Which of the following statements is NOT true regarding dependent demand items

Chapter 11 Resource Planning

11 Material Requirements Planning

Material requirements planning (MRP) is a computerized information system developed specifically to aid in managing dependent demand inventory and scheduling replenishment orders. Answer: TRUE Difficulty: Easy Keywords: material requirements planning (MRP) Learning Outcome: Apply the process of materials requirements planning (MRP) AACSB: Application of Knowledge Learning Obj.: Explain how the concept of dependent demand in material requirements planning is fundamental to resource planning.
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A parent is any item manufactured from one or more components. Answer: TRUE Difficulty: Easy Keywords: parent, component Learning Outcome: Apply the process of materials requirements planning (MRP) AACSB: Application of Knowledge Learning Obj.: Explain how the concept of dependent demand in material requirements planning is fundamental to resource planning.
Dependent demand for an item occurs because the quantity required for it varies with the production plans of one or more parents. Answer: TRUE Difficulty: Moderate Keywords: dependent demand, parent Learning Outcome: Apply the process of materials requirements planning (MRP) AACSB: Application of Knowledge Learning Obj.: Explain how the concept of dependent demand in material requirements planning is fundamental to resource planning.
A component is an item that may go through one or more operations to be transformed into or become part of one or more parents. Answer: TRUE Difficulty: Easy Keywords: component, parent, transform Learning Outcome: Apply the process of materials requirements planning (MRP) AACSB: Application of Knowledge Learning Obj.: Explain how the concept of dependent demand in material requirements planning is fundamental to resource planning.
If the demand for an independent demand item is continuous and uniform, so will the planned order releases of its components. Answer: FALSE Difficulty: Moderate Keywords: dependent demand, continuous Learning Outcome: Apply the process of materials requirements planning (MRP) AACSB: Application of Knowledge Learning Obj.: Explain how the concept of dependent demand in material requirements planning is fundamental to resource planning.
Which of the following is not an example of dependent demand items? A) shoelaces, shoes B) wheels, car C) carafes, coffeemakers D) ice skates, roller skates Answer: D Difficulty: Moderate Keywords: dependent demand Learning Outcome: Apply the process of materials requirements planning (MRP) AACSB: Application of Knowledge Learning Obj.: Explain how the concept of dependent demand in material requirements planning is fundamental to resource planning.
Any item manufactured from one or more components is a(n): A) parent. B) component. C) intermediate item. D) purchased item. Answer: A Difficulty: Moderate Keywords: parent, component Learning Outcome: Apply the process of materials requirements planning (MRP) AACSB: Application of Knowledge Learning Obj.: Explain how the concept of dependent demand in material requirements planning is fundamental to resource planning.
Under which one of the following circumstances can an MRP system be used to its best advantage? A) when the item's demand depends only on customer demand B) when the item's demand is uniform C) when the item's demand is constant D) when the item's demand depends on the production plans of its parent(s) Answer: D Difficulty: Moderate Keywords: material requirements planning (MRP) Learning Outcome: Apply the process of materials requirements planning (MRP) AACSB: Application of Knowledge Learning Obj.: Explain how the concept of dependent demand in material requirements planning is fundamental to resource planning.

