Apics Exam Questions

September 25, 2017 Philosophy

Question Number: 1 BASICS OF SUPPLY CHAIN MGMT (BSCM) :Businesswide Concepts The basic elements of the supply chain include: A) supply, manufacture, distribution. B) design, manufacture, inventory. C) engineer, design, manufacture. D) supply, engineer, manufacture. The correct answer is: A Even though different companies produce different products, the basic elements are the same: supply, manufacture, and distribution. (Arnold, Introduction to Materials Management, Chapter 1). [pic] Question Number: 2 BASICS OF SUPPLY CHAIN MGMT (BSCM) :Businesswide Concepts

In order to maximize profit, a company must have all of the following objectives except: A) Best customer service B) Most accurate production forecast C) Lowest inventory investment D) Lowest distribution cost The correct answer is: B A company, to maximize profits, must have the lowest production cost, best customer service, lowest inventory investment, and lowest distribution costs. While an accurate production forecast will contribute to low production costs, it will not guarantee the Lowest production costs. (Arnold, Introduction to Materials Management, Chapter 1). [pic]

Question Number: 3 BASICS OF SUPPLY CHAIN MGMT (BSCM) :Businesswide Concepts The inventory turns ratio measures: A) the amount of inventory needed to support sales growth. B) obsolete inventory as a percent of sales. C) how effectively inventory is being used. D) the amount of space needed to store inventory. The correct answer is: C The inventory turns ratio measures how effectively inventories are being used. It is calculated by dividing annual cost of goods sold by average inventory in dollars. (Arnold, Introduction to Materials Management, Chapter 1). [pic] Question Number: 4

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BASICS OF SUPPLY CHAIN MGMT (BSCM) :Businesswide Concepts Process specifications can be best defined as a document which: A) shows how the product will appear. B) shows the steps needed to produce the end item. C) details the capacity available at a work center. D) flow charts various processes. The correct answer is: B Process specifications describe the steps needed to make an end product. They are usually printed on a routing sheet or kept in the database for online access. (Arnold, Introduction to Materials Management, Chapter 1). [pic] Question Number: 5 BASICS OF SUPPLY CHAIN MGMT (BSCM) :Businesswide Concepts

A company’s strategic plan: A) provides the manufacturing plan for families of end items. B) outlines the sales plan for the next year. C) is a statement of goals and objectives for a long range period. D) outlines new products for the next year. The correct answer is: C While strategic plans do provide for manufacturing, sales, and new product plans, they really provide the overall direction for the company. The result is a statement of goals and objectives for 2-5 years, and sometimes 10 years. (Arnold, Introduction to Materials Management, Chapter 2). [pic] Question Number: 6

BASICS OF SUPPLY CHAIN MGMT (BSCM) :Businesswide Concepts In which of the following manufacturing environments would consumer products, such as film, food, etc. be classified? A) Assemble-to-order B) Engineer-to-order C) Make-to-order D) Make-to-stock The correct answer is: D Consumer products are generally considered make-to-stock. There are a few standard items assembled from many components. (Arnold, Introduction to Materials Management, Chapter 3). [pic] Question Number: 7 BASICS OF SUPPLY CHAIN MGMT (BSCM) :Businesswide Concepts Many different end items are made from a small number of components.

What manufacturing environment would this be? A) Make-to-stock B) Make-to-order C) Assemble-to-order D) Engineer-to-order The correct answer is: B Make-to-order companies typically make many end items from a small number of components. The schedule is developed from actual customer orders. (Arnold, Introduction to Materials Management, Chapter 3). [pic] Question Number: 8 BASICS OF SUPPLY CHAIN MGMT (BSCM) :Businesswide Concepts The purpose of a strategic business plan is to: A) plan production by product family. B) plan for business changes which take a long time.

C) establish customer requirements over the long term. D) establish order promising strategies. The correct answer is: B Strategic plans are used for long term planning (2-10 years). They are used to allow time to plan for changes which take a long time to occur. These might include new plants or distribution centers. (Arnold, Introduction to Materials Management, Chapter 8). [pic] Question Number: 9 BASICS OF SUPPLY CHAIN MGMT (BSCM) :Businesswide Concepts Aggregate inventory management is concerned with: A) managing inventory items and how they are used. B) establishing the production plan.

C) the cost and benefits of carrying the different classes of inventory. D) the distribution network and the movement of inventory. The correct answer is: C Aggregate inventory management is concerned with the cost and benefit of carrying raw materials, work-in-process, and finished goods inventory. It is financially oriented. (Arnold, Introduction to Materials Management, Chapter 9). [pic] Question Number: 10 BASICS OF SUPPLY CHAIN MGMT (BSCM) :Businesswide Concepts Which of the following are objectives of inventory? I. Maximize customer service II. Efficient transaction

III. Low cost plan operations IV. Minimum inventory investment A) I, II, and III B) I, III, and IV C) I, II, and IV D) II, III, and IV The correct answer is: B In order to maximize profits, a company must manage inventories, provide great customer service, and have efficient plant operations, while minimizing the amount of capital used for inventory. (Arnold, Introduction to Materials Management, Chapter 9). [pic] Question Number: 11 BASICS OF SUPPLY CHAIN MGMT (BSCM) :Businesswide Concepts Which of the following would be included in the cost of carrying inventory? I.

