dispatcher removes the job that will take the longest and reschedules it so that the remaining jobs will be completed on time. This sequencing technique is an example of: A. the critical ratio. B. the earliest job due date. C. first come, first served. D. the shortest processing time.

Overall explanation The shortest processing time rule directs the sequencing of jobs in ascending order by processing time.

1233. Manufacturing lead times can be reduced by: A. ensuring that there is a backlog of work so that no machines are idle. B. reducing input at bottleneck work centers. C. increasing the number of operators at the work center. D. reducing planned queue times at work centers.

Overall explanation Queue time makes up most of the lead time, so reducing what is planned will reduce the amount of time the product is in process.

1234. Manufacturing lead time represents the: A. time from the receipt of a customer order to the delivery of the product. B. longest planned length of time to accomplish the activity in question. C. total lead time required to obtain a purchased item. D. total time required to manufacture an item, exclusive of lower-level purchasing lead time.

Overall explanation Manufacturing lead time represents the total time required to manufacture an item, exclusive of lower-level purchasing lead time. For make-to-order products, it is the length of time between the release of an order to the production process and shipment to the final customer. For make-to-stock products, it is the length of time between the release of an order to the production process and receipt into inventory. Included are order preparation time, queue time, setup time, run time, move time, inspection time, and put-away time.

1235. A work order for an operation is divided into two lots and runs concurrently on two machines. Which of the following techniques is being used? A. Lot overlapping B. Lot splitting C. Lot sizing D. Lot sequencing

Overall explanation Lot splitting divides a work order into two lots and runs it concurrently on two machines, which reduces manufacturing lead time.

1236. Which of the following labor reporting elements is most important to a continuous improvement program in a standard cost environment? A. Standard production order hours B. Actual setup hours C. Standard internal setup hours D. Actual run hours

Overall explanation Actual run hours can be compared to the standard to determine any variance.

1237. Which of the following statements about utilization of resources is true? A. Increasing the utilization of an operation increases throughput. B. Utilization is the minimum number of hours expected from the work center. C. The objective should be 100% utilization of all resources. D. A bottleneck is a pacing operation.

Overall explanation Production should be paced using the throughput of any bottlenecks.

1238. Which of the following is a type of flow manufacturing? A. Mass/continuous B. Intermittent C. Line balancing D. Balancing operations

Overall explanation Flow manufacturing processes include repetitive, batch flow, and mass/continuous types. In flow manufacturing, material flow usually is uninterrupted.

1239. The input/output report for a work center in the current period is showing an input queue at the work center. What is the most appropriate action? A. Decrease the work center input. B. Increase the work center output. C. Check the cumulative input/output report. D. Re-run capacity requirements planning.

Overall explanation It is necessary to check the cumulative report to determine if this is a one-period scenario or a trend occurring at the work center.

1240. Which of the following is most likely a reason for establishing order priorities with a final assembly schedule based on internal measures rather than on customer-oriented measures? A. The kanban quantity is larger than the lot size. B. The customer has a short order due date. C. Damaged product needs to be replaced. D. Key work centers are level-loaded.

Overall explanation Level loading is independent of any customer priorities.

1241. If safety stock is 1,000 units, the unit cost is $2, the lead time is 12 weeks, the service level is 90%, and demand is 3,000 units per week, what is the reorder point? A. 6,000 units B. 36,000 units C. 37,000 units D. 73,000 units

Overall explanation DDLT (demand during lead time) + SS (safety stock) = (3,000 units per week x 12 weeks) + 1,000 units = 37,000 units

1242. Which scheduling technique is effective for situations in which several bottleneck stages may exist? A. Mixed-flow scheduling B. Material-dominated scheduling C. Forward-flow scheduling D. Mixed-model scheduling

Overall explanation Mixed-flow scheduling is a procedure used in some process industries for building process train schedules that start at an initial stage and work toward the terminal process stages.

1243. Which element of flexibility is most related to the number of kanbans in the system? A. Having a certification program that ensures operator cross-training B. Ease with which movable equipment allows a layout to be reconfigured C. Having short internal setup times that permit frequent changeovers D. Ability of a work center to match the required output rate

Overall explanation The shorter the setup, the fewer the required kanbans.

1244. Which of the following statements is most true of a one-card kanban system? A. The two operations are not in line-of-sight. B. It often uses a visual signal instead of a card. C. The card quantity is equal to a one-day supply. D. It uses one combination move/production card.

Overall explanation A one-card kanban system typically has close operations, so the signal may be an empty spot for the next units or a different visual signal. In actual practice, cards are far less commonly used than visual signals.

1245. A door handle assembly is sold as an independent demand item. It has an economic order quantity of 500 units, and the average demand is 100 units per week. The stock keeping location holds 80 units of safety stock. There is a lead time of 3 weeks to order and receive units at the location. What is the order point using an order point system? A. 300 units B. 380 units C. 240 units D. 500 units

Overall explanation Order Point = Demand During the Lead Time + Safety Stock. Demand During the Lead Time = Units per Period × Lead Time = 100 units per period × 3 week lead time = 300 units during lead time. Order Point = 300 units during lead time + 80 units safety stock = 380 units.

1246. Which of the following sets the pace of production to match the rate of customer demand and becomes the heartbeat of any lean production system? A. Takt time B. Sensei C. Drum D. Buffer

Overall explanation Takt time sets the pace of production to match the rate of customer demand and becomes the heartbeat of any lean production system.

1247. Referring to the input/output report in the figure below, what observation would be accurate? Work Center Capacity Per Day: 16 Hours (All Units in Standard Hours) Mfg. Calendar Day 48 49 50 51 52 SUM Planned Input 16 16 14 13 20 79 Actual Input 14 16 12 15 16 73 Cumulative Variance -2 -2 -4 -2 -6 -6 Planned Output 16 16 16 16 16 80 Actual Output 12 18 14 15 19 78 Cumulative Variance -4 -2 -4 -5 -2 -2 Planned Backlog 8 8 8 6 3 7 Actual Backlog 8 10 8 6 6 3 A. Production increased a bit more than planned in part because inputs increased a lot more than planned; the backlog improved significantly. B. Production inputs improved because the actual backlog improved and production outputs improved because the capacity per day was exceeded in several cases. C. Despite significantly greater input than planned, production was very low but at least the backlog shrunk. D. Despite significantly less input than planned, production didn’t suffer too much, but the backlog is much lower than desired.

Overall explanation The cumulative input variance was -6 standard hours, so there was less input than intended, but despite this output was only -2 standard hours, which is close to the intended output level. However, the backlog should have remained fairly steady at 7 standard hours but instead was reduced to 3 standard hours, which could result in idle capacity if it is reduced further to 0 hours.

1248. Which of the following are the desired results of removing a kanban card from between two steps of a smooth-flowing process? A. Reduced inventory level and insertion of a kanban card to replace the one removed B. Reduced inventory level and exposure of problems C. Insertion of a kanban card to replace the one removed and exposure of problems D. Reduced inventory level, insertion of a kanban card to replace the one removed, and exposure of problems

Overall explanation Removing a kanban card from an inventory system that is in equilibrium will remove the inventory associated with the kanban and will throw the system into imbalance. The imbalance will enable the quality team to detect where the problems are arising due to less inventory in the system. These problems can then be attacked and the system returned to a state of equilibrium.

1249. What does mixed-flow scheduling mean? A. The last stage is scheduled first when the first stage is constrained by material supply only. B. The first stage is scheduled first when demand is low. C. An intermediate stage is scheduled first when the main bottleneck moves to a processor in that stage. D. Each stage may use either processor or material-dominated scheduling.

Overall explanation Mixed-flow scheduling is a “a procedure used in some process industries for building process train schedules that start at an initial stage and work toward the terminal process stages. This procedure is effective for scheduling when several bottleneck stages may exist. Detailed scheduling is done at each bottleneck stage” (Dictionary). Therefore, an intermediate stage would be scheduled first when the main bottleneck moves to a processor in that stage. Low demand does not require the first stage to be scheduled first, whereas constrained supply probably would. While it is true that each stage may use either processor or material-dominated scheduling, it is not directly related to mixed-flow scheduling.

1250. New equipment and workers are added to a constraint work center. If the process is linear and one unit is input and one is output per operation, what might occur next if demand does not change? A. The next slowest work center in terms of production rate may become the constraint. B. The market cannot become the constraint. C. The system will not have a constraint any more. D. The next fastest work center in terms of production rate may become the constraint. .

Overall explanation Since there is always a constraint in a system, when one constraint is removed, either the next slowest operation will become the constraint or the market will become the constraint, given the assumptions in the scenario. Even though demand did not change, the market could become the constraint if demand is less than the next slowest operation

1251. The kanban system is responsible not only for implementing the production schedule but also for: A. facilitating the continuous improvement of execution and control. B. eliminating the need for a raw material or component warehouse. C. replacing the annual physical inventory process. D. facilitating the material requirements plan.

Overall explanation The kanban system is responsible not only for implementing the production schedule but also for facilitating the continuous improvement of execution and control.

1252. A make-to-stock company purchases parts that are unique to the company. What is the best reason for establishing a received quantity tolerance that closes a remaining open balance on a purchase order? A. The company does not want to pay transportation and setup costs multiple times. B. The supplier may not produce the exact required quantity due to historical yields. C. The company routinely carries safety stock of sufficient quantity to cover a shortage. D. The parts are so inexpensive that dealing with a partial quantity is not cost-effective.

Overall explanation Small, inexpensive parts can be furnished with the next order and will be replanned by material requirements planning.

1253. Establishing a results-oriented, high-performance culture generally requires managers and other leaders to: A. foster competition in each department. B. increase the employee review cycle to once a month. C. set stretch objectives. D. implement a suggestion system.

Overall explanation Successfully leading the effort to foster a results-oriented, high-performance culture generally entails such leadership actions and managerial practices as setting stretch objectives.

1254. What is the term for a facility, function, department, or resource whose capacity is less than the demand placed upon it? A. Critical resource B. Bottleneck C. Buffer D. Work cell

Overall explanation A bottleneck is a facility, function, department, or resource whose capacity is less than the demand placed upon it. For example, a bottleneck machine or work center exists where jobs are processed at a slower rate than they are demanded.

1255. Which of the following environments would have the most predictable throughput? A. Intermittent B. Continuous process C. Assembly line D. Job shop

Overall explanation A continuous flow would have a predictable, steady throughput.

1256. A company seeking to increase flow and improve critically constrained resources in its supply chain would train employees on which of the following principles of theory of constraints management? A. Flow and capacity should be balanced. B. Consider all constraints simultaneously when establishing schedules. C. Utilization and activation of a resource are the same. D. Process batch sizes must be fixed.

Overall explanation For a process to be improved, all of the subprocesses must be reviewed and improved together. By improving one subprocess only, planners could cause a new constraint somewhere downstream in the overall process flow.

1257. What is another name for the bill of distribution? A. Distribution network structure B. Bill of labor C. Supply chain network D. Bill of resources

Overall explanation The bill of distribution is also called the distribution network structure.

1258. Effective distribution planning requires balancing customer service with the costs of warehousing, transportation, and: A. inventory. B. overhead. C. ordering. D. changing capacity.

Overall explanation Carrying more inventory may improve customer service, but it increases the cost of holding inventory and so must be balanced with customer service.

1259. What process of sorting and packing products eliminates the need for storage? A. Cross-docking B. Split delivery C. Floating inventory D. Honeycombing

Overall explanation Cross-docking is packing products on incoming shipments so they can be easily sorted at intermediate warehouses or for outgoing shipments.

1260. A company has both functional/low variety products and innovative/high variety products. The distribution deployment should include: A. shipping products to customers in the same manner as the competition. B. different strategies for the two different types of products. C. shipping products from regionally positioned distribution warehouses. D. shipping all products consistently.

Overall explanation When deciding how to distribute product to customers, operations should deploy different strategies for functional/low variety products and innovative/high variety products.

1261. Which is the best reason listed for an organization to maintain a complex supply channel with many echelons? A. Assemble-to-order goods can be postponed to the distribution center (DC) level for business-to-consumer (B2C) sales. B. Key competitors use a complex supply chain model with many echelons. C. Each echelon adds more costs than the value they add. D. Engineer-to-order goods are produced rapidly for business-to-business (B2B) sales.

Overall explanation A complex channel is used when it is necessary. The correct answer lists one possible reason why such a channel would be necessary. Such a channel is much more likely to be needed in B2C sales than in B2B sales. The ability to postpone final assembly to the DC level is a reason to maintain these DCs so as to help minimize total inventory.

1262. The movement of shipments using different types of equipment and combining the best features of each mode is called: A. line-haul transport. B. intermodal transport. C. freight brokerage. D. combined transport.

Overall explanation Intermodal transport refers to shipments moved by different types of equipment in order to benefit from the best features of each mode.

1263. An organization that focuses on internet sales of products purchased overseas and needs to delay expanding its distribution center footprint for as long as it can should seek to be superior in which metric? A. Supplier lead times B. High finished goods inventory turns C. Geographic location of distribution centers D. Maximum utilization of space in distribution centers

Overall explanation Inventory turns are important to profitability for a reseller and higher inventory turns can also reduce pressures on distribution center capacity. Maximizing distribution center space utilization could imply carrying too much inventory and distribution centers also start operating poorly when their utilization rates get too high.

1264. What does the term "distribution" refer to? A. Art and science of obtaining, producing, and distributing material and product in the proper place and in proper quantities B. General flow of merchants shipping between two departure/terminal areas C. Action of transporting someone or something or the process of being transported D. Activities associated with the movement of material, usually finished goods or service parts, from the manufacturer to the customer

Overall explanation Distribution is the action or process of supplying goods to stores and other businesses that sell to consumers.