11 Master Production Scheduling

The master production schedule (MPS) is the part of the material requirements planning that specifies when components must be ordered or assembled. Answer: FALSE Difficulty: Moderate Keywords: master production schedule, MPS, material requirements plan Learning Outcome: Apply the process of materials requirements planning (MRP) AACSB: Application of Knowledge Learning Obj.: Describe a master production schedule (MPS) and compute available-to-promise quantities.
Available-to-promise inventory is the amount of end items that marketing can promise to customers by a certain date. Answer: TRUE Difficulty: Easy Keywords: ATP, available to promise inventory, MPS, master production schedule Learning Outcome: Apply the process of materials requirements planning (MRP) AACSB: Application of Knowledge Learning Obj.: Describe a master production schedule (MPS) and compute available-to-promise quantities.
The portion of the master production schedule farthest into the future is often frozen to reduce forecasting requirements. Answer: FALSE Difficulty: Moderate Keywords: MPS, master production schedule, freezing Learning Outcome: Apply the process of materials requirements planning (MRP) AACSB: Application of Knowledge Learning Obj.: Describe a master production schedule (MPS) and compute available-to-promise quantities.
The projected on-hand inventory in the MPS takes into account scheduled receipts, but not planned receipts. Answer: FALSE Difficulty: Moderate Keywords: MPS, master production schedule, freezing Learning Outcome: Apply the process of materials requirements planning (MRP) AACSB: Application of Knowledge Learning Obj.: Describe a master production schedule (MPS) and compute available-to-promise quantities.
The projected on-hand inventory in the MPS takes into account customer orders (booked) as well as the MPS quantities. Answer: TRUE Difficulty: Moderate Keywords: MPS, master production schedule, projected on-hand inventory Learning Outcome: Apply the process of materials requirements planning (MRP) AACSB: Application of Knowledge Learning Obj.: Describe a master production schedule (MPS) and compute available-to-promise quantities.
Gross requirements are the total demand derived from all parent production plans. Answer: TRUE Difficulty: Moderate Keywords: gross requirements Learning Outcome: Apply the process of materials requirements planning (MRP) AACSB: Application of Knowledge Learning Obj.: Describe a master production schedule (MPS) and compute available-to-promise quantities.
Available-to-promise (ATP) quantities are only shown in the first period (if the projected on-hand inventory is greater than zero in the first period), and subsequently in periods when the MPS quantity is greater than 0. Answer: TRUE Difficulty: Moderate Keywords: Available-to-promise quantities, ATP, MPS quantity Learning Outcome: Apply the process of materials requirements planning (MRP) AACSB: Application of Knowledge Learning Obj.: Describe a master production schedule (MPS) and compute available-to-promise quantities.

Table 11. Big Truck Tacos has developed the following forecast of demand and accepted orders for their holiday tacos as they enter the Taco Festival Season. They enter the planning period with 65 holiday tacos in inventory as shown in Week 0.

Week 0 1 2 3 4 5 6 7 8 Forecast 70 80 90 100 120 140 170 220 Customer Orders 80 50 30 10 0 0 0 0 Projected on- hand inventory 65 MPS ATP

Use Table 11 to answer this question. If Big Truck Tacos makes tacos in batches of 20, what should their MPS entry be for the first week of production? A) 60 B) 80 C) 100 D) 20 Answer: D Difficulty: Moderate Keywords: master production schedule Learning Outcome: Apply the process of materials requirements planning (MRP) AACSB: Analytical Thinking Learning Obj.: Describe a master production schedule (MPS) and compute available-to-promise quantities.

Table 11. Mutts Amazing Dogs has developed the following demand forecast for The Pitbull, a spicy concoction graced by pepperjack cheese, serrano, habanero, poblano and jalapeno peppers, onion, and a cilantro- lime aioli. They enter the planning period with 20 hotdogs in inventory as shown in Week 0. A few customers have standing orders for hotdogs and they have booked catering events over the next two months. They buy their hotdogs in packages of ten just like you and me.

Week 0 1 2 3 4 5 6 7 8 Forecast 70 80 90 100 120 140 170 220 Customer Orders 80 50 30 10 0 0 0 0 Projected on- hand inventory 20 MPS ATP