Heating and lighting a warehouse II. Obsolete inventory III. Labor to move material IV. Damaged inventory A) I, II, and III B) II, III, and IV C) I, III, and IV D) I, II, III, and IV The correct answer is: D All of the above costs would be included in the cost of inventory. Any costs incurred as the result of having inventory should be included. (Arnold, Introduction to Materials Management, Chapter 9). [pic] Question Number: 12 BASICS OF SUPPLY CHAIN MGMT (BSCM) :Businesswide Concepts Which of the following best describes a normal distribution? A) Most values clustered near a central point

B) Warehouses centrally located to markets C) Values accumulated at six sigma D) A critical ratio of 1. 0 The correct answer is: A Normal distribution refers to the statistical distribution of values where the majority of values will accumulate around the mean. The resulting graph is shaped like a bell. It is often known as a “bell curve”. (Arnold, Introduction to Materials Management, Chapter 11). [pic] Question Number: 13 BASICS OF SUPPLY CHAIN MGMT (BSCM) :Businesswide Concepts Based on the following information, what would the safety stock need to be to ensure product is in stock 99. 999% of the time? MAD = 100 On hand = 200 Weekly demand = 400 A) 100 B) 300 C) 500 D) 600 The correct answer is: C To ensure coverage of product 99. 9999% of the time, it would require 5 MAD for safety stock. Therefore: 5 * 100 = 500. (Arnold, Introduction to Materials Management, Chapter 11). [pic] Question Number: 14 BASICS OF SUPPLY CHAIN MGMT (BSCM) :Businesswide Concepts Each distribution center places orders from central supply as they are needed. This is called: A) pull system. B) push system. C) Just-in-Time delivery. D) supply chain management. The correct answer is: A

When each distribution center orders from central supply or the factory independently of what other distribution centers are doing, it is called a pull system. The advantage is that coordination and communication is less expensive. The disadvantage is that the lack of coordination causes problems with customer service and inventories. (Arnold, Introduction to Materials Management, Chapter 11). [pic] Question Number: 15 BASICS OF SUPPLY CHAIN MGMT (BSCM) :Businesswide Concepts A company makes all decisions regarding forecasting and orders centrally for its distribution network.

This company is using which of the following systems? A) Pull system B) Push system C) Just-in-Time D) Time phased order point The correct answer is: B The push system “pushes” inventory to distribution centers by making stocking decisions centrally. The advantage is that inventory is sent where it is needed most. The disadvantage is that the coordination is more expensive than the pull system. (Arnold, Introduction to Materials Management, Chapter 11). [pic] Question Number: 16 BASICS OF SUPPLY CHAIN MGMT (BSCM) :Businesswide Concepts A company wants to store 15,000 cartons with 20 cartons on each pallet.

The warehouse is set up to store pallets 5 high. How many pallet positions are needed? A) 150 B) 500 C) 750 D) 3000 The correct answer is: A The number of pallet positions can be calculated by dividing the number of cartons of storage needed by the number of cartons per pallet which equals the total number of pallets needed. Divide the total number of pallets needed by the number of pallets stacked height which equals the number of positions needed. For this problem: 15,000/ 20 = 750 pallets needed; 750/ 5 = 150 positions. (Arnold, Introduction to Materials Management, Chapter 12. ) [pic] Question Number: 17

BASICS OF SUPPLY CHAIN MGMT (BSCM) :Businesswide Concepts All of the following are basic grouping methods to store and locate stock in a warehouse except: A) Items related functionally B) Items in sequential SKU number C) Items which are physically similar D) Items which are fast moving The correct answer is: B The purpose of grouping items in a warehouse is to be more productive in storage and in the picking process. Items which have sequential SKU numbers may have nothing to do with each other. As a result, this would not be a criteria for grouping. (Arnold, Introduction to Materials Management, Chapter 12). pic] Question Number: 18 BASICS OF SUPPLY CHAIN MGMT (BSCM) :Businesswide Concepts What is the major disadvantage of a fixed location warehouse? A) Put away time is increased B) Cube utilization is poor C) Dock time is increased D)Material handling costs rise The correct answer is: B Fixed location warehouses offer poor cube utilization because pallet locations are left empty when the product assigned to the location is out of stock. Generally, fixed locations are used in small warehouses with low throughput. (Arnold, Introduction to Materials Management, Chapter 12). [pic] Question Number: 19

BASICS OF SUPPLY CHAIN MGMT (BSCM) :Businesswide Concepts Which of the following are advantages of point of use storage? I. Ease of control II. Material handling is reduced III. Storage costs are reduced IV. Material is accessible at all times A) I, II, and III B) II, III, and IV C) I, III, and IV D) I, II, III, and IV The correct answer is: B All are advantages of point-of-use storage except ease of control, which is an advantage of central storage. (Arnold, Introduction to Materials Management, Chapter 12). [pic] Question Number: 20 BASICS OF SUPPLY CHAIN MGMT (BSCM) :Businesswide Concepts

Which of the following are advantages of using central storage? I. Ease of control II. Costs are reduced III. Inventory record accuracy is easier to attain IV. Safety stock is reduced A) I, II, and III B) I, III, and IV C) II, III, and IV D) I, II, III, and IV The correct answer is: B Costs are not reduced with central storage. There are labor costs, racking, paper system, and other costs associated with central storage. (Arnold, Introduction to Materials Management, Chapter 12). [pic] Question Number: 21 BASICS OF SUPPLY CHAIN MGMT (BSCM) :Businesswide Concepts Which of the following best describes cycle counting?

A) A process to reduce cycle time B) Set up reduction to shorten the production cycle C) Counting inventory on a pre-determined schedule D) Conducting a time study at a work center The correct answer is: C Cycle counting is used to count inventory on a pre-determined schedule for the purpose of identifying errors and taking corrective action so the error will not occur again. (Arnold, Introduction to Materials Management, Chapter 12). [pic] Question Number: 22 BASICS OF SUPPLY CHAIN MGMT (BSCM) :Businesswide Concepts The movement of finished goods from production to the customer is: A) physical supply.