1265. Which of the following computerized system components is most necessary with a random location storage system? A. Exception identification report B. Storage selection during put-away C. Random locator report D. Picking lists with locations

Overall explanation Pickers will not necessarily know the location or picking rules, so the logic must be computerized.

1266. Most organizations build a scorecard using key performance indicators (KPIs) to track and share information on transportation performance. What are some of these KPIs? A. On-time delivery, delivery consistency, cost of service B. On-time delivery, delivery consistency, backorder rate C. Inventory turnover, delivery consistency, backorder rate D. Delivery consistency, cost of service, units per transaction

Overall explanation KPIs that are often used to measure transportation performance include on-time delivery, quality of service, cost of service, on-time loading, delivery consistency, claims for loss and damage, and freight bill accuracy. The backorder rate, units per transaction, and inventory turnover are not transportation metrics.

1267. A distribution channel is defined as: A. the distribution route, from raw materials through consumption, that a product travels. B. the routes between the production facility and the distribution centers. C. the path a product travels through the distribution center from receipt to shipment. D. the distribution route from the production facility to the consumer.

Overall explanation A distribution channel is the distribution route, from raw materials through consumption, along which products travel.

1269. The function of planning, scheduling, and controlling activities related to mode, vendor, and movement of inventories into and out of an organization is known as: A. distribution. B. inventory control. C. transportation. D. supply chain management.

Overall explanation A terminal is a location where carriers load and unload goods to and from vehicles. It is also used to make connections.

1268. What is the key to reducing the organization’s overall terminal handling costs for a time period? A. Maximize the weight of individual shipments. B. Maximize the number of shipments handled by the same carrier. C. Use a customs broker. D. Use the air transportation mode more often.

Overall explanation By increasing the weight of individual shipments, creating more TL shipments, there will be fewer shipments during a particular time period and therefore lower terminal handling, pickup and delivery, and billing and collecting costs.

1271. Which of the following is a location where carriers load and unload goods to and from vehicles? A. Terminal B. Port C. Depot D. Dock

Overall explanation A terminal is a location where carriers load and unload goods to and from vehicles. It is also used to make connections.

1270. Which would reduce materials handling costs? A. Shipping directly to customers rather than using a break-bulk center B. Manually moving materials near at hand rather than going to get a forklift C. Shipping by full truckload rather than less-than-truckload D. Using traditional warehousing rather than cross-docking x

Overall explanation A terminal is a location where carriers load and unload goods to and from vehicles. It is also used to make connections.

1272. Which is most likely to reduce terminal-handling charges at an international shipping port that specializes in container ship loading and unloading? A. Removing pallets and shipping units in containers that use the full floor-to-ceiling volume for the maximum number of units B. Adding battery-powered radio frequency identification (RFID) units to all containers shipped there C. Shipping multiple containers on the same container ship rather than the same number of containers spread across multiple ships D. Billing and collecting from the carriers on a more timely basis

Overall explanation For shipping lines, terminal-handling charges are the costs of paying container terminals for unloading and loading during shipment. The use of bar codes or other automated identification methods (such as RFID) also reduces costs.

1273. Increasing the number of distribution centers usually results in a reduction in which of the following? A. Cumulative lead time B. Shipping times to the customer C. Transportation costs D. Safety stock

Overall explanation More warehouses typically means less time, and therefore less cost, for shipping to the customer.

1274. If a warehouse has a much worse record of errors in filling individual line items for orders than for other warehouses in the organization, which is the best process listed to audit to see if it is the root cause? A. Marshalling the shipment B. Zone picking of goods C. Dispatching the shipment D. Batch picking of goods

Overall explanation In marshalling, goods making up a single order are brought together and checked for omissions or errors. Order records are updated. Picking is the process of selecting items from storage and bringing them to a marshalling area. While this process might also be audited, since the errors are not being caught until they reach the customer, the error checking process definitely needs auditing.

1275. A stated goal of a continuous improvement project related to the order cycle is to significantly reduce the number of customers who are lost due to unacceptably long lead times. Which improvement would help most with this? A. Eliminating the order processing step B. Reducing the average duration of the order cycle C. Regularly expediting orders with a chance of being late D. Reducing the maximum duration of the order cycle

Overall explanation While reducing the average duration of the order cycle is also a useful improvement, it is the lead times that miss the target by the largest number of days that have the most chance of being significant to these customers.

1276. Use the information on the planned order releases from distribution centers (DCs) A and B in the figure below to complete the abbreviated central supply planning distribution requirements planning grid. What is Central Supply’s projected available balance for week 3? Week 0 1 2 3 DC A Planned Order Released 100 100 100 DC B Planned Order Released 200 200 Central Supply Lead Time: 2 Weeks Order Qty: 500 Units Week 0 1 2 3 Gross Requirements Projected Available 500 Planned Order Receipts Planned Order Releases Week 0 1 2 3 DC A Planned Order Released 100 100 100 DC B Planned Order Released 200 200 Central Supply Lead Time: 2 Weeks Order Qty: 500 Units Week 0 1 2 3 Gross Requirements 100 300 200 Projected Available 500 400 100 400 Planned Order Receipts 500 Planned Order Releases 500 A. -100 units B. 400 units C. 500 units D. 100 units

Overall explanation Since the DC information shows planned order releases already, the offsetting from the planned order receipts is not shown for these DCs and the orders can be directly summed as the gross requirements for each week for central supply. After that, calculate the projected available per week. Projected Available = Prior Period Projected Available + Planned Order Receipts – Gross Requirements. Week 1: 500 units + 0 units – 100 units = 400 units. Week 2: 400 units + 0 units – 300 units = 100 units. Week 3: 100 units + 0 units – 200 units = –100 units. Whenever the projected available would go negative, schedule a planned order receipt in that week for the order quantity amount. Therefore add 500 units in the planned order receipt for week 3 and using offsetting of 2 weeks, also add a planned order release for 500 units in week 1. Finally recalculate the week 3 projected available: 100 units + 500 units – 200 units = 400 units.

1277. If a company implements the time-phased order point (TPOP) technique rather than the order point technique, which of the following is a benefit that likely will be achieved? A. Planning of end items but not capacity for future lumpy demand B. Historical data to determine the optimum time to reorder C. Availability of future planned orders for current capacity planning D. Assistance in maintaining true dates of need for open orders

Overall explanation The TPOP technique provides planners with the ability to view supply and demand within a user-defined planning horizon. By providing a simulation of possible future supply and demand for an item, TPOP enables the planner to maintain the true dates of need for all orders, to use future supply requirements to plan for future capacities, and to see component demand requirements and capacity for future lumpy demand.

1278. Which of the following is the primary goal of distribution requirements planning (DRP)? A. Maintaining a well-balanced inventory at all appropriate locations within the network B. Delivering products on schedule in the quantities requested by the customer C. Accurately feeding the gross requirements into the master production schedule D. Decoupling the distribution plan from the production plan

Overall explanation The primary goal of DRP is to ensure that inventory is available in the right quantities and in the right places in the distribution channel.

1279. A company has made a decision to locate a new distribution center in an area that is currently serviced only by the manufacturing warehouse in order to improve customer service levels with faster deliveries and fewer item stockouts. Which of the following results should they expect? A. Total distribution network inventory will increase because of the additional location, though demand will be unchanged. B. Total distribution network safety stock will decrease, because there is more inventory in the distribution network. C. Faster customer deliveries from all locations will enable inventory turns to increase. D. Delivery time to existing distribution centers will increase, because of the delay in delivering to the new distribution center.

Overall explanation Any additional facility will introduce extra inventory into the network given that faster customer deliveries and fewer stockouts are desired.

1280. The lead time used in distribution requirements planning (DRP) is the: A. delivery lead time. B. order fulfillment lead time. C. manufacturing lead time. D. transit time to the warehouse.

Overall explanation DRP logic uses the in-transit time to determine when inventory should be available to be shipped from the supply facility.

1281. How is in-transit time accounted for in distribution requirements planning (DRP)? A. Offset in gross requirements B. Built into delivery time C. As safety stock D. As safety capacity

Overall explanation Just as material requirements planning offsets the lead time from the planned order release by the lead time, DRP offsets the in-transit time. The planned shipment to the receiving warehouse is the gross requirement for the supply warehouse.

1282. What is the primary goal of a distribution requirements planning (DRP) implementation for a multiple-level distribution network? A. To increase production efficiencies B. To balance transportation and warehousing costs C. To maintain a balanced inventory in the distribution system D. To minimize the inventory at the central warehouse

Overall explanation The primary goal of DRP is to maintain a well-balanced inventory across the distribution network.

1283. When seeking long-term stability in market share, a company has many alternatives, such as adding features and functions, keeping costs stable, or reducing costs and functionality. Each alternative has pros and cons. This type of company has likely: A. increased product features with hopes of spreading higher costs over more products. B. considered whether its products are candidates for outsourcing. C. accepted a lower margin with hopes for a future price increase. D. adopted overcoming tradeoffs as an operations strategy.

Overall explanation A company seeking market stability would likely adopt overcoming tradeoffs as an operations strategy.

1284. Which of the following is a replenishment system where signals from a manufacturer to a supplier are used to pull inventory replenishment through the system? A. Two-bin system B. Collaborative planning, forecasting, and replenishment C. Vendor-managed inventory D. Kanban

Overall explanation A kanban is a method of lean production that uses standard containers or lot sizes with a single card attached to each. It is a pull system in which work centers signal with a card that they wish to withdraw parts from feeding operations or suppliers.

1285. Which of the following communications is the primary means of notifying suppliers of needs in a make-to-stock environment where the company is minimizing in-plant inventories? A. Forecast B. Kanban C. Safety stock D. Blanket order

Overall explanation Kanbans or signals are used in a lean manufacturing environment. A forecast is an estimate of future demand, and they may have an impact on how much inventory might be bought or produced, they are more concerned with predicting demand than minimizing on-hand inventory. Safety stock is extra inventory kept in case of emergency. A blanket order is a type of long-term contract that allows the release of materials at pre-determined delivery dates, so it may help maintain certain inventory levels, but it does not actively minimize them.

1286. Which of the following is true in a bottleneck situation? A. Utilizing a non-bottleneck resource 100% of the time produces 100% utilization overall. B. Capacity and priority must be looked at independently. C. Establishing a time buffer before the bottleneck minimizes flow disruption. D. A bottleneck must be fed at a rate less than or equal to its capacity.

Overall explanation Establishing a time buffer prior to the bottleneck allows for any delay from the feeding workstation to be minimized.

1287. Which of the following best describes mixed-model scheduling? A. All of the above B. Provide flexibility at the cost of higher WIP C. Aims to produce each according to daily demand D. Produces some models for next year while making this year’s models

Overall explanation The goal is to build every item every day, according to daily demand, in order to minimize WIP and control costs. Production of next year’s models along with this year’s models is not a mixed-model scheduling practice.

1288. What is the term for an acceptable departure from a target value for a product’s ability to function as established by engineers? A. Spread B. Statistical process control C. Tolerance D. Specification limits

Overall explanation Specification results falling inside a product’s tolerance limits are considered acceptable. Results falling outside of tolerance limits are rejected and require either rework or scrapping. Specification limits are set by customer requirements and engineers and are usually fixed.

1289. An order is received for 3,600 items to be produced in a process that has an unavoidable scrap loss of 10%. What quantity should be started? A. 3,600 B. 3,960 C. 4,000 D. 4,360

Overall explanation The calculation is as follows: 3,600/(1 – 0.10) = 4,000 units.

1290. Which of the following is a capacity management plan that tracks performance to the capacity plans? A. Input/output control (I/O) B. Capacity requirements planning (CRP) C. Finite loading D. Rough-cut capacity planning (RCCP)

Overall explanation With I/O, planned inputs and outputs for each work center are developed by capacity requirements planning and approved by manufacturing management. Actual input is compared to planned input to identify when work center output might vary from the plan.

1291. Which formula is correct? A. Order Point = Demand During the Lead Time + Safety Stock B. Economic Order Quantity = (2AS/ic) C. Average Inventory = (Quantity + Safety Stock)/2 D. Safety Stock = Order Point + Order Quantity

Overall explanation Order Point (OP) = Demand During the Lead Time (DDLT) + Safety Stock (SS). "Average Inventory = (Quantity + Safety Stock)/2" is incorrect because average inventory is order quantity Q/2 + SS, not (Q + SS)/2. "Economic Order Quantity = (2AS/ic)" is incorrect because it omits the square root of the equation shown. Meanwhile, the formula "Safety Stock = Order Point + Order Quantity" is simply incorrect.

1292. Using the information provided below, what is the cumulative input deviation at the end of period 5? INPUT Period 1 2 3 4 5 6 Plan 400 400 450 450 500 500 Actual 450 430 440 480 520 530 Deviation Cumulative Deviation Output Period 1 2 3 4 5 6 Plan 400 400 450 450 500 500 Actual 360 410 530 460 520 540 Deviation Cumulative Deviation A. 40 B. 80 C. 120 D. 200

Overall explanation INPUT Period 1 2 3 4 5 6 Plan 400 400 450 450 500 500 Actual 450 430 440 480 520 530 Deviation 50 30 -10 30 20 30 Cumulative Deviation 50 80 70 100 120 150 Output Period 1 2 3 4 5 6 Plan 400 400 450 450 500 500 Actual 360 410 530 460 520 540 Deviation -40 10 80 10 20 40 Cumulative Deviation -40 -30 50 60 80 120

1293. What is a method for increasing throughput? A. Delivering materials to point-of-use B. Increasing order sizes to minimize setup C. Relieving bottleneck work centers D. Using group technology

Overall explanation Bottleneck work centers determine throughput time for the entire product line.

1294. What is the term for an element of time or material that can be maintained at the constraint, convergent points, divergent points, and shipping points? A. Drum B. Buffer C. Rope D. Safety stock

Overall explanation In the theory of constraints, buffers can be time or material, and they support throughput and/or due date performance. Buffers can be maintained at the constraint, convergent points (with a constraint part), divergent points, and shipping points.