Use Table 11 to answer this question. What should the MPS quantity be for week 5? A) 190 B) 120 C) 170 D) 160 Answer: B Difficulty: Moderate Keywords: master production schedule Learning Outcome: Apply the process of materials requirements planning (MRP) AACSB: Analytical Thinking Learning Obj.: Describe a master production schedule (MPS) and compute available-to-promise quantities.
Use Table 11 to answer this question. What is their available to promise inventory for week 4? A) 30 B) 50 C) 70 D) 90 Answer: D Difficulty: Moderate Keywords: master production schedule Learning Outcome: Apply the process of materials requirements planning (MRP) AACSB: Analytical Thinking Learning Obj.: Describe a master production schedule (MPS) and compute available-to-promise quantities.
Use Table 11 to answer this question. The sales manager realizes that he shifted a decimal point for week 3; instead of customer orders for 30, they actually have customer orders for 300. "My bad," he says to no one in particular. The production manager retreats to the sanctity of his office and after dismembering his sales-manager voodoo doll, sets about making things right. What's the proper MPS quantity for week 3 now that the orders are straightened out? A) 280 B) 270 C) 300 D) 290 Answer: C Difficulty: Moderate Keywords: master production schedule Learning Outcome: Apply the process of materials requirements planning (MRP) AACSB: Analytical Thinking Learning Obj.: Describe a master production schedule (MPS) and compute available-to-promise quantities.
Use Table 11 to answer this question. Mutt decides to operate on a level MPS plan for weeks 1 through 4. What MPS quantity brings them into week 5 with the same ATP as if they had adopted a more traditional approach? A) 190 B) 150 C) 170 D) 160 Answer: A Difficulty: Challenging Keywords: master production schedule Learning Outcome: Apply the process of materials requirements planning (MRP) AACSB: Analytical Thinking Learning Obj.: Describe a master production schedule (MPS) and compute available-to-promise quantities.
Operations produces a number of items in one production period. Those items that are not produced for a specific customer order are ________. Answer: available to promise inventory Difficulty: Moderate Keywords: available to promise, ATP Learning Outcome: Apply the process of materials requirements planning (MRP) AACSB: Application of Knowledge Learning Obj.: Describe a master production schedule (MPS) and compute available-to-promise quantities.
________ is an estimate of the amount of inventory available each week after gross requirements have been satisfied. Answer: Projected on-hand inventory Difficulty: Moderate Keywords: projected on-hand inventory Learning Outcome: Apply the process of materials requirements planning (MRP) AACSB: Application of Knowledge Learning Obj.: Describe a master production schedule (MPS) and compute available-to-promise quantities.
Complete the following MPS Record.

Answer:

Difficulty: Moderate Keywords: MPS, master production schedule Learning Outcome: Apply the process of materials requirements planning (MRP) AACSB: Analytical Thinking Learning Obj.: Describe a master production schedule (MPS) and compute available-to-promise quantities.

11 MRP Explosion

A materials requirements planning (MRP) explosion occurs when the system is bombarded with too many orders to schedule at one time. Answer: FALSE Difficulty: Easy Keywords: material requirements planning (MRP) Learning Outcome: Apply the process of materials requirements planning (MRP) AACSB: Application of Knowledge Learning Obj.: Apply the logic of an MRP explosion to identify production and purchase orders needed for dependent demand items.
A bill of materials is a record of all the components of an item, the parent-component relationships, and the usage quantities derived from engineering and process designs. Answer: TRUE Difficulty: Moderate Keywords: bill of materials, BOM Learning Outcome: Apply the process of materials requirements planning (MRP) AACSB: Application of Knowledge Learning Obj.: Apply the logic of an MRP explosion to identify production and purchase orders needed for dependent demand items.
Part commonality tends to increase inventory costs. Answer: FALSE Difficulty: Moderate Keywords: part commonality, inventory Learning Outcome: Apply the process of materials requirements planning (MRP) AACSB: Application of Knowledge Learning Obj.: Apply the logic of an MRP explosion to identify production and purchase orders needed for dependent demand items.
Gross requirements are the total demand derived from all parent production plans. Answer: TRUE Difficulty: Moderate Keywords: gross requirements, demand, parent Learning Outcome: Apply the process of materials requirements planning (MRP) AACSB: Application of Knowledge Learning Obj.: Apply the logic of an MRP explosion to identify production and purchase orders needed for dependent demand items.
A bill of materials (BOM) shows all of the components of an item, the parent-component relationships, usage quantities, and lot size derived from engineering and process designs. Answer: FALSE Difficulty: Moderate Keywords: BOM, bill of materials, parent, component Learning Outcome: Apply the process of materials requirements planning (MRP) AACSB: Application of Knowledge Learning Obj.: Apply the logic of an MRP explosion to identify production and purchase orders needed for dependent demand items.
MRP II ties MRP to the company's financial system. Answer: TRUE Difficulty: Moderate Keywords: MRP, MRP II, material requirements planning Learning Outcome: Apply the process of materials requirements planning (MRP) AACSB: Application of Knowledge Learning Obj.: Apply the logic of an MRP explosion to identify production and purchase orders needed for dependent demand items.
Which of the following statements about MRP is true? A) To be classified as a successful MRP user, a company must use either the L4L or POQ rules for lot sizing. B) MRP gross requirements for a parent item are equal to the planned order releases of its components. C) MRP logic is based on the logic of uniform, continuous demand, and item independence. D) MRP gross requirements for a component depend on the planned order releases of its immediate parents. Answer: D Difficulty: Moderate Keywords: MRP, material requirements planning, component Learning Outcome: Apply the process of materials requirements planning (MRP) AACSB: Application of Knowledge Learning Obj.: Apply the logic of an MRP explosion to identify production and purchase orders needed for dependent demand items.
Which one of the following is an input to the MRP system? A) shop-floor schedules B) financial reports C) master production schedule D) purchasing orders Answer: C Difficulty: Moderate Keywords: MRP, material requirements planning, input Learning Outcome: Apply the process of materials requirements planning (MRP) AACSB: Application of Knowledge Learning Obj.: Apply the logic of an MRP explosion to identify production and purchase orders needed for dependent demand items.
If a planned receipt for an item is due in week 6 and the item's lead time is two weeks, in which week will the corresponding planned order release occur? A) week 2 B) week 4 C) week 6 D) week 8 Answer: B Difficulty: Moderate Keywords: planned order receipt, planned order release Learning Outcome: Apply the process of materials requirements planning (MRP) AACSB: Application of Knowledge Learning Obj.: Apply the logic of an MRP explosion to identify production and purchase orders needed for dependent demand items.
Which one of the following statements about lot-sizing rules is true?