B) supply chain. C) physical distribution. D) conversion cycle. The correct answer is: C Physical distribution is the actual movement of goods from production to the customer. Physical supply is the movement of raw material from the supplier to manufacturing. (Arnold, Introduction to Materials Management, Chapter 13). [pic] Question Number: 23 BASICS OF SUPPLY CHAIN MGMT (BSCM) :Businesswide Concepts All of the following activities are part of the physical distribution system except: A) Transportation B) Warehousing C) Material handling D) Forecasting of customer orders The correct answer is: D

Physical distribution includes the activities of transportation, distribution, inventory, warehousing, material handling, packaging, and order processing. Forecasting is not a physical distribution activity. (Arnold, Introduction to Materials Management, Chapter 13). [pic] Question Number: 24 BASICS OF SUPPLY CHAIN MGMT (BSCM) :Businesswide Concepts Trucks, as a mode of transportation, are best suited for: A) moving small quantities to widely dispersed markets. B) moving large quantities to widely dispersed markets. C) moving small quantities to narrowly dispersed markets. D) moving large quantities to narrowly dispersed markets.

The correct answer is: A Trucks are best when there is a need to move small quantities to widely dispersed markets. Trains are better for moving large quantities. (Arnold, Introduction to Materials Management, Chapter 13). [pic] Question Number: 25 BASICS OF SUPPLY CHAIN MGMT (BSCM) :Businesswide Concepts For a given product, the line haul cost is $1. 50 per mile. The product will move 400 miles. If 40,000 pounds are being shipped, what is the cost per hundred weight? A) 1. 00 B) 1. 50 C) 2. 00 D) 2. 50 The correct answer is: B The truck will cost $600 to move 400 miles ($1. 50 * 400 miles).

To calculate the cost per hundred weight: Divide the total cost for the truck by 400. (40,000 pounds divided by 100). Therfore: $600 divided by 400 = $1. 50/cwt. (Arnold, Introduction to Materials Management, Chapter 13). [pic] Question Number: 26 BASICS OF SUPPLY CHAIN MGMT (BSCM) :Businesswide Concepts Which of the following best describes the purpose of a distribution warehouse? A) A warehouse to store goods for long periods of time B) A storage warehouse for floor stock C) A warehouse to move and mix goods D) A supply chain warehouse for regional storage The correct answer is: C

A distribution warehouse is used primarily to break down large lots into smaller lots for shipment. A general warehouse is used for long term storage. (Arnold, Introduction to Materials Management, Chapter 13). [pic] Question Number: 27 BASICS OF SUPPLY CHAIN MGMT (BSCM) :Businesswide Concepts Which of the following are the roles which warehouses serve? I. Transportation consolidation II. Inventory efficiency III. Product mixing IV. Customer service A) I, II, and III B) I, III, and IV C) II, III, and IV D) I, II, III, and IV The correct answer is: B Warehouses serve three important roles: ) Transportation consolidation – consolidate small shipments (LTL) into large shipments (TL) 2) Product mixing – group a variety of products into one order 3) Customer service – allows products to be placed closer to the customer Inventory will typically rise with an increase in the number of warehouses. (Arnold, Introduction to Materials Management, Chapter 13). [pic] Question Number: 28 BASICS OF SUPPLY CHAIN MGMT (BSCM) :Businesswide Concepts A market boundary can be defined as the: A) geographic boundary of a region. B) line where the laid down cost is the same from two supply sources.

C) line where shipments in one distribution center equals another. D) mileage boundary where shipment costs exceed the margin to be gained. The correct answer is: B A market boundary is the line where the laid down cost from two supply sources is equal. The laid-down cost is the delivered cost of a product to a geographic point. (Arnold, Introduction to Materials Management, Chapter 13). [pic] Question Number: 29 BASICS OF SUPPLY CHAIN MGMT (BSCM) :Businesswide Concepts As a company increases the number of warehouses from one to two, there is an impact on safety stock. Safety stock will: A) increase by a factor of 2. B) decrease by half.

C) increase, and the percent can be calculated. D) decrease by a calculated percentage. The correct answer is: C The safety stock will increase by an amount which can be calculated, but it will not double automatically. The amount of the increase will depend on service levels by part, the demand variation, and other factors. As the number of warehouses increases, demand at each will decrease, causing greater variations in product demand. Therefore, safety stock will increase appropriately. (Arnold, Introduction to Materials Management, Chapter 13). [pic] Question Number: 30 BASICS OF SUPPLY CHAIN MGMT (BSCM) :Businesswide Concepts

The Just-in-Time philosophy can be best defined as: A) Delivering goods just before they are needed B) Fulfilling customer orders just as they are needed C) Manufacturing without inventory D) Elimination of waste The correct answer is: D The Just-in-Time philosophy is concerned with the elimination of waste or non-value activities. Maintaining large inventories is just one of many non-value added activities. (Arnold, Introduction to Materials Management, Chapter 14). [pic] Question Number: 31 BASICS OF SUPPLY CHAIN MGMT (BSCM) :Businesswide Concepts The Toyota Motor Company identified seven sources of waste in manufacturing.

Which of the following represent those sources of waste? I. Process II. Overproduction III. Wait-time IV. Movement A) I, II, and III B) I, II, and IV C) II, III, and IV D) I, II, III, and IV The correct answer is: D The seven sources of waste identified by Toyota are Process, Methods, Movement, Product Defects, Waiting times, Overproduction, and Inventory. (Arnold, Introduction to Materials Management, Chapter 14). [pic] Question Number: 32 BASICS OF SUPPLY CHAIN MGMT (BSCM) :Businesswide Concepts To achieve necessary quality levels in a JIT environment, quality must be: A) built into the product by operators.

B) inspected at multiple points. C) ensured by the quality control lab. D) an inspectors function. The correct answer is: A Quality must be the operators responsibility. They are the only ones who can make sure defects are not built into the product. They must be allowed to stop the process when defects are found. (Arnold, Introduction to Materials Management, Chapter 14). [pic] Question Number: 33 BASICS OF SUPPLY CHAIN MGMT (BSCM) :Businesswide Concepts In order to reduce the number of transactions which occur in a JIT environment, companies use a system called: A) transaction prevention. B) pre-deduct.