1295. In the theory of constraints planning and control system, which of the following techniques facilitates the capacity control function? A. Drum schedule B. Pace of throughput C. Rope D. Buffer management

Overall explanation The buffer ensures that the process will never be "starved" for needed inventory. This buffer of inventory represents the amount of time that the inventory in the buffer protects the constraint from disruptions.

1296. A company has decided to redesign a product’s overall value chain to eliminate some cost-producing activities. This product is currently in the company’s broad differentiation strategy product group. What is the product likely moving to? A. Focused differentiation strategy product group B. Product group that will compete on delivery speed C. Focused low-cost strategy product group D. Innovation product group

Overall explanation A company competes on either an overall low-cost provider strategy, a broad differentiation strategy, a focused low-cost strategy, or a focused differentiation strategy.

1297. Characteristics of a product-service package that are considered a competitive advantage are also called: A. order winners. B. orders of magnitude. C. order qualifiers. D. perfect orders.

Overall explanation Order winners are characteristics (e.g., a capability or quality) that cause customers to choose a firm’s goods or services over those of its competitors. They can be considered a competitive advantage of the firm.

1298. A company’s electromechanical products are used heavily in sometimes unanticipated ways, thus leading to emergency service outages. The on-site repair team suggests that the products be made to automatically assess, diagnose, and report status. The cross-functional product review team sees this as an opportunity to increase overall product value. What would likely be the most impactful outcome of implementing this strategy? A. Providing data for continuous improvement B. Facilitating upstream integration C. Becoming a potential union problem if machine diagnostics replaces something a person could do D. Increasing the product’s order-winning features

Overall explanation Order winners are competitive characteristics that cause customers to choose a firm’s goods and services over those of its competitors. They are a competitive advantage for the firm. In this case, product design would be the order winner, ideally eliminating the expensive emergency service outages.

1299. What is a normal progression for a unique product characteristic that delights customers? A. it moves from an order qualifier to eventually become an order winner. B. It starts as an order winner and eventually becomes an order qualifier. C. It always starts off at the product introduction stage as the focal point for advertising and sales presentations and always moves to the growth stage. D. It becomes a likely catalyst for a line extension or a new product.

Overall explanation Such characteristics rely on their novelty, and they’re no longer novel once they are offered in the market. What was an order winner may in time become an order qualifier if it starts to be considered a standard requirement.

1300. Greens is a fictional high-end gourmet shop that stocks and prepares unique foods for sale. Their clientele are a specific group of people who like to eat well, cook gourmet meals, or entertain guests. Greens offers a wide selection of gourmet products and focuses on excellence in customer service. They learn their customers by name, deliver products to their homes or businesses, and notify them when their favorites are available. Because of their business strategy, they have gained a loyal following with high customer satisfaction. How would you recommend Greens manage its competitors? A. Don’t focus on current competitors. Think about future growth. B. Focus on maintaining a quality and service gap between Greens and its rivals. C. Increase spending on mass advertising to raise awareness throughout the market. D. Imitate the behavior of financially successful large chains. .

Overall explanation The best approach for Greens to take in managing its competitors is to focus on maintaining a quality and service gap. That is, Greens needs to ensure that its food offerings are of higher quality than its competitors

1301. What is an accurate description of order winning and order qualifying factors? A. There can be only one order winning factor involved in a customer’s decision to purchase a product or service. B. Performance must be above a certain level in at least three performance objective categories for an order winning threshold to be attained. C. Quality must always be one of the order winning factors of performance. D. Order qualifying factors represent minimal requirements, while order winning factors exceed expectations.

Overall explanation Order qualifying factors represent minimal requirements, while order winning factors exceed expectations. The other answer choices define the terms too precisely. For example, quality may or may not be the order winning factor, and the number of factors may vary.

1302. Business-to-business customers have said that new products being rolled out need to have reasonable delivery reliability and price but insist on a product design that meets exacting precision requirements, so it integrates with their product without costly rework. They do not care about delivery speed because they are able to place their orders far in advance. Which of the following strategies would be most likely to delight these customers? A. Create a good design with best-in-class delivery reliability and a reasonable price by focusing on high production rates and inspections to ensure that only products that match the exacting specifications go out the door to the customer. B. Consider product design, delivery reliability, and price to be order winners to focus on so as to exceed expectations. C. Consider product design to be the only order winner to focus on, work to be above average at delivery reliability and price, and make-to-order and ship via slow and inexpensive methods when given sufficient lead time. D. Consider product design to be the only order winner to focus on and accept that this will require a higher-than-average price, use slow and inexpensive shipping to compensate, and work on great delivery reliability using a make-to-stock strategy.

Overall explanation The combination of product and related services will delight customers when their order qualifiers are all met and their order winner qualities are kept as the highest priority. In this case, the organization does not try to make all things be order winners but focuses on great product design. They use slow shipping methods and make-to-order to keep their costs down and offer a price that keeps it as an order qualifier. Any extra costs required to ensure above-average delivery reliability could then be absorbed.

1303. What factors would prompt a manufacturer of playground equipment to choose to be assemble-to-order (ATO)? A. Quality used to be a customer order winner but now is a qualifier, and the product’s life cycle is moving into maturity. B. A customer order winner is delivery speed, and the push/pull frontier needs to be at the end-item level. C. After-market service used to be an order winner but now is a qualifier, and the product’s life cycle is moving into decline. D. A customer order winner is flexibility, and the push/pull frontier can be at the module level.

Overall explanation Order winners and qualifiers plus the location of the push/pull frontier are two of the strongest determinants of the type of manufacturing environment (or service environment) an organization will need to have. In this case, the need for flexibility and the ability to use actual customer orders for modular assembly both point to using ATO.

1304. Two companies offer comparable products with relatively similar quality and pricing, but one company dramatically leads the market due to its after-sales support. This is an example of: A. an order survey. B. an order qualifier. C. an order winner. D. order follow-up.

Overall explanation After-sales support often separates competitors, when customers know that one company stands behind its products while the other is only interested in the initial sale.

1305. A company’s products compete in a market with highly variable demand. Management agrees that a good way to win sales for these products is to add capacity, even though it may be underutilized. What is most likely the primary order winner for this product? A. Cost B. Flexibility C. Quality D. Customization

Overall explanation Flexibility is the ability of the manufacturing system to respond quickly, in terms of range and time, to external or internal changes. Having excess capacity allows for changeover flexibility so that the organization can react to customer demand changes.

1306. What strategic-level benefit can result from incorporating sustainability policies in the strategic planning process? A. Adding measurable activities to job descriptions for facilities personnel B. Increasing expertise and diversity at the board of directors’ level C. Reducing transportation costs for some classes of freight D. Avoiding plant-level regulatory fines

Overall explanation The board of directors’ level would be strategic. The other responses would be tactical, not strategic.

1307. In corporate social responsibility, three measures of company performance are the economic dimension, the social dimension, and: A. the cultural dimension. B. the diversity dimension. C. the political dimension. D. the environmental dimension.

Overall explanation Embracers of sustainability are much more likely to have a solid business-case definition of sustainability such as the triple bottom line (social, economic, environmental) and are much more likely to see the financial benefit.

1308. Supporters of sustainability view it as a means to: A. prevent lawsuits. B. gain recognition in developing countries. C. gain a competitive edge and increase market share. D. stay ahead of environmental regulations.

1309. Which of the following is a preferable strategy for the prevention of pollution? A. Have at least one source of renewable energy in use at each facility. B. Ensure that all effluents emanating from a facility are monitored. C. Design products that use fewer resources and cause less pollution. D. Plan for multiple energy sources to power critical resources.

Overall explanation Designing products that use fewer resources and cause less pollution is preferable and can reduce the overall cost of production.

1310. A company’s sustainability strategy first has an impact on: A. employee training. B. employee attrition. C. product and process design. D. recycling of by-products and co-products.

Overall explanation In order for sustainability to be an organizational strategy, it must start in the product and process design phase.

1311. Which of the following areas in the UN Global Compact contains the principle calling for the elimination of discrimination in respect of employment and occupation? A. Human Rights B. Environment C. Labour D. Anti-Corruption

Overall explanation Principle 6, which is located within the Labour area of the UN Global Compact, calls for the elimination of discrimination in respect of employment and occupation.

1312. A key design factor for today’s manufacturers might include taking product back at the end of its life cycle to dispose of properly. This would be an example of: A. circular logic. B. sustainability. C. energy efficiency. D. anti-corruption.

Overall explanation Sustainability includes activities that provide present benefit without compromising the needs of future generations.

1313. An organization is working to earn the ASCM Enterprise Certification. What can make it more difficult to satisfy the certification’s checklist related to plan, source, transform, order, fulfill, return, and orchestrate? A. The organization has a highly complex supply chain. B. The organization is at the "civil" stage of corporate social responsibility maturity. C. The organization has a locally adaptive approach to globalization and supply chain management. D. The organization’s culture places high value on sustainability and so has high expectations for its supply chain.

Overall explanation As the supply chain grows more complex, it becomes more difficult to know with certainty suppliers’ and distributors’ social and environmental conditions. Maintaining a sustainable supply chain may require use of third parties to assess and monitor supplier conditions.

1314. Which of the following actions will a company most likely take as a primary focus of its level production strategy to deal with demand peaks while meeting standard lead time delivery? A. Produce ahead. B. Subcontract. C. Work overtime. D. Level load demand.

Overall explanation Building up inventory is used to buffer peak demand.

1315. The table below provides an example of which production strategy? Quarters 1 2 3 4 Opening Inventory = 10 Inventory 10 10 10 10 Planned Production 20 25 30 35 Sales 20 25 30 35 A. Level B. Chase C. Balanced D. Hybrid

Overall explanation The planned production follows the shipment amounts, so this is a chase production strategy.

1316. A company intends to cut its backlog from four months to two. Annual demand is 360 units. What is the number of units that should be included in the production plan? A. 300 units B. 360 units C. 420 units D. 720 units

Overall explOverall explanation The planned production follows the shipment amounts, so this is a chase production strategy.anation The production rate is 30 units per month. To decrease backlog, an extra 60 units should be produced above the annual demand of 360 units.

1317. The production planning process uses which of the following time fences? A. Demand time fence B. Planning time fence C. Production planning time fence D. There are no time fences in production planning.

Overall explanation The production plan uses the planning horizon of the sales and operations plan but no time fences.

1318. An MTO company would like to cut a product’s backlog from six to four months. If annual demand is 360 units, the production plan for this year should be how many units? A. 480 units B. 360 units C. 420 units D. 300 units

Overall explanation In an MTO environment, reducing the backlog by two months requires producing and shipping two additional months worth of units. The annual demand of 360 units equals a monthly average of 30 units, so 60 additional units would be required. The annual demand of 360 plus the 60 additional units to reduce the backlog would equal 420 units.

1319. The role of the quality department in implementing total quality management (TQM) includes which of the following? A. Evaluating suppliers based on quality of material received B. Training employees on quality concepts and techniques C. Serving as team leads for self-directed work teams D. Testing products for conformance to specifications

Overall explanation Management should be the first to be trained in TQM to show their commitment and support of the project. That training must then be rolled down to individual employees by teaching them the tools of quality; this should come from the quality department.

1320. If the backlog is higher than the planned amount, which of the following elements is likely to be increasing? A. Employment concerns B. Quoted lead times C. Work in process D. Cycle times

Overall explanation An increase in backlog indicates that order delivery dates are longer than targeted.

1321. The automaker Toyota turned societal concerns for fuel efficiency and automobile emissions into an industry-leading hybrid car strategy that enabled them to gain early market leadership. How does this strategy measure up against the Triple Bottom Line? A. It delivers benefits in all three areas of the TBL. B. It sacrifices economic gain for social and environmental good. C. It focuses primarily on environmental and economic areas. D. It demonstrates the tension that is created between the desire to deliver social and economic good.

Overall explanation It produces benefits for people (interests in doing good for the environment), planet (lowered use of carbon-based fuels and emissions), and profit (increased company competitive advantage).

1322. Which of the following statements about production planning is true? A. Production plan families are broken down into material requirements planning items and the time frame changed to days or weeks. B. The production plan should be frozen for at least the cumulative lead time of the product. C. Production planning is a process that a company uses to plan its resources to change either backlog and/or finished goods inventory. D. Production planning should be processed on a weekly basis and in detail by unique end items.

Overall explanation A company uses production planning to plan its resources to change either backlog and/or finished goods inventory.

1323. Which of the following actions to improve the validity of the master schedule is most under the master scheduler’s control? A. Identifying sources of demand problems B. Aggregating capacity by flattening bills of material C. Improving the accuracy of the resource bills of material D. Reducing sources of supply problems

Overall explanation Maintaining the resource bills of material to reflect current conditions has an ongoing impact on the validity of the master schedule.

1324. Which of the following key resources is most likely to be used to validate the production plan in a high-volume company that produces a number of families of windows, including standard and custom sizes and unique designs? A. Plate glass B. Housing starts C. Labor hours D. Production rate

Overall explanation Hours is the common denominator given the variety of product families.

1325. What constrains the production plan? A. Load planning B. Resource plan C. Effectivity plan D. Option overplanning

Overall explanation The resource plan identifies when the production plan cannot be met due to a resource constraint.

1326. Which basic production planning strategy will build inventory and avoid the costs of excess capacity? A. Chase strategy B. Demand matching strategy C. Product-based strategy D. Level production strategy

Overall explanation Chase and demand matching strategies are the same, and do not build inventory because they are designed with the capacity and flexibility to match variations in demand over time. Meanwhile, a product-based strategy is not a production strategy. Therefore, level production strategy is the correct answer.