A) The periodic order quantity (POQ) rule seeks to create inventory remnants. B) If the POQ rule is used, an item's lot size can vary each time an order is placed. C) The lot-for-lot (L4L) rule is a special case of the fixed-order quantity (FOQ) rule. D) All lot-sizing rules seek to minimize inventory levels. Answer: B Difficulty: Moderate Keywords: lot, sizing, POQ, periodic order quantity Learning Outcome: Apply the process of materials requirements planning (MRP) AACSB: Application of Knowledge Learning Obj.: Apply the logic of an MRP explosion to identify production and purchase orders needed for dependent demand items.

Which one of the following is an MRP lot-sizing rule that attempts to minimize the amount of average inventory? A) periodic order quantity (POQ), with P = 2 B) fixed order quantity (FOQ) C) economic order quantity (EOQ) D) lot for lot (L4L) Answer: D Difficulty: Moderate Keywords: MRP, material requirements planning, L4L Learning Outcome: Apply the process of materials requirements planning (MRP) AACSB: Application of Knowledge Learning Obj.: Apply the logic of an MRP explosion to identify production and purchase orders needed for dependent demand items.
Which statement on MRP explosion is best? A) It calculates the total number of subassemblies, components, and raw materials needed for each parent item. B) It calculates the total number of raw materials to be purchased from all suppliers. C) It calculates the total number of parts to be produced for each parent item. D) It calculates the total number of parts needed to be produced less the number of parts on hand for each parent item. Answer: A Difficulty: Moderate Keywords: MRP, material requirements planning, explosion Learning Outcome: Apply the process of materials requirements planning (MRP) AACSB: Application of Knowledge Learning Obj.: Apply the logic of an MRP explosion to identify production and purchase orders needed for dependent demand items.
Use the following partially completed MRP record to answer the question.

What are the quantities of planned order releases for item ABC for the first five weeks (weeks 1, 2, 3, 4, and 5)? A) 30, 0, 60, 0, 145 B) 60, 0, 145, 0, 0 C) 0, 30, 60, 0, 0 D) 30, 0, 60, 145, 0 Answer: B Difficulty: Moderate Keywords: MRP, material requirements planning, planned order release Learning Outcome: Apply the process of materials requirements planning (MRP) AACSB: Analytical Thinking Learning Obj.: Apply the logic of an MRP explosion to identify production and purchase orders needed for dependent demand items.

Use the following partially completed MRP record to answer the question.

What are the quantities of planned order releases for item XYZ for the first six weeks (weeks 1, 2, 3, 4, 5, and 6)? A) 20, 30, 0, 40, 20, 0 B) 35, 0, 60, 0, 0, 0 C) 5, 30, 0, 40, 20, 0 D) 35, 0, 0, 40, 20, 0 Answer: A Difficulty: Moderate Keywords: MRP, material requirements planning, planned order release Learning Outcome: Apply the process of materials requirements planning (MRP) AACSB: Analytical Thinking Learning Obj.: Apply the logic of an MRP explosion to identify production and purchase orders needed for dependent demand items.