C) backflushing. D) bar coding. The correct answer is: C Backflushing is a system for doing inventory and labor transactions based on the finished goods production. With this system, one transaction will create the many issues transactions for inventory. This process works best when the lead time for the product is short and the product flows down a production line. (Arnold, Introduction to Materials Management, Chapter 14). [pic] Question Number: 34 BASICS OF SUPPLY CHAIN MGMT (BSCM) :Businesswide Concepts The annual cost of goods sold for a company is $40 million and the average inventory is $10 million.

By how much would the inventory need to be reduced to have annual inventory turns equal 20 turns? A) $2 million B) $4 million C) $6 million D) $8 million The correct answer is: D In order for a company with cost of goods sold of $40 million to turn the inventory 20 times annually, the inventory would have to be valued at $2 million (40/20). Since the average inventory is currently valued at $10 million, the inventory would need to be reduced by $8 million. (Arnold, Introduction to Materials Management, Chapter 1). [pic] Question Number: 35 BASICS OF SUPPLY CHAIN MGMT (BSCM) :Businesswide Concepts

A company wants to produce 1000 units over the next four months using a level strategy. The months have 20, 21, 19 and 22 working days in each one. Based on this strategy, how much would be produced in the first month? A) 244 B) 254 C) 260 D) 262 The correct answer is: A To find the answer: Divide the planned production (1000) by the number of days available in the four months (82) to find the daily production rate (12. 2). Multiply the daily production rate (12. 2) by the number of days in the first month (20) to obtain the first month’s production (244). (Arnold, Introduction to Materials Management, Chapter 1). [pic]

Question Number: 36 BASICS OF SUPPLY CHAIN MGMT (BSCM) :Businesswide Concepts System nervousness is caused by: A) the inability of the planner to remain calm. B) requirements changing rapidly. C) constant demands by manufacturing for long production runs. D) purchased materials which do not arrive on time. The correct answer is: B System nervousness is caused by requirements which change rapidly and usually by small amounts. The planner must, in these cases, apply judgement to the situation before changing the plans to accommodate the change. (Arnold, Introduction to Materials Management, Chapter 4). [pic] Question Number: 37

BASICS OF SUPPLY CHAIN MGMT (BSCM) :Businesswide Concepts A component has a fixed cost of $1,000 and a variable cost of $5. 00 per unit to produce. What would the average cost per unit be if the company produces 4,000 units? A) $5. 00 B) $5. 10 C) $5. 25 D) $5. 50 The correct answer is: C To produce 4,000 units, the total cost would be $21,000. ($5 * 4,000 units + $1,000 fixed cost = $21,000). Divide the $21,000 by the number of units (4000) to find the cost per unit. ( $21,000/4,000 = $5. 25). An alternative way to calculate the cost per unit would be to divide the fixed cost ($1,000) by the units produced (4,000) which equals $. 5. Add the fixed cost to the variable cost to get the cost per unit. ($5. 00 + $. 25 = $5. 25). (Arnold, Introduction to Materials Management, Chapter 7). [pic] Question Number: 38 BASICS OF SUPPLY CHAIN MGMT (BSCM) :Businesswide Concepts Which of the following best defines throughput? A) The number of bottlenecks slowing production B) The total capacity which a factory can produce C) The speed of a work center to produce D) The total volume of production passing through a facility The correct answer is: D Throughput is the total volume of production passing through a facility.

Bottlenecks control the throughput in the facility and must be eliminated in order to increase the throughput. (Arnold, Introduction to Materials Management, Chapter 6). [pic] Question Number: 39 BASICS OF SUPPLY CHAIN MGMT (BSCM) :Businesswide Concepts Forecasts are typically more accurate for the near future than they are for the longer future. This occurs because: A) the near term holds less uncertainty than the long term. B) more data is available in the near term. C) aggregate data is easier to forecast. D) the future is more dynamic in the near term. The correct answer is: A The near term is more predictable than the long term.

Most companies can easily predict what they are going to do next week compared to next year. This allows forecasts to be more accurate in the near term. (Arnold, Introduction to Materials Management, Chapter 8). [pic] Question Number: 40 BASICS OF SUPPLY CHAIN MGMT (BSCM) :Businesswide Concepts Forecasts are usually wrong but we continue to use them. They are necessary because: A) forecasters provide a service to the organization. B) forecasts are a prelude to business planning. C) the master production schedule (MPS) needs one. D) materials requirements planning (MRP) cannot operate without one.

The correct answer is: B Forecasts are the prelude to business planning. They provide an estimate of what conditions will look like in the future. So even though we know they are wrong, by measuring how wrong they are, forecasts can be constantly improved for use by the business. (Arnold, Introduction to Materials Management, Chapter 8). [pic] Question Number: 41 BASICS OF SUPPLY CHAIN MGMT (BSCM) :Businesswide Concepts Even in an intermittent manufacturing shop, certain JIT principles can be applied. Which of the following principles can be used in an intermittent manufacturing shop? I. Employee involvement

II. Total preventive maintenance III. Inventory reduction IV. Continuous flow lines A) I and III B) II and IV C) I, II, and III D) I, II, III, and IV The correct answer is: C An intermittent manufacturer is characterized by processing in batches, and large variation in design and order quantities. At the extreme, every job could be made to customer specification. The product lacks a continuous flow. However, JIT principle can be applied for employee involvement, workplace layout, total quality control, preventive maintenance, setup time reduction, supplier partnerships, and inventory reduction. Arnold, Introduction to Materials Management, Chapter 14). [pic] Question Number: 42 BASICS OF SUPPLY CHAIN MGMT (BSCM) :Businesswide Concepts Which of the following manufacturing types would typically have the longest delivery time? A) Make-to-order B) Engineer-to-order C) Make-to-stock D) Assemble-to-order The correct answer is: B Delivery time is defined as the time elapsed from receipt of the customer’s order to the delivery of the product to the customer. Engineer-to-order companies will generally have the longest delivery time due to the design and engineering time required to create a product.