1327. A manufacturer is unable to meet a customer’s demand with their current in-house capacity and strategy. Assuming that there are no secret and minimal proprietary design factors, to which strategy could they turn to meet demand while neither incurring greater inventory costs nor reducing their own capacity? A. Adding overtime shifts B. Redesigning the product C. Partnering with a competitor D. Subcontracting

Overall explanation Subcontracting provides the opportunity to meet demand in excess of capacity without undue changes in capacity or staffing levels. There is no excess inventory cost, because supply should always meet the minimum level of demand. However, purchasing and then reselling products or services to fulfill the remaining demand will tend to result in lower profit margins. There may also be quality issues.

1328. A company is ready to introduce a new product family that has many of the criteria the market is demanding. Which of the following production strategies is most applicable for the introduction phase of the new product family? A. Hybrid B. Chase C. Level D. Ramp-up

Overall explanation Demand is unknown, but the company believes that sales will be good. Some inventory buildup enables the company to be somewhat flexible for the actual timing and quantity of demand. For this reason, chase is not the best option. Level is not the best option either because the amount of demand for the year is not yet known.

1329. Which of the following production strategies should show the most consistently high capacity performance? A. Optimized B. Chase C. Hybrid D. Level

Overall explanation In a level strategy, the company controls both the planned load and the available capacity.

1330. Which of the following processes sets the projected backlog level at the product family level? A. Business planning B. Demand management C. Master scheduling D. S&OP

Overall explanation It is during S&OP that the overall supply levels are set, the inventory level is planned, and the projected backlog level is planned at the product family level within defined supply constraints. Master scheduling, business planning, and demand management are incorrect because S&OP takes place before master scheduling, after business planning, and after demand management provides input.

1331. Which of the following is most true in a production environment with products that are subject to cyclical, random, seasonal, and trend types of demand? A. The hybrid production strategy is used to vary capacity. B. Temporary help is used to vary capacity. C. Forecasting is primarily based on historical demand. D. Finished goods inventory is a demand buffer. x

Overall explanation Planned production per period equals the total production required divided by the number of periods (18 months in this example). Total production required equals the total forecasted demand (72,000 units) minus the beginning inventory (4,800 units) plus the ending inventory (6,600 units); 72,000 – 4,800 + 6,600 = 73,800. Planned production per period = 73,800 units/18 months = 4,100 units per month.

1332. What monthly unit production amount would be required to satisfy the production plan given the following information? Planning Horizon 18 Months Working Days Per Planning Period 22 Production Planning Approach Level Total Demand 72,000 units Beginning Inventory 4,800 units Target for Ending Inventory 6,600 Planned Lot Size 2,000 A. 3,900 units B. 4,000 units C. 4,100 units D. 6,000 units

1333. The average of the absolute values of the deviations from some expected value” best defines which of the following terms A. Mean average deviation B. Mean absolute deviation C. Standard deviation D. Forecast error

1334. Tracking signals are computed by which of the following methods? A. Multiplying the MAD by four B. Increasing the α coefficient to the MAD C. Dividing the cumulative sum of errors by the MAD D. Dividing the average error by the trip value

Overall explanation The cumulative sum of errors divided by the MAD is the correct computation of a tracking signal. The cumulative sum of errors is also referred to as the running sum of forecast error. Dividing the average error by the trip value is incorrect because the trip value is a threshold predetermined by management. Multiplying the MAD by four is incorrect because it is one way to calculate a trip value. Increasing the α coefficient to the MAD is incorrect because the α coefficient can be adjusted to place more emphasis on recent information, but is not used to compute the tracking signal.

1335. An error in the demand forecast trend over several years will have the greatest impact on which of the following processes? A. Capacity requirements planning B. Business planning C. Master production scheduling D. Branch warehouse replenishment

Overall explanation An error in recognizing a forecast trend can impact planning on all levels. The key here is that the trend is occurring over several years. It would therefore most affect business planning, which looks at the long term.

1336. A company uses a moving average to forecast on a monthly basis, and it has many customers with varied demand. Which of the following is the best example of a root cause of an outlier in the forecast? A. Actual demand for a period that causes the next period’s forecast to exceed the median B. One customer order within a period that is 10 times larger than any other order C. Actual demand for a period that is three standard deviations greater than the forecast D. Shutdown of the company for a month with no customer orders accepted

Overall explanation Not accepting orders for a period will artificially drive the forecast down for the following periods. Orders will always vary in size.

1337. An organization has set a trip value of ±3.0 and has calculated the algebraic sum of forecast deviations as –70 and the mean absolute deviation as 25. What is the tracking signal, and what course of action does that indicate for the organization? A. The tracking signal is –2.8; no forecast reevaluation is necessary. B. The tracking signal is –2.8; the forecast is significantly biased and must be reevaluated. C. The tracking signal is –0.36; no forecast reevaluation is necessary. D. The tracking signal is –0.36; the forecast is significantly biased and must be reevaluated.

Overall explanation Tracking signal is calculated by dividing the algebraic sum of forecast deviations by the mean absolute deviation. Using the numbers given in the question, this results in a tracking signal of –2.8. The organization has set a trip value of ±3.0. Since the tracking signal falls within that range, the organization does not need to reevaluate the forecast, as the bias is considered within the appropriate range.

1338. What is the mean absolute deviation given the following sales performance data? A. 4 B. 5 C. 6 D. 7

Overall explanation The answer is solved using the following equation: MAD = Sum of Absolute Deviations/Number of Observations In this case, that is 24/6 = 4.

1339. A new product is being introduced to the company’s product mix, which will have an effect on the current period material plan due to the cumulative lead time of the purchased parts. Which of the following actions would be of immediate value to the material planner? A. Analyzing orders that are likely to be late B. Modeling the key work center capacities C. Simulating the revised material plan D. Analyzing the product’s cumulative lead time

Overall explanation Simulating the new material plan will identify those items that will be out of balance, without disrupting the already balanced plan.

1340. An organization produces industrial-capacity printer systems. They sell relatively few units a year at a high margin. If this product’s technology clockspeed is low, what would be the best design and manufacturing philosophies? A. Integral design and make-to-stock manufacturing B. Modular design and push manufacturing C. Integral design and push-pull manufacturing D. Modular design and pull manufacturing

Overall explanation The question describes a product that has low technology clockspeed, which is a product with a long life cycle. Since it has few buyers, its demand will by nature be unstable compared to a product with a much larger customer base. The combination of high demand uncertainty plus low new product introduction frequency enables an integral design to be the most efficient design choice. Push-pull manufacturing is called for to enable the organization to be make-to-order but have reasonable lead times. The long lead time sourcing and component manufacture requirements can be push, while the products themselves can be make-to-order and pull.

1341. Based on the information provided below, what is the actual March backlog? Period J F M A M J J A S O N D Sales Plan 50 50 60 60 80 90 70 50 40 40 40 40 Actual Sales 51 48 64 Difference 1 -2 Cumulative Difference 1 -1 Period J F M A M J J A S O N D Production Plan 50 60 60 70 70 70 70 50 50 50 50 40 Actual Production 48 61 60 Difference -2 1 Cumulative Difference -2 -1 Period J F M A M J J A S O N D Back Log Plan 30 20 20 10 20 40 40 40 30 20 10 10 Actual Backlog 30 Difference Cumulative Difference A. 20 B. 21 C. 23 D. 24

Overall explanation Period J F M A M J J A S O N D Back Log Plan 30 20 20 10 20 40 40 40 30 20 10 10 Actual Backlog 30 33 20 24 Difference Cumulative Difference

1342. Using the information provided below, how many employees are needed to accomplish the planned production assuming level production? Beginning Inventory 250 Units Total Annual Forecast Demand 60,000 Units Ending Inventory Target 250 Units Working Days Per Month 20 Days Number of Periods 12 Periods Employee Productivity 25 Per Day A. 10 employees B. 25 employees C. 200 employees D. 2,400 employees

Overall explanation The answer is calculated as follows: * Level Production per Period = Annual Forecast Demand - Beginning Inventory + Ending Inventory/Number of Periods = (60,000 units - 250 units + 250 units)/12 periods = 5,000 units per period * Units per Day = 5,000 units per period/20 days = 250 units per day * Number of Employees = Units per Day/Employee Productivity Rate = 250 units per day/25 units per day per employee = 10 employees

1343. Which of the following sales and operations planning results is most likely to be used to measure sales department performance in an engineer-to-order environment? A. Backlog plan B. Capacity plan C. Inventory plan D. Financial plan

Overall explanation Backlog in money or months of work is an indicator of the health of the company.

1344. What term indicates the percentage of time the work center is active compared to the available time? A. Utilization B. Productivity C. Yield D. Efficiency

Overall explanation Utilization = Hours Actually Worked/Available Time.

1345. In capacity requirements planning, scheduled receipts include: A. planned orders. B. firm planned orders. C. purchase orders. D. open production orders.

Overall explanation Open orders appear as scheduled receipts, coming from material requirements planning.

1346. Which of the following is true if a work center is overstated in terms of available production capacity? A. Capacity requirements planning becomes less useful as a feedback tool. B. Planned order-required dates won’t match customers’ order-required dates. C. The company will add capacity via additional personnel, tooling, or equipment. D. Efficiency will increase. x

Overall explanation Capacity requirements planning (CRP) refers to the process of determining in detail the amount of labor and machine resources required to accomplish the tasks of production.

1347. Which of the following capacity management techniques is most appropriately used to test the feasibility of the plans generated by material requirements planning? A. Input/output control B. Rough-cut capacity planning C. Capacity requirements planning D. Resource planning

Overall explanation Capacity requirements planning (CRP) refers to the process of determining in detail the amount of labor and machine resources required to accomplish the tasks of production.

1348. What term is used to show the result of calculating available time × utilization × efficiency? A. Standard hours B. Rated capacity C. Demonstrated capacity D. Efficiency

Overall explanation Rated Capacity = Available Time × Utilization × Efficiency.

1349. Which of the following is a display of future capacity requirements based on released and/or planned orders over a given span of time? A. Yield B. Customer order C. Load profile D. Capacity

Overall explanation A load profile, also known as a load projection or a load report, is a display of future capacity requirements based on released and/or planned orders over a given span of time.

1350. Based on the information provided below, what is the utilization for this work center? * Standard hours/part: 0.1 * Scheduled run time: 7.2 * Standard internal setup time: 0.25 hour * Scheduled downtime: 0 * Actual run time: 7.0 hours * Actual internal setup time: 0.1 hour * Total hours/shift: 8 * Resources: 1 * Shifts/day: 1 A. 88 percent B. 89 percent C. 91 percent D. 93 percent

Overall explanation Utilization = Actual Hours Worked/Hours Available = (7 hours actual run time + 0.1 hours actual setup time)/(8 hours x 1 resource x 1 shift per day)= 0.8875 rounded to 0.89 or 89%.

1351. Which of the following is a method for increasing capacity? A. Outsourcing B. Eliminating overtime C. Increasing worker flexibility D. Subcontracting

Overall explanation Actual capacity is more important than safety capacity for producing kOverall explanation Utilization = Actual Hours Worked/Hours Available = (7 hours actual run time + 0.1 hours actual setup time)/(8 hours x 1 resource x 1 shift per day)= 0.8875 rounded to 0.89 or 89%.nown orders in hand.

1352. What is a problem in reducing rated capacity in order to allow for safety capacity? A. It shows that actual received orders cannot be scheduled if demand warrants it. B. It affects related work centers even where safety capacity is not required. C. Rated capacity cannot be reduced due to the way it is calculated. D. Actual utilization and efficiency will cause it to be increased with the next calculation.

Overall explanation Actual capacity is more important than safety capacity for producing known orders in hand.

1353. A work center requires 36 standard hours to produce 200 units of a product. If the work center has an efficiency of 110 percent and a utilization of 80 percent, how many hours of available time will be required to produce the product? A. 26.2 hours B. 31.7 hours C. 40.9 hours D. 49.5 hours

Overall explanation Efficiency = Standard Hours Produced/Hours Actually Worked. Since you know the standard hours and efficiency but need the hours actually worked, start by solving for hours actually worked. Hours Actually Worked = Standard Hours Produced/Efficiency = 36 standard hours/1.1 = 32.73 actual hours. This would be the answer if utilization were 100 percent, but since utilization is only 80 percent the available time needs to be more than this. Utilization = Hours Actually Worked/Available Time. Solve for available time. Available Time = Hours Actually Worked/Utilization = 32.73 actual hours/0.8 = 40.9 hours.

1354. Based on the information provided below, what is the efficiency for this work center? Standard Hours/Part 0.1 Standard Hours Expected 7.2 Standard Internal Setup Time 0.25 Hours Scheduled Downtime 0 Actual Run Time 7.0 Hours Actual Internal Setup Time 0.1 Hours Total Hours/Shift 8 Resources 1 Shifts/Day 1 A. 95 percent B. 97 percent C. 103 percent D. 105 percent

Overall explanation Efficiency = Standard Hours Produced/Actual Hours Worked = (7.2 standard hours run time + 0.25 standard internal setup time)/(7 hours actual run time + 0.1 hours actual internal setup time) = 1.049 rounded 1.05 or 105 percent.

1355. A work order requires 220 units to be run. The setup time is 2 standard hours. The run time is 0.2 standard hours per unit. Queue and wait time are 0.5 standard hours per unit. What is the operation time for this work order? A. 44.0 standard hours B. 46.6 standard hours C. 46.0 standard hours D. 44.4 standard hours

Overall explanation Operation Time per Work Order = Setup Time + Run Time = Setup Time + (Quantity × Standard Time per Unit) = 2 hours + (220 units × 0.2 hours per unit) = 46 standard hours.