Use the following MRP record to answer the question.

Which one of the statements concerning item LMN is true? A) The scheduled receipt of 80 units in week 3 should be expedited so that it is finished in week 2. B) The planned order release quantity in week 3 is 80 units. C) The planned receipt quantity in week 6 is 30 units. D) The projected on-hand inventory in week 8 is 70 units. Answer: A Difficulty: Challenging Keywords: scheduled receipt, planned order release, projected on-hand inventory Learning Outcome: Apply the process of materials requirements planning (MRP) AACSB: Analytical Thinking Learning Obj.: Apply the logic of an MRP explosion to identify production and purchase orders needed for dependent demand items.

Management wishes to use a POQ lot-sizing rule for an item that experiences an average demand of 30 units per week. If the desired average lot size is 120 units, what should P be? A) zero or one week B) two or three weeks C) four or five weeks D) more than five weeks Answer: C Difficulty: Moderate Keywords: lot sizing, POQ Learning Outcome: Apply the process of materials requirements planning (MRP) AACSB: Analytical Thinking Learning Obj.: Apply the logic of an MRP explosion to identify production and purchase orders needed for dependent demand items.
Management wishes to use an FOQ lot-sizing rule for an item based on the economic order quantity. If the annual demand is 1,200 units, the holding cost is $10 per unit per year, and the setup cost is $50 per lot, which one of the following fixed-order quantities is most appropriate? A) 90 units B) 110 units C) 130 units D) 150 units Answer: B Difficulty: Moderate Keywords: lot sizing, FOQ Learning Outcome: Apply the process of materials requirements planning (MRP) AACSB: Analytical Thinking Learning Obj.: Apply the logic of an MRP explosion to identify production and purchase orders needed for dependent demand items.

Scenario 11. Sunshine Manufacturing produces three products: X, Y, Z. The production of these end items is controlled by an MRP system. Each end item X is assembled with two components of A and one component of B. Each end item of Y is assembled with two components of C and one component of A. End item Z is assembled from one unit of D and one unit of C; D is manufactured from one unit of A; and C is manufactured from one unit of B.

Use the information in Scenario 11. Which of the following sequences is an acceptable way to process the inventory records for components A, B, C, and D? A) A, B, C, D B) D, A, B, C C) B, A, D, C D) C, B, D, A Answer: D Difficulty: Challenging Keywords: order processing Learning Outcome: Apply the process of materials requirements planning (MRP) AACSB: Analytical Thinking Learning Obj.: Apply the logic of an MRP explosion to identify production and purchase orders needed for dependent demand items.
Use the information in Scenario 11. If item C has a manufacturing lead time of two weeks, and a planned receipt of 65 units is needed in week 4, which of the following statements is true? A) The planned order release in week 2 for item C is 130 units. B) The gross requirements for item B in week 4 is 65 units. C) The gross requirements for item B in week 2 is 130 units. D) The gross requirements for item B in week 2 is 65 units. Answer: D Difficulty: Challenging Keywords: gross requirements Learning Outcome: Apply the process of materials requirements planning (MRP) AACSB: Analytical Thinking Learning Obj.: Apply the logic of an MRP explosion to identify production and purchase orders needed for dependent demand items.

Scenario 11.

Which of the following statements are true of dependent demand?

Which of the following statements about dependent demand are true? Dependent demand tends to be more intermittent than independent demand. Once forecasts or production schedules are complete, dependent demand is known exactly.

Which of the following are included in materials with dependent demand?

Dependent demand items are components of finished goods—such as raw materials, component parts, and subassemblies—for which the amount of inventory needed depends on the level of production of the final product.

Which of the following is an example of dependent demand?

Dependent demand, on the other hand, is demand for component parts or subassemblies. For example, this would be the microchips in the computer, the wheels on the bicycle, or the cheese on the pizza.

What is the name given to the list of quantities of components ingredients and materials required to make a product?

A bill of materials (BOM) is a comprehensive inventory of the raw materials, assemblies, subassemblies, parts and components, as well as the quantities of each needed to manufacture a product. In a nutshell, it is the complete list of all the items that are required to build a product.