In contrast, make-to-order companies will make a product from existing components after an order is received. Make- to-stock companies will ship to the customer from stock. Assemble-to-order companies will assemble a customer order from existing sub-assemblies. (Arnold, Introduction to Materials Management, Chapter 1). [pic] Question Number: 43 BASICS OF SUPPLY CHAIN MGMT (BSCM) :Businesswide Concepts Which of the following statements would be true regarding the delivery time in an engineer to order company? A) Delivery time is shorter than a make-to-order company.

B) It would be the same as a make-to-stock item. C) It would be longer than an assemble-to-order company. D) It would be shorter than an assemble-to-order company. The correct answer is: C Delivery time is defined as the time elapsed between receipt of the customer’s order and the delivery to the customer. Engineer-to-order companies have the longest delivery time due to the engineering which must occur before the product can be manufactured for delivery. (Arnold, Introduction to Materials Management, Chapter 13). [pic] Question Number: 44 BASICS OF SUPPLY CHAIN MGMT (BSCM) :Businesswide Concepts

Which of the following would be considered a function of physical distribution? A) Material handling B) Routings C) Kanban size D) Pull signal The correct answer is: A Physical distribution includes all the activities associated with physically moving goods; from the supplier to the start of production, and from the end of production to the consumer. Material handling is involved with physically moving the goods. The others are functions within manufacturing. (Arnold, Introduction to Materials Management, Chapter 13). [pic] Question Number: 45

BASICS OF SUPPLY CHAIN MGMT (BSCM) :Businesswide Concepts Which of the following would be considered part of the physical distribution system? A) Moving materials between work centers B) Receiving goods from suppliers C) Planning the transfer of goods to outside contractors D) Forecasting inventory levels to support manufacturing The correct answer is: B Physical distribution is defined as the physical movement of goods from suppliers to the beginning of production and from the end of production to the consumer. Receiving would be included as part of the function of physical distribution. Arnold, Introduction to Materials Management, Chapter 13). [pic] Question Number: 46 BASICS OF SUPPLY CHAIN MGMT (BSCM) :Businesswide Concepts Which of the following would most likely be an independent demand item? A) Inventoried subassembly for a printer B) Manufactured subassembly in a car C) Purchased component for a fork truck D) Spare part for a jet engine The correct answer is: D Independent demand is defined as demand for an item which is unrelated to the demand for another item. Service parts would typically be forecast independently from their use during the manufacture of the jet engine.

Therefore, the jet engine might have independent and dependent demand. (Arnold, Introduction to Materials Management, Chapter 11). [pic] Question Number: 47 BASICS OF SUPPLY CHAIN MGMT (BSCM) :Businesswide Concepts Production planning is generally a direct input to: A) material requirements planning. B) purchase order planning. C) capacity load at a work center. D) master production scheduling. The correct answer is: D Production plans are agreed upon management plans for manufacturing, shipping and inventory/backlog. These plans are developed at the aggregate level (e. g. monthly, product families).

The plan provides management approval for the master scheduler to develop the detailed master schedule (end products, weekly). (Arnold, Introduction to Materials Management, Chapter 2). [pic] Question Number: 48 BASICS OF SUPPLY CHAIN MGMT (BSCM) :Businesswide Concepts Which of the following would most likely be a dependent demand item? A) Safety gloves B) Office supplies C) Purchased component D) Item being shipped to customer The correct answer is: C Dependent demand is defined as “demand that is directly related to or derived from the bill of material structure for other items or end products. (APICS Dictionary) Therefore, a purchased component would be part of a bill of material structure and demand would be related to the demand for other parts in that structure. [pic] Question Number: 49 BASICS OF SUPPLY CHAIN MGMT (BSCM) :Businesswide Concepts If a company is going to establish a cycle count program, a primary objective should be to: A) correct the inventory records. B) reduce the headcount. C) identify the causes of inventory errors. D) eliminate the physical inventory. The correct answer is: C The primary objective of a cycle count program is to identify the causes of inventory errors and eliminate them permanently.

Only by correcting the causes of error will the records stay accurate for the system to operate properly and, perhaps in the future, eliminate the physical inventory. (Arnold, Introduction to Materials Management, Chapter 12). [pic] Question Number: 50 BASICS OF SUPPLY CHAIN MGMT (BSCM) :Businesswide Concepts A company needs to increase production in the current week to meet a customer request. The quickest way to accomplish this is to: A) work overtime. B) hire more workers. C) hire temporary workers. D) subcontract the work. The correct answer is: A

Working overtime allows skilled workers to finish the customers job. This would be quicker than hiring workers which can take a great deal of time. Temporary workers can be hired quickly, however, the quality would suffer, and finding a short term subcontractor would not generally be feasible. (Arnold, Introduction to Materials Management, Chapter 5). [pic] Question Number: 51 BASICS OF SUPPLY CHAIN MGMT (BSCM) :Businesswide Concepts Which of the following does a tracking signal identify in a forecast? A) Mean absolute deviation B) Standard deviation C) Bias D) Aggregate summarization The correct answer is: C

Bias occurs when the cumulative actual demand varies from the forecast on a consistent basis. A tracking signal provides a mathematical method to determine if the forecast error is truly biased or if random error is occurring. Random error will correct itself while bias will not. A tracking signal is calculated by dividing the algebraic sum of the forecast errors by the MAD (Mean Absolute Deviation). (Arnold, Introduction to Materials Management, Chapter 8). [pic] Question Number: 52 BASICS OF SUPPLY CHAIN MGMT (BSCM) :Businesswide Concepts An income statement of a company will show which of the following?