1356. A customer has doubled its order for ski boots, which means that the manufacturer will not be able to meet the tight deadline. In addition, some of the pre-made clasps have been rejected after suffering transit damage, which means expediting the ski boot order is not an option. What action remains to the planner to address these issues? A. Replanning B. Canceling the order C. Maintaining priorities D. Redesigning the product

Overall explanation Replanning becomes necessary when expediting is not possible for one or more materials due to shortages. It involves calculating a new net requirement and planned order release and receipt date. This may or may not result in a new due date for the end unit(s). Maintaining priorities is not possible at this time, a product redesign is an extreme and unworkable solution, and canceling the order would result in waste.

1357. Establishing which of the following requires extensive, time-consuming observation of workers and activities? A. Standard times B. Work schedules C. Manufacturing calendar D. Inventory

Overall explanation Establishing standard times usually requires extensive observation of workers and activities. This type of information can be time-consuming and expensive to gather.

1358. A company has a drilling department with 5 drill presses. The department operates 8-hour days, 5 days a week. What is the weekly available time in hours? A. 25 hours B. 40 hours C. 80 hours D. 200 hours

Overall explanation The calculation requires multiplying the 5 drill presses by the 8-hour shift by the 5 working days; 5 presses x 8 hours per day x 5 days = 200 hours.

1359. Since capacity has already been validated at the master production schedule (MPS) level, why is it checked again at the material requirements planning (MRP) level? A. Load may have changed at the various key work enters. B. MPS uses only key work centers. C. Capacity may have changed at the various key work centers. D. CRP performs a more detailed capacity check at the work center level.

Overall explanation Capacity requirements planning (CRP) performed at the MRP level is a more detailed process than rough-cut capacity planning (RCCP) at the master production schedule level. Master production scheduling doesn’t check key work centers, but RCCP does.

1360. In a company with somewhat erratic demand levels, which of the following is of most importance to the planner in the relationship between material requirements planning (MRP) and capacity requirements planning (CRP)? A. Whether underload conditions exist B. Whether the plan is achievable C. Whether overload conditions exist D. Whether there is a balance

Overall explanation The objective of running CRP with MRP is to know that the plan is achievable. Knowing the other elements is important in order to help achieve the plan.

1361. Which of the following best defines the process of CRP? A. Determining in detail the amount of labor and machine resources required to accomplish the requirements schedule B. Determining the date on which the components and materials are required C. Establishing the overall objectives and goals of the MPC system D. Determining the quantity of all components and materials

Overall explanation CRP determines in detail labor and machine resources required to accomplish production tasks. The other answers are incorrect because CRP must be consistent with the overall objectives of the MPC system; determining the date required and quantity of components refer to material planning as opposed to capacity planning.

1362. A standard for a work center is 2 units of output per standard hour. In 100 hours, the work center actually produces 210 units of output. What is the work center’s efficiency? A. 95 percent B. 48 percent C. 125 percent D. 105 percent

Overall explanation Efficiency = Standard Hours Produced/Hours Actually Worked. To find the answer to this question, first we need to calculate the standard hours produced. To do this, divide the units actually produced by the standard rate of production: 210 units/2 units per standard hour = 105 hours. Efficiency = 105 hours/100 hours = 1.05 = 105 percent. Alternatively, the same answer can be found by dividing the actual rate of production by the standard rate of production: 210 units/200 units = 105 percent.

1363. Planned orders plus open orders constitute what in a job shop? A. Firm planned orders B. Load C. Scheduled receipts D. Routing

Overall explanation A manufacturing calendar consecutively numbers only the workdays so that the component and work order scheduling may be done on the actual number of workdays available. Non-workdays are omitted from the sequential count.

1364. Where would a worker find details of the actual days to be worked on any given assignment? A. Queue time B. Time bucket C. Planning horizon D. Manufacturing calendar

1365. In a labor-intensive assembly work center, how are capacity and load normally computed? A. Material consumed B. Standard machine hours C. Number of operations D. Standard labor hours

Overall explanation If the work center is labor intensive, standard labor hours is the only one that makes sense here.

1366. Which of the following bottleneck performance measures is as meaningful in a make-to-order environment with a functional layout as it is in a make-to-stock environment with a flow layout? A. Setup time B. Efficiency C. Lot size D. Utilization

Overall explanation Bottlenecks in any environment need to be fully utilized.

1367. Which of the following departments is likely least affected by frequently overloaded work centers that lead to unrealistic master schedules? A. Purchasing B. Finance C. Sales D. Production

Overall explanation Finance is more concerned with mid- to long-term financial issues.

1368. Utilization is the ratio of: A. scheduled hours to productive hours. B. productive hours to scheduled hours. C. hours per shift to hours per day. D. standard hours to productive hours.

Overall explanation Utilization is the ratio of time used in production activities to the clock time scheduled for those activities.

1369. Types of orders considered in the load distribution during capacity requirements planning include which of the following? A. Released order, purchase orders, and firm planned orders B. Purchase orders and firm planned orders C. Released orders and firm planned orders D. Released orders

Overall explanation Capacity planning is concerned with production orders that have been released to production and with planned and firm planned orders.

1370. What is the difference between capacity information used for capacity requirements planning (CRP) and that used for rough-cut capacity planning (RCCP)? A. Key work centers are not rechecked. B. Work center operations are checked. C. Different work centers are checked. D. A greater level of detail is checked.

Overall explanation CRP checks more detail than RCCP.

1371. Corporate goals identified using a top-down and bottom-up approach should be prioritized by using: A. an activity-based costing process applied to each goal. B. a Delphi forecast process where a panel of experts are engaged for this specific purpose. C. a Pareto analysis revealing that 80% of the potential gains will come from 20% of the opportunities. D. a strengths, weaknesses, opportunities, and threats analysis involved with each goal.

Overall explanation By developing a strengths, weaknesses, opportunities, and threats (SWOT) analysis involved with each goal, the most important goals should move to the top.

1372. An adaptive company that frequently experiments with developing potentially disruptive products experiences a new product failure. How will the company likely view this failure? A. As a reason to never revisit this niche market B. As an opportunity to observe competitive responses C. As an activity inhibiting future variations of this type of behavior D. As a valuable knowledge-gathering experience

Overall explanation Adaptive companies use experimentation far more broadly than their rivals. While experimentation necessarily produces failure, adaptive companies are very tolerant of failure, viewing it as a learning opportunity.

1373. Which of the following statements describes the strategic plan? A. It consists of tactical plans that direct the business to achieve competitive advantage on a continuous basis. B. It is a statement of long-range strategy and revenue, cost, and profit objectives and is usually accompanied by budgets, a projected balance sheet, and a cash flow. C. It defines how to marshal and determine actions to support the mission, goals, and objectives of an organization. D. It is a time-phased statement of expected customer orders anticipated to be received.

Overall explanation A strategic plan defines how to marshal and determine actions to support the mission, goals, and objectives of an organization.

1374. An organization is attempting to break into a market that already has several competitors who have significant market share. Which action would increase the level of competition and pressure on these established competitors? A. Start with products that already have steadily increasing demand. B. Introduce a daring but risky strategic innovation. C. Choose specific products to produce where the cost of switching brands is high for the consumer. D. Imitate the competitors’ products features and price closely.

Overall explanation Rivalry tends to be weaker when the rival (the company trying to break into the market in this case) pursues a "me too" strategy and there are no daring strategic innovators. Therefore, daring innovations are an opportunity that could pay off.

1375. What would be an effective response for an established company when faced with a threat of new competitors in an industry? A. Offer price discounts. B. Create a variety of marketing responses so long as they increase profit per unit. C. Pressure suppliers not to work with competitors. D. Cut costs related to customer service level.

Overall explanation Advertising, promoting, discounting, and adding new features to an existing product line will all make it more difficult for new rivals to enter the market.

1376. A design engineering group has dismantled a new product from another supplier. This is an example of: A. unethical behavior. B. thievery. C. competitive analysis. D. disintermediation. x

Overall explanation Markets and operational capabilities must be aligned. For an organization that competes on responsiveness to changing customer demand, a superior strategy here is to align more loosely (with excess capacity) rather than more tightly (with just the right level of capacity). An organization that competes on cost might choose an option with little excess capacity.

1377. When aligning capabilities with needs, for an organization that competes on responsiveness, the response could be extremely focused with little excess capacity or flexibility or be designed with excess capacity and more flexibility. What would be the more desirable strategy? A. Aligning or responding with excess capacity B. Aligning tightly initially and then expanding in a stepwise fashion C. Aligning more tightly and continuously assessing and adjusting D. Aligning with little excess capacity to better contain overhead costs

1378. A steel manufacturer has changed its process from using a few large coke-fueled ovens to using many small electronic arc furnaces, thus reducing product costs considerably. What is this an example of? A. Design for manufacturability B. Reverse engineering C. Leapfrogging D. Value chain redesign

Overall explanation One successful steel manufacturer changed to small electronic arc furnaces rather than the more expensive coke ovens typically used in traditional steel manufacturing and thus was able to deliver competing product at lower cost. This is an example of value chain redesign.

1379. An organization’s production plan would need to be changed if what occurs? A firm’s marketing strategy directly impacts the production plan by which of the following actions? A. Short-term marketing tactics are considered a failure. B. The organization decides to use a lag capacity strategy. C. Customers demand new after-sale service options. D. Raw materials arrive a week early to the plant.

Overall explanation By failing to increase demand from the customer base, marketing will directly impact the existing production schedule created by production management, meaning that planned production should likely be reduced.

1380. What is the definition of the term "supply chain"? A. When supply chain partners interact at all levels to maximize mutual benefits B. Global network used to deliver products and services from raw materials to end customers through an engineered flow of information, physical distribution, and cash C. Process reference model promoted by ASCM as the cross-industry, standard diagnostic tool D. Comprehensive approach to managing an enterprise’s interactions with the organizations that supply the goods and services the enterprise uses

Overall explanation Supply chains comprise the various entities from the consumer back to the source of raw materials consumed in the end product.

1381. Which quantitative forecasting technique applies past patterns of demand data covering introduction, growth, maturity, saturation, and decline of similar products to a new product family? A. Concurrent forecasting B. Trend C. Life cycle analysis D. Seasonality Overall explanation

Life cycle analysis is a quantitative forecasting technique based on applying past patterns of demand data covering introduction, growth, maturity, saturation, and decline of similar products to a new product family.

1382. Through the use of value chain analysis, cost performance may be improved by: A. finding lower-cost raw materials. B. charging more for products that use activities within the value chain. C. identifying and eliminating non-value-added activities. D. imposing high utilization targets for value chain operations.

Overall explanation Value chain analysis can improve the company’s cost performance by identification and elimination of non-value-added activities.

1383. Product life cycle analysis is best addressed by: A. competitors’ similar offerings. B. the multiple versions of the product as it matures. C. the product and/or market situation. D. annual sales by region.

Overall explanation A product life cycle describes the stages a product goes through from beginning to end.

1384. An organization is examining its corporate social responsibility policies and wants to start by looking to internal influences to guide any changes it makes. Which of the following is an example of an internal influence? A. Local competition B. Trade blocs C. National laws and regulations D. Intended customers

Overall explanation Internal influences are generally within the organization’s control and include the customers that the company chooses to market to. National laws, trading blocs, and local competition are all examples of external influences.

1385. In the five forces model of competition, as products available from rival suppliers become less differentiated, supplier rivalry is said to: A. increase. B. diminish design innovation. C. cause price increases. D. become stagnant.

Overall explanation With similar product offerings, buyers have less reason to be brand-loyal, thus increasing supplier rivalry.

1386. Strategies that emphasize areas where the company is weak or has unproven competencies: A. act as catalysts for improvement and should be pursued. B. are often used as stretch goals. C. can improve morale by providing a target for improvement. D. should be ignored in favor of areas where competency exists.

Overall explanation Strategies that place a heavy emphasis on areas where the company is weak or has unproven competencies should be avoided. The company’s strategy should be aimed at capturing market opportunities that are most suited to the company’s collection of capabilities.

1387. The plan for determining actions to support the mission, goals, and objectives of an organization is the: A. tactical plan. B. strategic plan. C. sales and operations plan. D. project plan.

Overall explanation The strategic plan is the plan for how to marshal and determine actions to support the mission, goals, and objectives of an organization.

1388. What is a typical first step in assessing a company’s overall advantage or disadvantage as contrasted with its competitors? A. Outsource all non-core-competency tasks. B. Identify all competitors and hypothesize their various strengths. C. Segregate the company’s operations into different types of primary and secondary activities. D. Reverse-engineer products from the top 20% of all competitors.

Overall explanation A first step in evaluating a company’s economic advantage or disadvantage relative to its competitors is to segregate the company’s operations into different types of primary and secondary activities.

1389. A company is focusing on its supply chain design and costs. A competitive strategy would be to understand how effectively and efficiently it delivers value to customers as compared with its: A. quality function deployment strategy. B. primary regulatory overseer. C. competitors. D. supply chain partners.

Overall explanation To remain competitive, a company must understand how effectively and efficiently it delivers value to customers relative to its competitors.

1390. Why should caution be exercised in using value chain analysis alone in efforts to meet or beat top competitors’ costs? A. Competitors may spend more on sales and marketing; this is typically not revealed in value chain analysis. B. Cost and price differences may emanate from supplier and distribution superiority. C. Financial and portfolio analysis are superior tools for cost reductions. D. Value chain analysis often ignores purchasing.

Overall explanation Cost and price differences between competitors may have their origins in activities performed by suppliers or by distribution allies.

1391. A commercial door manufacturer wants to add some make-to-stock (MTS) capabilities to its current make-to-order (MTO) manufacturing environment. Which of the following should be modified to reflect this strategy and what competitive advantage could be emphasized in line with this strategy? A. Vision statement should be modified to express a goal of faster lead time. B. Mission statement should be modified to express a goal of low-cost leadership. C. Vision statement should be modified to express a goal of low-cost leadership. D. Mission statement should be modified to express a goal of faster lead time.

Overall explanation Essentially, a company’s vision statement answers the question, "Where are we going?" The vision statement for this organization needs to express what competitive advantage they are pursuing in moving to a MTS environment for some of their products. Often MTS is about improving availability such as by having faster lead times. While low-cost leadership could be a goal, carrying MTS inventory will make this goal harder to achieve.

1392. Which is an output of material requirements planning and is also part of the priority plan evaluated in capacity requirements planning? A. Validated capacity for components and assemblies. B. Priority plan due dates and quantities for end items rather than work center outputs. C. Open order quantities for families of products. D. Planned order receipt dates for work center outputs.

Overall explanation The outputs of MRP include planned order quantities and release dates and the due dates or planned order receipt dates for completion of subassemblies and end items. Note that the question specifies that this is just being sent to capacity requirements planning, so it has yet to be validated.

1393. What is the term for the amount of scheduled work ahead for a manufacturing facility expressed in terms of hours of work or units of production? A. Released orders B. Open orders C. Load D. Load profile

Overall explanation Load is the amount of planned work scheduled for and actual work released to a facility, work center, or operation for a specific span of time.

1394. Which of the following measurements remains the same regardless of what is reported for performance? A. Efficiency B. Actual hours C. Utilization D. Standard hours

Overall explanation Standard hours are based on a work center and production quantity.

1395. Which of the following statements is true of utilization? A. It is possible for nothing to be produced even though utilization is 100%. B. The greater the number of setups, the lower the utilization. C. Bottleneck resources have 100% utilization. D. The greater the number of resources, the higher the utilization.

Overall explanation The time could be utilized doing scheduled internal setup.

1396. A work center consists of 2 machines working 8 hours a day and 5 days a week. Historically, utilization has been 80 percent and efficiency has been 90 percent. To the nearest hour, what is the rated capacity? A. 58 hours B. 37 hours C. 40 hours D. 80 hours

Overall explanation Rated Capacity = Available Time × Utilization × Efficiency = (2 machines × 8 hours/day × 5 days) × 0.8 × 0.9 = 57.6 hours, rounded to 58 hours.

1397. Over a one-year period, work center 12 was available for 14,000 hours (269.2 hours per average week), actually worked 11,980 hours, and produced 12,800 standard hours of work. What was the average weekly rated capacity? A. 246 standard hours B. 230 standard hours C. 230 actual hours D. 246 actual hours

Overall explanation To calculate rated weekly capacity, first calculate utilization and efficiency. Utilization = Actual Hours/Available Hours = 11,980 hours/14,000 hours = 0.8557. Efficiency = Standard Hours Produced/Actual Hours = 12,800 hours/11,980 hours = 1.0684. Rated Weekly Capacity = Available Weekly Hours × Utilization × Efficiency = 269.2 hours per week × 0.8557 × 1.0684 = 246 hours (rounded).

1398. A work center is used 16 hours per day in a 5-day week, and there are 4 pieces of equipment and 8 operators. Each operator requires one piece of equipment to work. Utilization is 80 percent. What is the available time for a five-day week? A. 320 hours B. 256 hours C. 640 hours D. 512 hours

Overall explanation Available Time = Equipment or Workers × Hours in Time Bucket. Here equipment is used because this is the constraint. (The fact that the workers operate in two shifts has already been accounted for by listing 16 hours per day as part of the available hours.) Therefore the calculation is 4 pieces of equipment × (5 days × 16 hours per day) = 320 hours. Utilization is not needed to answer this question.

1399. Which of the following information is most critical when using capacity planning to validate the material plan? A. Demonstrated capacity B. Theoretical capacity C. Key work centers D. Standard hours/part

Overall explanation Demonstrated capacity identifies what the work center has been able to achieve in the past.

1400. Which of the following characteristics are desirable in a system measuring overall plant productivity? A. Visibility of multiple manufacturing resources, and identification of factors for improving throughput B. Visibility of multiple manufacturing resources, and presentation of data in discounted dollars C. Identification of factors for improving throughput, and detailed analysis of labor variances D. Visibility of multiple manufacturing resources, identification of factors for improving throughput, and detailed analysis of labor variances

Overall explanation Visibility of multiple manufacturing resources and identification of factors for improving throughput provide for the measurement of overall plant productivity.

1401. Based on the information provided below, what is the productivity of the work center Work Center 18 Week 15 Product Quantity Produced (Units) Standard Hours Hours Charged A 200 200 250 B 60 120 100 C 80 80 100 * Total hours worked—480 hours * Planned labor—420 standard hours/week * Standard labor cost—$5/standard hour A. 83% B. 89% C. 94% D. 120%

Overall explanation The actual output (hours charged) is 250 hours + 100 hours + 100 hours = 450 hours. The actual input (total hours worked) is 480 hours. Productivity = Actual Output of Production/Actual Input of Resources = 450 hours/480 hours = 0.9375 rounded to 0.94 or 94%.

1402. What will increase the output of products in a factory system? A. Improving utilization and efficiency B. Increasing lead-time estimates C. Rearranging routing sequences D. Consuming material

Overall explanation The central idea of this question is that increasing capacity will increase output. Of the possible answers, only "improving utilization and efficiency" includes factors used in capacity determination. Consuming material and increasing lead-time estimates would likely have the opposite effect of reducing output. Rearranging routing sequences is conceivable, but assuming that optimum routings are planned in the first place, rearranging them would result in less than an optimum process.

1403. Based on the information provided below, what is the rated capacity of the work center? * Work center information * Hours available: 7.2 * Internal setup hours: 0.2 * Standard hours produced: 7.0 * Actual hours worked: 7.1 * Scheduled downtime hours: 0.8 * Hours per shift: 8 * Shifts per day: 1 * Days per week: 5.5 * Number of resources: 20 worker A. 855 hours B. 867 hours C. 879 hours D. 880 hours

Overall explanation Available hours x utilization x efficiency = [(20 workers x 8 hours x 1 shift x 5.5 days) – 0.8 hours] x (7.1 hours/7.2 hours) x (7.0 hours/7.1 hours) = (880 hours – 0.8 hours) x 0.9861 x 0.9859 = 855 hours (rounded).

1404. Which statement is true regarding the work center described in the information provided below if the load for next week is 110 hours? Work Center Data * Machines: 3 * Shifts per day: 1 * Days worked per week: 5 * Hours worked per shift: 8 * Utilization: 85% * Operator efficiency: 95% A. The work center is balanced. B. The work center is constrained by operators. C. The work center is overloaded. D. The work center is underloaded.

Overall explanation Rated capacity is 96.9, so the work center is overloaded.

1405. A work center produces 200 units, 220 units, 210 units, 200 units, and 205 units each day of a 5-day week respectively. If the standard hours per item are 0.5, what is the work center’s demonstrated capacity for the week (expressed as a daily rate)? A. 104 standard hours. B. Available time, utilization, and efficiency are not provided, so the answer can’t be calculated. C. 414 standard hours. D. 207 standard hours.

Overall explanation Demonstrated capacity can be calculated by multiplying the average number of items produced by the standard hours per item. First, find the average number of items produced by summing the units and dividing by the number of units: (200 units + 220 units + 210 units + 200 units + 205 units)/5 days = 1,035 units/5 days = 207 units per day. Next, multiply this average by the standard hours per item: 207 units per day × 0.5 hours per unit = 103.5 standard hours per day, rounded to 104 standard hours.

1406. Why does capacity requirements planning use infinite rather than finite planning? A. Infinite capacity matches the level of detail as defined in the planning hierarchy. B. Capacity requirements planning is simply a reflection of the requirements from the material plan. C. Customer demand is inconsistent and requires variable work center capacity. D. The material requirements plan cannot provide sufficient detail for finite loading.

Overall explanation The materials plan drives the requirements for capacity planning.

1407. Which of the following is out of the machining department supervisor’s direct control? A. Rated capacity of the work center B. Operator assignments C. Sequence of jobs to be run D. Tooling availability for jobs in queue

Overall explanation Rated capacity is a calculation used for load planning.

1408. In discrete manufacturing, capacity requirements planning (CRP) receives which two of the following items from material requirements planning (MRP)? A. Due dates and order quantities B. Due dates and standard hours C. Order quantities and low-level codes D. Standard hours and low-level codes

Overall explanation For CRP to function successfully, it must receive the due dates and order quantities from MRP.

1410. Which of the following terms applies to a suggested order quantity, release date, and due date created by the planning system’s logic when it encounters net requirements in processing material requirements planning (MRP)? A. Reschedule recommendation B. Planned order release C. Planned order receipt D. Planned order

Overall explanation A planned order includes a suggested order quantity, release date, and due date created by the planning system’s logic when it encounters net requirements in processing MRP.

1409. When altering operations schedules to accommodate an exception, what is the scheduler’s priority? A. Getting the expedited job done immediately regardless of the schedule impact B. Influencing decision makers to stop allowing exceptions C. Assuming infinite capacity when rescheduling D. Making decisions that help maintain valid plans

Overall explanation An exception management process needs to prioritize making and implementing decisions that help maintain valid plans.

1411. What are service parts? A. Modules, components, and elements that are planned to be used without modification to replace an original part B. Items stored in maintenance to repair manufacturing equipment on the shop floor C. Items that are not planned for and are pulled from manufacturing stock when required D. Expensed items that are used in manufacturing but are included in the structure of the product

Overall explanation Service parts are modules, components, and elements that are planned to be used without modification to replace an original part.

1413. Which of the following outcomes will occur if work is scheduled at a higher rate of production than is actually produced? A. Work-in-process will increase. B. Standard costs will decrease. C. The output rate will increase. D. Lead times will decrease.

Overall explanation If more work is scheduled at a workstation than can be completed, the amount of work-in-process will increase.

1414. Which would be a logical inventory policy for "C" items according to ABC classification? A. Avoid counting at all during periodic inventories. B. Order in bulk as infrequently as possible. C. Phase out this inventory whenever possible. D. Order lot-for-lot from supplier.

Overall explanation Part of the Dictionary definition of ABC classification is as follows: "The ABC principle states that effort and money can be saved through applying looser controls to the low-dollar-volume class items than to the high-dollar-volume class items." Since the cost of carrying this inventory is very low, ordering very infrequently will minimize ordering cost. Also, since there are fewer ordering points per year, there is a risk of stockout only at those few times. (A stockout of a low-cost component could be very expensive if it prevents completing an order.)

1412. Which inventory function exists because of the time needed to move goods from one location to another? A. Fluctuation B. Anticipation C. Hedge D. Transportation

Overall explanation The transportation function takes into account the time needed to move goods from one location to another.

1415. For a company that uses ABC inventory classification to structure cycle counting processes, which category would be counted most often? A. All classifications are counted equally. B. A C. C D. B

Overall explanation When using ABC inventory classification, A items are counted most often, followed by B and C respectively.

1416. Under the theory of constraints, what signals the start of the purchasing process? A. Planned order release B. Kanban C. Change in buffer inventory D. Purchase requisition

Overall explanation Production inventory shortages cause a "hole" in the constraints buffer and alert the buffer manager to release a purchase order for the short materials.

1418. A statement of a company’s goals and its approach to the management of inventories is the: A. inventory policy. B. inventory investment. C. inventory accounting. D. inventory cycle.

Overall explanation The inventory policy is a statement of a company’s goals and its approach to the management of inventories.

1417. Which of the following situations is a result of anticipation inventory? A. Higher subcontracting costs B. Lower inventory carrying costs C. Lower overtime costs D. Higher required capacity

Overall explanation Building up inventory in advance of an anticipated need would lower the need for overtime, subcontracting, and additional capacity later. It would also raise inventory costs.

1419. What type of inventory loss is most likely to impact a commercial bakery? A. Obsolescence B. Shelf life C. Scrap D. Shrinkage

Overall explanation Due to the short period of time that fresh-baked bread remains edible, a commercial bakery is likely to see significant inventory losses associated with shelf life.

1420. Which of the following statements is true when production lead time is increased? A. Component inventory will increase. B. Work-in-process inventory will increase. C. Work-in-process inventory will decrease. D. Work-in-process inventory may be insufficient.

Overall explanation When production takes longer, the raw materials, components, and subassemblies will spend more time in work-in-process. The size of the component inventory and the necessary inventories needed in production are unaffected by an increase in product lead times.

1421. Material is staged for which of the following reasons? A. To balance the workload in the storeroom B. To use warehouse space efficiently C. To minimize the impact of inventory errors D. To offset poor storeroom response

Overall explanation Staging inventory before put-away, use, or shipment enables inventory control to validate balance records.

1422. Inventory in excess of consumption that has not been used for a defined period is identified as: A. safety stock. B. surplus. C. inactive. D. hedge.

Overall explanation Inactive inventory is stock designated as being in excess of consumption within a defined period or stocks of items that have not been used for a defined period.

1423. What is included in work-in-process inventory? A. Maintenance, repair, and operating supplies in the plant B. Finished and quarantined goods still in the plant C. Purchased materials in the plant D. Goods in various stages of completion throughout the plant

Overall explanation Work in process (WIP) includes a good or goods in various stages of completion throughout the plant, including all material from raw material that has been released for initial processing up to completely processed material awaiting final inspection and acceptance as finished goods inventory.

1425. What is the term for items used in support of general operations and maintenance such as maintenance supplies, spare parts, and consumables used in the manufacturing process and supporting operations? A. Overhead B. Expense items C. Indirect spend D. Maintenance, repair, and operating supplies

Overall explanation Maintenance, repair, and operating supplies (MRO) include items used in support of general operations and maintenance such as maintenance supplies, spare parts, and consumables used in the manufacturing process and supporting operations.

1424. The amount of time an item may be held in inventory before it becomes unusable is: A. the product life cycle. B. a limited life. C. lot control. D. the shelf life.

Overall explanation The shelf life is the amount of time an item may be held in inventory before it becomes unusable.

1426. The competitive characteristics that persuade a customer to choose one company’s products over those of another company are called: A. specifications. B. low price. C. order qualifiers. D. order winners.