A) Inventory levels B) Long term debt C) Cost of products sold D) Net cash available The correct answer is: C Income statements reflect the revenues and expenses of a company generating either a profit or loss. Cost of products sold is subtracted from the revenue to obtain a gross profit. From the gross profit, expenses are deducted to arrive at a net income or loss. [pic] Question Number: 53 BASICS OF SUPPLY CHAIN MGMT (BSCM) :Businesswide Concepts Which of the following is a reason to maintain inventory? A) Improve customer service B) Reduce transportation costs C) Increase machine operating time

D) Reduce costs The correct answer is: A One of the primary reasons to maintain inventory is to provide competitive customer service. By having inventory, a company can avoid costly stockouts, lost sales, and lost customers. In some industries, such as consumer goods, it is imperative that the product be in stock when the customer orders. (Arnold, Introduction to Materials Management, Chapter 1). [pic] Question Number: 54 BASICS OF SUPPLY CHAIN MGMT (BSCM) :Businesswide Concepts Which of the following best describes the ABC approach to inventory control? A) Maintain a high inventory of “A” parts.

B) Have plenty of “C” parts. C) Keep the “B” parts to a minimum level. D) Always keep plenty of inventory. The correct answer is: B The ABC method of inventory control operates on the assumption that a company’s limited resources should be used to maintain the high priority items, or A items. The C parts have less value and should therefore be maintained at a very high level of inventory so inaccuracies will not impact the operation. This would allow less resources to be committed managing the low priority items. (Arnold, Introduction to Materials Management, Chapter 9). [pic] Question Number: 55

BASICS OF SUPPLY CHAIN MGMT (BSCM) :Businesswide Concepts The law which states that a small percentage of the group usually accounts for a large percent of the results is which of the following? A) Fredo’s law B) Newton’s first law C) Pareto’s law D) Nielsen’s law The correct answer is: C Pareto was an Italian economist who developed the observation that 80% of the Italian wealth was concentrated in 20% of the population. This observation can apply to many areas and is used to analyze the inventory for classifying A, B, and C items. Generally, 80% of the inventory dollars rest with 20% of the parts. Arnold, Introduction to Materials Management, Chapter 9). [pic] Question Number: 56 BASICS OF SUPPLY CHAIN MGMT (BSCM) :Businesswide Concepts Inventory is used to decouple: A) production plans from master schedules. B) rough cut capacity from capacity plans. C) supplier orders from supplier deliveries. D) supply from the demand. The correct answer is: D Inventory is used to separate supply from demand. This allows the manufacturing to occur smoothly without as much disruption caused by fluctuating demand. The inventory acts like a shock absorber so the spikes in demand are not reflected in the manufacturing schedule. Arnold, Introduction to Materials Management, Chapter 9). [pic] Question Number: 57 BASICS OF SUPPLY CHAIN MGMT (BSCM) :Businesswide Concepts A supervisor’s primary role in a total employee involvement company is: A) controlling. B) cheerleading. C) coaching. D) quality control. The correct answer is: C Total employee involvement allows employees to participate in decision making which was previously reserved for management. In this environment, the supervisor’s role is to help employees succeed by assisting employees in a decision making process rather than telling employees what to do.

This coaching process helps employees improve the decisions they make. (Arnold, Introduction to Materials Management, Chapter 14). [pic] Question Number: 58 BASICS OF SUPPLY CHAIN MGMT (BSCM) :Businesswide Concepts Conformance can be best described as: A) making the highest quality products. B) meeting the specified requirements. C) working together as a team. D) flowing product through cells. The correct answer is: B Conformance, as defined by the APICS Dictionary, is “an affirmative indication or judgement that a product or service has met the requirements of a relevant specification, contract, or regulation. This does not mean that a manufacturer is necessarily making the highest quality products in the marketplace. (Arnold, Introduction to Materials Management, Chapter 14). [pic] Question Number: 59 BASICS OF SUPPLY CHAIN MGMT (BSCM) :Businesswide Concepts The objective of scheduling is to: A) ensure work centers are properly loaded. B) meet delivery dates. C) provide capable to promise information. D) meet cost targets. The correct answer is: B The primary objective of scheduling is to meet delivery dates while utilizing manufacturing resources effectively. (Arnold, Introduction to Materials Management, Chapter 3). pic] Question Number: 60 BASICS OF SUPPLY CHAIN MGMT (BSCM) :Businesswide Concepts If a variety of products are made in a factory, the most common unit of capacity is: A) machine turns. B) inventory turns. C) time. D) dollars. The correct answer is: C When factories make a variety of products, the most common unit of capacity is time or hours. In factories which make common units, a measure of capacity will be the unit of output. For example, beer is measured in barrels, automobiles are measured in cars produced, etc. (Arnold, Introduction to Materials Management, Chapter 2). [pic]

Question Number: 61 BASICS OF SUPPLY CHAIN MGMT (BSCM) :Businesswide Concepts Which of the following best defines the term break even point? A) The point at which a product fails B) Current assets = current liabilities C) Required capacity = available capacity D) Revenues = total costs The correct answer is: D The break-even point occurs when revenues equal total costs. When volume is less than the break even-point, a loss occurs. Conversely, when volume exceeds the break even point, a profit occurs. (Arnold, Introduction to Materials Management, Chapter 7). [pic] Question Number: 62