Overall explanation Order winners are special product and service attributes desired by the customer that enable companies to beat the competition. A lower price is always welcome, however it is not the only aspect of company choice. Order qualifiers are characteristics a product or service must have to be considered. Specifications are, of course, necessary; however, any supplier or source would have to meet specifications. Order winners are what set one company above its competitors.

1427. Business-to-business customers have said that new products being rolled out need to have reasonable delivery reliability and price but insist on a product design that meets exacting precision requirements so it integrates with their product without costly rework. They do not care about delivery speed because they are able to place their orders far in advance. Which of the following strategies would be most likely to delight these customers? A. Consider product design to be the only order winner to focus on and accept that this will require a higher-than-average price, use slow and inexpensive shipping to compensate, and work on great delivery reliability using a make-to-stock strategy. B. Consider product design to be the only order winner to focus on, work to be above average at delivery reliability and price, and make-to-order and ship via slow and inexpensive methods when given sufficient lead time. C. Consider product design, delivery reliability, and price to be order winners to focus on so as to exceed expectations. D. Create a good design with best-in-class delivery reliability and a reasonable price by focusing on high production rates and inspections to ensure that only products that match the exacting specifications go out the door to the customer.

1428. An organization creates a separate network organizational structure, using a "big opportunity" to help form the core of this network that operates alongside the traditional hierarchical structure. What will help this network keep an entrepreneurial spirit? A. Have core members recruit new volunteers and provide guidance on how to stay unstructured yet self-motivated. B. Assign a team member to develop a budget for the next "big opportunity" so it gets the time and energy it requires. C. Start using formal project management techniques to ensure that the next "big opportunity" is developed quickly. D. Assign formal roles to network team members to reduce duplication of effort.

Overall explanation As a network team forms alongside the traditional hierarchical structure, the network members will need guidance to understand how a network needs to differ from a hierarchy so that they keep that entrepreneurial spirit rather than starting to build a hierarchy within the network (e.g., a focus on budgets, project management, roles, etc.).

1429. Failure to meet customer expectations with order qualifiers will likely: A. be of no consequence concerning overall top-line performance. B. result in considerable dissatisfaction of all customers. C. have a negative impact on customer service. D. be the catalyst for engineering changes.

Overall explanation When a company underperforms in its order qualifying tasks, considerable dissatisfaction among customers is the likely result.

1430. Which of the following factors is fundamental to development of a marketing strategy? A. Vertical integration B. Order qualifiers C. Supplier’s geographical location D. Labor capability

Overall explanation Generally, a supplier must meet minimum requirements to be considered a viable competitor in the marketplace. Customer requirements may be based on price, quality, delivery, and so forth and are called order qualifiers.

1431. Which of the following entities or conditions impacts customer demand as a standard that consumers and companies require of any product? A. Delivery B. Competition C. Convenience D. Quality

Overall explanation In today’s market, quality is an order qualifier and a requirement to do business. Products and services need to meet or exceed customer expectations.

1432. What should a company look at when process flexibility becomes a key order winner? A. Outsourcing to a larger supplier with wider capabilities B. Outsourcing to many smaller suppliers in hopes that one will have excess capacity when needed C. Keeping manufacturing in house to provide shorter customer delivery lead times D. A dual strategy of outsourcing and insourcing benefiting from scheduling simplicity

Overall explanation If flexibility is a key order winner, the company should consider outsourcing to a larger supplier with wider capabilities.

1434. Customers’ minimum requirements based on price, quality, delivery, and so forth are called: A. order qualifiers. B. customer-defined attributes. C. specifications. D. order winners.

Overall explanation Minimum requirements for attributes such as price, quality, and delivery are qualifiers to compete.

1433. Order qualifiers need to drive what? A. New operational capability development B. Competitive benchmarking C. Marketing strategy D. Vertical or horizontal integration

Overall explanation Generally, a supplier must meet set minimum requirements to be considered a viable competitor in the marketplace. Customer requirements may be based on price, quality, delivery, and so forth and are called order qualifiers. These requirements need to drive many parts of a product’s life cycle, from product and service development to marketing strategy.

1435. At what do the organizational structures commonly found in large and successful organizations tend to be effective and efficient? A. Functioning and executing B. Innovating and changing C. Such organizational structures tend to be neither effective nor efficient. D. Such organizational structures tend to be effective in most areas but not efficient.

Overall explanation Traditional organizational structures that most large and successful organizations have are usually good at keeping the organization functioning and executing effectively and efficiently. However, these same structures tend to have lost the entrepreneurship and agile innovation ability that makes start-ups so great.

1436. Which of the following actions may result in unmanageable backlog? A. Productivity gains B. Increasing available capacity C. Purchase of single-purpose equipment D. Increasing planned lead time

Overall explanation Increasing planned lead time means that each job will be on the shop floor longer, which increases work in process and queues, and that it will take longer to process jobs.

1437. Load smoothing at the production planning level to resolve an overload condition identified by resource planning is an example of: A. a level production strategy. B. supply planning. C. demand planning. D. a chase production strategy.

Overall explanation Load leveling is an attempt to balance demand from period to period within supply constraints.

1438. Which manufacturer would be most likely to use a chase strategy? A. Compression socks manufacturer. B. Paint manufacturer. C. Seasonal ice cream candy bar manufacturer. D. Seasonal glassware manufacturer.

Overall explanation The seasonal ice cream candy bar manufacturer sells perishable products that also have distinct seasonality. Because perishable products cannot be produced long in advance of need, they cannot use a level strategy and may need to use a chase strategy.

1441. An organization has limited shop floor space to add new equipment and doesn’t want to move or expand space this year. What would be the best way for it to still add agility and flexibility this year? A. Change from level to chase production planning and use hirings and layoffs more frequently. B. Invest in new methodologies and replace some equipment with more versatile versions. C. Change from chase to level production planning and add a shift. D. Add new equipment in tighter configurations and train users on improving dexterity.

Overall explanation Agility and process flexibility can be developed by making investments in methodologies such as lean as well as investing in equipment that enables flexibility.

1440. For the purposes of production planning, product families can be established on the basis of A. new product introductions. B. similarities in manufacturing process. C. the availability of equipment. D. the availability of materials.

Overall explanation Manufacturing needs to know what products share the same manufacturing processes. The availability of materials and machinery, affect production capacity but are not the basis for establishing product families. New product introductions could fit best in an existing product family or be in a new one, but each new product would not necessarily be in a new family.

1439. A company produces toys that can be personalized with a predetermined set of options. Delivery is quoted as ten days from receipt of the order. Which of the following sales and operations planning elements is most likely to be of little use to management? A. Demand forecast B. Production plan C. Inventory plan D. Backlog plan

Overall explanation This is an assemble-to-order environment; it would not have a backlog plan.

1442. An MTS company would like to cut its physical inventory from four to two months. If annual demand is 360 units, the production plan for this year should be how many units? A. 480 units B. 360 units C. 420 units D. 300 units

Overall explanation In an MTS environment, the objective to decrease finished goods inventory by two months requires producing two months’ less inventory than annual demand requirements. There are currently 4 months of physical inventory in stock (360 units/12 = 30 units; 30 units x 4 months = 120 units) the objective is to reduce to 2 months (60 units). To do this, they must sell off 60 current inventory units to reduce backlog. Next year they need to sell 360 units, so they only need to produce 300 units as 60 units are already in inventory.

1443. To minimize costs and meet predictable seasonal demand, a manufacturer may need to develop a customized strategy drawing from multiple approaches. This is what type of strategy? A. Synthesized B. Level C. Hybrid D. Chase

Overall explanation Hybrid strategies can combine chase, level, and subcontracting strategies in different ways to arrive at custom solutions. Often a custom solution will be optimal in terms of minimizing costs and meeting other objectives such as labor relations.

1445. Given the following, what is the work center backlog? * Average input: 100 units/week * Average output: 100 units/week * Current work in process: 160 units A. 0.63 weeks B. 1 week C. 1.6 weeks D. 2.6 weeks

Overall explanation To calculate the load that is backlog at a work center, divide the current number of units (or hours) currently at the work center by the average output, or 160 units/100 units of output per week = 1.6 weeks of load.

1444. The day 56 log for a work center shows planned input of 14 hours, actual input of 16 hours, and a cumulative input variance of -2 hours. For the same day the planned output was 15 hours, the actual output was 14 hours and the cumulative output variance was -5 hours. The day 55 log showed the planned backlog was 7 hours and the actual backlog was 6 hours. The planned backlog for day 56 was 6 hours. What was the actual backlog for day 56? A. 8 hours B. 6 hours C. -7 hours D. 0 hours

Overall explanation Actual Backlog = Previous Actual Backlog + Actual Input - Actual Output = 6 hours + 16 hours - 14 hours = 8 hours.

1446. A chase production plan is based on inventory days of supply. Days of supply at the end of Q1 are 600 units and this value is used in Q2, which as a forecast of 300 units. Quarter 3 has a forecast of 700 units. The Q2 300 units of expected demand divided by the average of 61 working days per quarter is 5 units per day. The minimum inventory is 60 days of supply. What does the Q2 chance production level need to be? A. 0 units B. 100 units C. 300 units D. 400 units

Overall explanation The 600 units in days of supply will be sufficient for the Q2 forecast: 600 units - 300 units - 300 units (if nothing new is produced). However there is a minimum inventory. The minimum inventory level is 60 days of supply x 5 units per day = 300 units. They are at the minimum level already and so nothing needs to be produced in this quarter.

1447. Tracking signals do which of the following? A. Adjust forecasts when errors are reported. B. Identify forecast bias. C. Identify causes of forecast errors. D. Compute the appropriate trip value to be used in demand filtering.

Overall explanation Tracking signals indicate bias within the forecast when then running sum of the forecast error (RSFE) exceeds MAD by a predetermined amount (e.g., at least three times). RSFE is also called the cumulative forecast error. The other answers are incorrect because tracking signals indicate deviation from the forecasts but not the causes of these deviations; management is responsible for computing the true value to be used, and this is not the function of a tracking signal; and tracking signals do not adjust forecasts; they only report deviations from the forecast.

1448. “The average of the absolute values of the deviations from some expected value” best defines which of the following terms? A. Standard deviation B. Mean average deviation C. Forecast error D. Mean absolute deviation

1450. A calculated value that can signal the quality or validity of a forecast when it is in doubt is known as: A. a tracking signal. B. mean absolute deviation. C. bias. D. a smoothing factor.

Overall explanation A tracking signal is the ratio of the cumulative algebraic sum of the deviations between the forecasts and the actual values to the mean absolute deviation. It is used to signal when the validity of the forecasting model might be in doubt.

1451. For the past six months, a manufacturer has experienced monthly forecast deviations of 15, –6, 12, 8, –18, and –4 units. What is the mean absolute deviation for these months A. 1.16 B. 9.33 C. 10.5 D. 11.67

1449. Why is it important to track a forecast? A. To start relying more on actual sales data. B. To compare actual sales versus the forecast. C. To improve the forecasting method. D. To satisfy marketing’s need for reporting.

Overall explanation The ability to improve on your forecasting method is the most important reason for monitoring the forecast in order to understand demand characteristics, variation, and stability—and to improve the forecast by narrowing the range of forecast error.

1452. Given the existence of forecasting error, what are manufacturers using in order to create more accurate production schedules and targets? A. Greater market analysis B. Improved manufacturing methods C. Actual demand data from supply chain partners D. Previous years’ targets and goals

Overall explanation Because of issues with forecasting, organizations are working to become less reliant on forecasts and more reliant on actual demand information provided by their downstream supply chain partners. This effectively means that organizations are moving toward a pull structure and away from a push structure.

1453. Which of the following is assumed in the process of forecasting and should be factored into future forecasts A. Forecast error B. Increased production throughput C. Lead time variation D. Reduced setup time

Overall explanation Forecast error is the difference between actual demand and forecast demand, stated as an absolute value or a percentage.

1454. Which of the following is a possible root cause of time series forecast bias? A. Differences between sales and demand B. Errors in monitoring the forecast C. Trend changes D. Insufficient data

Overall explanation Bias can be caused by issues with the forecasting technique, such as the lag that occurs when a trend changes. Trend changes may appear as spikes or dips in the data. Another potential root cause is when human bias was involved in making data estimates. Identifying the correct root cause is important; otherwise, inappropriate remedies might be applied.

1455. Customer-supplier relationships that focus on the future and long-term intercompany team building may be: A. something that needs to be formalized using long-term partnership agreements. B. jeopardized by a failure to meet expected order qualifying characteristics. C. jeopardized by a failure to meet expected order winning characteristics. D. a major order winning factor.

Overall explanation Enlightened customer-supplier relationships that focus on the big picture and the longer term may be a major order winning factor.

1458. Which of the following is assumed in the process of forecasting and should be factored into future forecasts? A. Reduced setup time B. Increased production throughput C. Lead time variation D. Forecast error

Overall explanation Forecast error is the difference between actual demand and forecast demand, stated as an absolute value or a percentage.

1459. A production plant expansion was based on the assumption of slowly increasing demand but demand has increased exponentially since ground was broken. What do supply chain managers need to do? A. Double the size of the current plant expansion B. Prioritize resource planning C. Cancel the current plant expansion project D. Refresh capacity planning

Overall explanation The goal of capacity planning is to determine how much capacity is going to be required of the plant to execute the firm’s production plans. In this case, the change in demand should trigger additional capacity planning, which could result in new capacity being planned at this or a different plant, outsourcing, no changes to plans, or other options. Any changes to an ongoing plant expansion would need to be carefully considered.