BASICS OF SUPPLY CHAIN MGMT (BSCM) :Businesswide Concepts The throughput of a manufacturing process is determined by: A) overloaded work centers. B) first work center in the process. C) underloaded work centers. D) last work center in the process. The correct answer is: A The factory throughput is regulated by the constraint work center. The constraint work center is by definition the work center that has no available capacity. Therefore, the overloaded work center regulates the throughput. (Arnold, Introduction to Materials Management, Chapter 6). [pic] Question Number: 63

BASICS OF SUPPLY CHAIN MGMT (BSCM) :Businesswide Concepts In a JIT manufacturing environment, waste can be described as: A) component scrap. B) overtime. C) any process which does not add value. D) any overhead process. The correct answer is: C In Just-in-Time manufacturing, waste can be best described as any process which does not add value. The processes can be overtime, scrap, paperwork, approvals, etc. which do not add any value to the product for the customer. (Arnold, Introduction to Materials Management, Chapter 14). [pic] Question Number: 64 BASICS OF SUPPLY CHAIN MGMT (BSCM) :Businesswide Concepts

A key element in selecting a site for a factory is: A) availability of water. B) access to rail sidings. C) cost and availability of transportation. D) warehouse space and cost. The correct answer is: C In siting a factory, low cost and availability of transportation are key components. This ensures that raw materials to keep the factory supplied are available. Additionally, finished goods leaving the factory can be delivered reliably to customers. (Arnold, Introduction to Materials Management, Chapter 13). [pic] Question Number: 65 BASICS OF SUPPLY CHAIN MGMT (BSCM) :Businesswide Concepts

The particular channel in which goods move describes: A) manufacturing channel. B) marketing channel. C) capacity channel. D) distribution channel. The correct answer is: D The distribution channel is the path that goods move through distribution centers, to wholesalers, and retailers. (Arnold, Introduction to Materials Management, Chapter 13). [pic] Question Number: 66 BASICS OF SUPPLY CHAIN MGMT (BSCM) :Businesswide Concepts Inventory areas should be locked except for during normal business hours because: A) people are apt to steal. B) storeroom personnel know where parts are stored.

C) transactions might not be completed. D) it’s the right thing to do. The correct answer is: C Inventory locations should be kept secure so the transactions are completed and inventories are maintained accurately. If people are allowed to access the inventory without a proper transaction being completed, inventory accuracy will suffer, and the system will become less reliable. (Arnold, Introduction to Materials Management, Chapter 12). [pic] Question Number: 67 BASICS OF SUPPLY CHAIN MGMT (BSCM) :Businesswide Concepts A company has its warehouse divided so order pickers only pick in their area.

This warehouse is operating under which of the following systems? A) Zone system B) Area system C) Consolidated pick system D) Modified pick system The correct answer is: A In a zone system, the warehouse is divided into zones and the order pickers only pick the items in their zone. The items are sent to the marshalling area to be combined with other items from other zones for that customer. An area system allows the picker to pick a complete order by moving through the warehouse. (Arnold, Introduction to Materials Management, Chapter 12). [pic] Question Number: 68 BASICS OF SUPPLY CHAIN MGMT (BSCM) :Businesswide Concepts

In a fixed location warehouse system, each SKU has an assigned location. While this has many positives, the negative aspect to fixed location warehousing is that: A) warehouses can get messy. B) cube utilization is poor. C) inventory accuracy suffers. D) items can be damaged in put away. The correct answer is: B In fixed location warehouses, cube utilization is poor because if a location has no stock, the space remains empty. (Arnold, Introduction to Materials Management, Chapter 12). [pic] Question Number: 69 BASICS OF SUPPLY CHAIN MGMT (BSCM) :Businesswide Concepts The balance to cube utilization is:

A) pallet positions. B) accessibility. C) put away speed. D) material handling costs. The correct answer is: B Cube utilization must always be balanced with accessibility to the goods when they are needed. For example, a warehouse could have one hundred per cent cube utilization but the warehouse pickers could not pick the goods. Therefore, warehouses do not operate at 100% cube utilization. (Arnold, Introduction to Materials Management, Chapter 12). [pic] Question Number: 70 BASICS OF SUPPLY CHAIN MGMT (BSCM) :Businesswide Concepts A normal distribution can be graphed as a : A) parabolic curve.

B) trend seasonal curve. C) positive bias curve. D) bell shaped curve. The correct answer is: D In a normal distribution, the actual points are concentrated around the average (mean). The further from the average the data is, the fewer data points emerge. (Arnold, Introduction to Materials Management, Chapter 8). [pic] Question Number: 71 BASICS OF SUPPLY CHAIN MGMT (BSCM) :Businesswide Concepts Which of the following manufactured product types are best suited for flow manufacturing? A) Wide range of disparate products B) Limited range of similar products C) Low volume of similar products

D) High volume of disparate products The correct answer is: B In a flow manufacturing environment, the workstations required to make a product or family of similar products are positioned closely together in the sequence necessary to make the product. Work flows from one work station to the next in a sequential flow. Because they tend to be inherently inflexible, flow lines are best suited to a high volume of similar products. [pic] Question Number: 72 BASICS OF SUPPLY CHAIN MGMT (BSCM) :Businesswide Concepts The key component to quick changeovers is: A) dramatically reduced set up times.

B) availability of materials to run when the changeover is complete. C) expensive machines which changeover automatically. D) large enough lot sizes so changeovers are not critical. The correct answer is: A Reducing setup times are the key component to making changeovers quicker. The quicker the changeover, the smaller the lot size can be. The smaller the lot size, the less inventory that needs to be maintained. This leads to much lower costs of operations. [pic] Question Number: 73 BASICS OF SUPPLY CHAIN MGMT (BSCM) :Businesswide Concepts A company which can adapt swiftly to changes in the volume and mix of their roducts is: A) good at sales and operation planning. B) forecasting accurately. C) process flexible. D) six sigma certified. The correct answer is: C Companies which are process flexible are able to adapt quickly to changes in the product mix and volume. They have modified their sales, manufacturing and supplier processes so they are machine flexible, have small lot sizes, have constant communication with the sales force, have suppliers who are involved in the planning and design of their products and have developed real time collaboration with all the parties involved.