1457. For the past six months, a manufacturer has experienced monthly forecast deviations of 15, –6, 12, 8, –18, and –4 units. What is the mean absolute deviation for these months? A. 1.16 B. 9.33 C. 10.5 D. 11.67

1456. Which example of differentiating a product from the offerings of competitors is most likely to result in the product becoming an order winner? A. Creating a combination of desired capabilities that is unique even though none of the capabilities by themselves is unique B. Building a product that meets actual customer needs even though it does not meet all expectations C. Changing priorities to focus on price, quality, delivery speed, and flexibility D. Adding one more feature so there are fewer minimum requirements that cannot be provided

Overall explanation Order winners can be a unique capability or quality no competitor has or a combination of price, product features, quality, and related services that customers will see as a superior value. Adding a feature while still failing to meet minimum requirements is an order disqualifier. Order winners usually focus on one (rarely more than two) of the following strategic initiatives: price/cost, quality, delivery speed, delivery reliability, product design, flexibility, after-market service, and image. Trying to focus on four of these is likely to result in mediocre results in all of them. Becoming an order winner requires meeting both needs and expectations.

1460. A work center has available time of 500 hours per week. It actually produces units for 400 hours per week. Its efficiency is 90 percent. What is the work center’s utilization? A. 80 percent B. 90 percent C. 125 percent D. 72 percent

Overall explanation Utilization = Hours Actually Worked/Available Time = 400 hours/500 hours = 0.8 = 80 percent. Efficiency is not needed to answer this question.

1461. A bill of resources shows that standard hours of labor for product family A is 0.2 hours per unit and for product family B is 0.4 hours per unit. Planned production is 700 units of A and 400 units of B for the month. If there are 2 workers with 160 hours per month available, what is the surplus or shortfall of labor? (Shortfall will be shown as a negative value.) A. -20 hours B. 20 hours C. 40 hours D. -40 hours

Overall explanation To determine if there is a shortfall or surplus of labor for the month, first calculate the available hours by multiplying the available hours per worker by the number of workers: 2 workers × 160 hours per worker = 320 hours. Next, determine the load or total hours required by multiplying the number of units for the family by the standard hours for labor for the product family and summing the results: (700 units × 0.2) + (400 units × 0.4) = 140 hours + 160 hours = 300 hours. Finally, the available hours minus the load equals the surplus or shortfall: 320 hours – 300 hours = 20 hours, a surplus.

1462. What is a common measure of a capacity planning process in a lean environment? A. Minimal work in process between operations B. Minimal work in process between workstations C. Minimal work in process between personnel D. Minimal work in process between work centers

Overall explanation Work in process is a measure of how well the planned buffers between work centers are being maintained; it measures the effectiveness of the overall capacity planning process.

1466. A company produces a variety of items with short manufacturing lead times. Which of the following capacity planning techniques would be most useful for bottleneck work centers? A. Finite capacity planning B. Detailed capacity planning C. Infinite capacity planning D. Bottleneck capacity planning

Overall explanation Finite capacity planning maximizes what can be produced.

1463. A work center is slightly under capacity for four weeks running, producing between 5% and 10% under its rated capacity. Which of the following would be a feasible way of resolving this difference? A. Redesigning the product B. Restructuring the work center C. Postponing delivery D. Scheduling overtime

Overall explanation Resolving differences starts by working to increase capacity where possible. Scheduling overtime may assist in resolving the difference, but a review aimed at finding the root cause of the underperformance should be made, as four weeks running is a long time. Is this a temporary situation due to regular employees being on vacation? Due to illness? A change in a process? Learning curves? Misstated standard times?

1464. Machine utilization can be increased by: A. increasing efficiency. B. increasing product changeovers. C. reducing unplanned downtime. D. reducing lot sizes.

Overall explanation The longer the machine is operating, the greater the utilization.

1465. A manufacturer of large appliances uses paced production lines for each product family. The rate varies by product, and labor levels are established to minimize the possibility of a line stoppage. Each product family is produced to a mixed-model schedule with lot sizes of one to ten. What is the best option for verifying the feasibility of the master production schedule? A. Resource planning B. Demonstrated capacity C. Capacity planning using plant-wide factors D. Rough-cut capacity planning

Overall explanation Knowing demonstrated capacity can identify whether the number of hours required for the specific product mix and quantity are available.

1467. Capacity requirements planning (CRP) receives the preliminary requirements plan in the form of which of the following? A. Routing B. Planned and open orders C. Design specifications D. Bills of material

Overall explanation At the material requirements planning level, the preliminary material requirements plan is sent to capacity requirements planning in the form of planned and open orders. These are translated into load on specific work centers, which is compared to their available capacity.

1468. Based on the chart below, what would the average capacity be for each week if 10 hours of load is desired at the end of week 4? A. 15 hours per week B. 20 hours per week C. 25 hours per week D. 35 hours per week

Overall explanation If the desired load at the end of period 4 is 10 hours and there is a total of 110 hours of load available, the workstation would have to increase capacity to 25 hours each week, or 100 hours of capacity. This would leave 10 hours of load at the end of week 4.

1469. What is the primary output of the capacity requirements planning (CRP) process? A. Planned and firm planned orders B. List of past-due manufacturing orders C. Final assembly schedule D. Load profile for each work center

Overall explanation CRP generates a load profile for each work center showing the load versus the available capacity.

1470. A specific work center is outperforming expectations, completing a job that planners expected to take 15 hours in only 12 hours. What does this indicate? A. Superior machine maintenance B. Low efficiency C. High efficiency D. Good work ethic

Overall explanation Efficiency is a measurement of the actual output relative to the standard output expected. It measures how well something is performing relative to existing standards. If the difference in this situation continues to be the case, the standard times should be reviewed and adjusted.

1471. Capacity requirements planning has been used to check the validity of the material plan, and no constraining work centers have been identified. Which of the following is most likely the reason? A. The available capacity is greater than that required by the volume and mix. B. Capacity requirements planning used infinite capacity rather than finite loading. C. The production operations are balanced and have no individual bottlenecks. D. The capacity check did not include the various constraining work centers.

Overall explanation The only scenario that is known is that there is enough available capacity. Individual operations within a work center may still have bottlenecks.

1472. Which of the following can be used to increase machine utilization? A. Running orders with similar setups together B. Running the orders with the largest quantities first C. Reducing lot sizes D. Increasing preventive maintenance time

Overall explanation Combining similar setups will allow the machine to have less downtime, therefore increasing utilization.

1473. Which of the following capacity planning (load) report characteristics can be attributed to material requirements planning (MRP)? A. Load is based on both planned and open orders, and load reflects valid order priorities. B. Load is based on both planned and open orders, and load distribution is based on actual lead times. C. Load reflects valid order priorities, and load distribution is based on actual lead times. D. Load is based on both planned and open orders, load reflects valid order priorities, and load distribution is based on actual lead times.

Overall explanation MRP provides the capacity planning system with load based on released and planned orders. The start and due dates on the orders reflect the valid order priorities.

1474. What is the rated capacity of a work center that has available time of 320 hours, utilization of 80 percent, and efficiency of 90 percent? A. 444 standard hours B. 230 actual hours C. 444 actual hours D. 230 standard hours

Overall explanation Rated Capacity = Available Time × Utilization × Efficiency = 320 hours × 0.8 × 0.9 = 230.4 standard hours, rounded to 230 standard hours. Since this is an expectation based on a time study and set as a standard for this work center, it is a standard hours calculation.

1475. Which of the following describes a new facility designed to be dedicated to providing just one family of product? A. It allows operational efficiencies to rise and costs to fall. B. It will likely be difficult to staff due to the boring, repetitive nature of a focused factory. C. It discourages the improvement of operational efficiencies, thus negatively impacting costs. D. It is risky, because when a quality issue occurs, all product is affected. Overall explanation

A new facility dedicated to providing just one family of product allows operational efficiencies to rise and costs to fall.

1476. Which type of capacity provides protection from planned and unplanned activities? A. Demonstrated capacity B. Theoretical capacity C. Safety capacity D. Productive capacity

Overall explanation Safety capacity is the planned amount by which the available capacity exceeds current productive capacity.

1477. Capacity requirements planning data used to calculate available labor and machine capacity is most likely to be located in the: A. routing operation details. B. work center data. C. labor reporting database. D. capacity planning bill of labor.

Overall explanation The work center master record contains all of the data regarding the capacity properties of the productive resource. This data is used whenever any job is assigned to be completed at the work center.

1478. Based on the information provided below, what is the productivity of the work center? * Total hours worked—480 hours Work Center 18 Week 15 Product Quantity Produced (Units) Standard Hours Hours Charged A 200 200 250 B 60 120 100 C 80 80 100 * Planned labor—420 standard hours/week * Standard labor cost—$5/standard hour A. 83% B. 89% C. 94% D. 120%

1479. Which of the following actions is most effective when load chronically exceeds average capacity? A. Expediting the important jobs B. Revising the master schedule C. Releasing orders early D. Regenerating the material requirements plan

Overall explanation If the capacity plan is overloaded, the master schedule priority plan must be changed.

1480. A company pursues a chase production strategy during holiday peaks. Which of the following elements is most likely to cause variability if rated capacity is recalculated on a period-by-period basis for capacity requirements planning? A. Utilization B. Demonstrated hours C. Efficiency D. Available hours

Overall explanation Available hours will change based on responding to holiday peaks. Efficiency and utilization should remain about the same.

1481. Which of the following is true when capacity requirements planning (CRP) determines that the load at a work center is within the capacity for the period? A. Overloads in adjacent periods can be moved to the period that is underloaded. B. More orders can be added to the master production schedule. C. This is not a key work center and should be removed from the capacity requirements planning. D. The material plan is balanced, and both the start and completion dates will likely be met.

Overall explanation The purpose of CRP is to verify that the material plan is balanced with capacity. There is no indication that there is an underload condition.

1482. A work center has 44 hours of available capacity. The product has an internal setup time of 2 hours and a run time of 4 hours per piece. What quantity of product can be produced? A. 10 pieces B. 11 pieces C. 19 pieces D. 21 pieces

Overall explanation 44 hours – 2 hours for internal setup = 42 hours; 42/4 hours per piece = 10 pieces

1483. Before delaying a master-scheduled item to balance load with capacity in a make-to-stock environment, what should the planner check first? A. Load projection for the preceding work centers B. Expected usage rate of the end item based on history C. Number of shifts in the overloaded work centers D. Impact on the customer service level of a replenishment delay

Overall explanation There are multiple ways to address overloaded work centers. However, delaying an end item may affect a business-level customer service objective.

1484. What would be an effective response for an established player when a competitor attacks with a disruptive business model or a product with features that are simpler and more affordable? A. Offer temporary discounts for existing products. B. Introduce a better product, and cross-sell and up-sell existing products. C. Wait to see if the competitor is successful. D. Immediately start an aggressive plan to acquire the upstart.

Overall explanation Incumbents often fail to counterattack a competitor’s disruptive advances. For example, Craig’s List offers free classifieds, and in all but one of the top 50 U.S. metropolitan markets for classified ads, it dominates. What was different about that one metropolitan area? That company responded quickly to the business model threat by launching its own free classifieds site along with other significant changes. Lessons learned? When faced with a disruptive competitor, consider quickly matching the disruptive business model.

1485. A life cycle analysis will typically show what percentage of manufacturing value cost locked in at the specification development and conceptual design phases of product development? A. 70% B. 50% C. 30% D. 10%

Overall explanation The largest percentage of manufacturing costs is locked in at the specification development and conceptual design phases of product development.

1486. At a minimum, a company’s key success factors should include which of the following? A. Generous portions of narrative from the company’s mission and vision statements B. Those attributes or strengths with the greatest impact on future success in the marketplace C. Internal rate of return stated as a percent of earnings D. Company’s targeted year-end stock price

Overall explanation Key success factors are the product attributes, organizational strengths, and accomplishments that have the greatest impact on future success in the marketplace.

1487. What is the most difficult phase in a product’s life cycle in terms of determining how to best arrange the supply chain, and why? A. The growth phase is most difficult for supply chain design because the problem is how to grow and protect market share despite competitors using some of the same supply chain intermediaries. B. The decline phase is most difficult for supply chain design because the problem is how to meet profit objectives given irregular demand. C. The decline phase is the most difficult for supply chain design because the problem is how to protect market share despite competitors using some of the same supply chain intermediaries. D. The growth phase is most difficult for supply chain design because the problem is how to meet profit and growth objectives given irregular demand.

Overall explanation During the growth phase, the objectives are to grow the market and to produce an acceptable profit. Note that the most difficult part of how to arrange the supply chain is actually during the growth phase. This is because demand may be very irregular, especially considering that forecasts may lack reliable data.

1488. Which of the following describes core competencies? A. Not directly related to the company’s products or markets B. Directly related to the company’s products or markets C. Ideal candidates for cost improvement initiatives including outsourcing D. Quantifiable and dollarized in financial reporting

Overall explanation According to the Dictionary core competencies are "bundles of skills or knowledge sets that enable a firm to provide the greatest level of value to its customers in a way that is difficult for competitors to emulate and that provides for future growth."

1489. A supply chain with one factory warehouse, six distribution centers, and 50 retail stores has how many echelons between the factory and the end customer? A. 3 B. 7 C. 56 D. 57

Overall explanation Echelons are the levels of supply chain nodes to get product to the customer.

1490. Which of the following is critical information that is required during the operations strategic planning process? A. Human resources plan for future hiring B. Supply chain design C. Overall objectives of the organization D. Prior year’s net income statement

Overall explanation One area’s strategic plan must be aligned with the strategic plan of the overall company.

1491. Which are primary activities in manufacturing planning and control? A. Sales support, demand management, and purchasing. B. Inventory management and cost information. C. Production planning and inventory management. D. Sales support and cost information.

Overall explanation MPC is a method of determining how to prioritize the use of available resources to best satisfy customer demand. These resources include materials and available equipment and worker capacity. Inventory management and cost information is incorrect because cost information is not an activity (though it is an input to manufacturing planning and control). Sales support is not a major activity of MPC, though sales does provide important data used in MPC.