They may not forecast their product at all but are able to adapt to the ongoing changes brought on by market forces. [pic] Question Number: 74 BASICS OF SUPPLY CHAIN MGMT (BSCM) :Businesswide Concepts The key driver in a Total Quality Management (TQM) company should be: A) lower costs. B) training employees. C) problem solving tools. D) customer needs. The correct answer is: D The customer needs should drive all of the focus of employees in a TQM environment. By focusing on the customer, all of the processes to support the customers expectations will be improved.

While training and problem solving tools are key methods for developing employee empowerment, the customer should be in the center of all the process improvements. [pic] Question Number: 75 BASICS OF SUPPLY CHAIN MGMT (BSCM) :Businesswide Concepts Quality can best be defined as: A) job one. B) meeting or exceeding the users’ expectations. C) the best product produced. D) zero defects. The correct answer is: B Quality is best defined by the user of the product. The user sets the expectation for a company’s products and services by buying initially and repeating the purchase.

While zero defects is a measure of the quality produced, there are customers who are buying off quality products which are perfect for their ultimate use. Again, it depends on the expectations. [pic] Question Number: 76 BASICS OF SUPPLY CHAIN MGMT (BSCM) :Businesswide Concepts In a flow manufacturing environment, product will generally flow consistently and constantly. As a result, there is little time to do inventory transactions to record the movement of parts through the line. To overcome this, many companies record their inventory by using: A) pre flushing. B) kanban.

C) cycle counts. D) backflushing. The correct answer is: D Backflushing is a method for recording the usage of inventory at a standard quantity when the finished unit is completed. Backflushing can also be completed at various points (paypoints) in the routing. This process eliminates the need to record issue transactions for materials and time entry for labor. [pic] Question Number: 77 BASICS OF SUPPLY CHAIN MGMT (BSCM) :Demand Planning Production plans have all of the following except: A) Shipment plan B) Product families C) Inventory plan D) Weekly production

The correct answer is: D Production plans are generally monthly statements of shipments, production, and inventory (or backlog), broken down by product families, not end items. (Arnold, Introduction to Materials Management, Chapter 2). [pic] Question Number: 78 BASICS OF SUPPLY CHAIN MGMT (BSCM) :Demand Planning Which of the following statements is most correct? A) The MPS shows families of products. B) The MPS has more detail than the production plan. C) The production plan has more detail than the MPS. D) The production plan rolls up to equal the MPS. The correct answer is: B

The MPS is a weekly build plan that contains more detail than the production plan. However, the MPS should add up to equal the production plan. (Arnold, Introduction to Materials Management, Chapter 2). [pic] Question Number: 79 BASICS OF SUPPLY CHAIN MGMT (BSCM) :Demand Planning A closed loop MRP system can be best defined as: A) action taken by a planner to approve planned orders. B) re-planning of capacity to accommodate restraints. C) integrated planning and control system with feedback from the bottom-up. D) integrated systems which include financial software, finite capacity, and logistics.

The correct answer is: C Closed loop MRP systems operate from the top down with feedback throughout the system. These feedback mechanisms allow changes to occur in the top level planning. (Arnold, Introduction to Materials Management, Chapter 2). [pic] Question Number: 80 BASICS OF SUPPLY CHAIN MGMT (BSCM) :Demand Planning You are working as a Master Scheduler in a discrete manufacturing company. A large customer has asked if you can deliver an order, but you have some short term capacity constraints. Which of the following actions could be taken so the order can be delivered? I. People could be hired II.

Overtime could be worked III. Inventory could be built in slow times IV. Work could be subcontracted A) I, II, and III B) II, III, and IV C) I, III, and IV D) I, II, and IV The correct answer is: B Short term capacity can be increased by overtime, inventory, or subcontracting. Often, hiring qualified people takes much longer than the other three options. (Arnold, Introduction to Materials Management, Chapter 2). [pic] Question Number: 81 BASICS OF SUPPLY CHAIN MGMT (BSCM) :Demand Planning Which of the following are strategies to use in developing a production plan? I. Chase strategy II. Delphi strategy

III. Level strategy IV. Backlog strategy A) I and II B) I and III C) II and IV D) III and IV The correct answer is: B The chase strategy means production will vary with demand (inventory stays level). The level strategy establishes production at the average demand. Fluctuations in demand are absorbed by inventory. The third strategy is subcontracting. Production is kept at the minimum demand level. Variations in the demand level are absorbed by subcontracting production. (Arnold, Introduction to Materials Management, Chapter 2). [pic] Question Number: 82 BASICS OF SUPPLY CHAIN MGMT (BSCM) :Demand Planning

Which of the following are inputs to a realistic MPS? I. Production plan II. Forecasts for end items III. Product costs for end items IV. Capacity constraints A) I, II, and III B) I, II, and IV C) II, III, and IV D) I, III, and IV The correct answer is: B The production plan, forecasts, and capacity constraints are all inputs to the MPS. While costs are nice to have, they are not a necessary input. (Arnold, Introduction to Materials Management, Chapter 3). [pic] Question Number: 83 BASICS OF SUPPLY CHAIN MGMT (BSCM) :Demand Planning Which of the following are objectives when establishing the MPS? I.

Efficient use of resources II. Efficient final assembly III. High customer service levels IV. Efficient use of inventory A) I, II, and III B) I, II, and IV C) I, II, III, and IV D) I, III, and IV The correct answer is: D The master scheduler, when developing the MPS, must make sure labor, material, equipment, and inventory are being used efficiently in order to maintain high levels of customer service. Efficient final assembly would be developed by a final assembly schedule. (Arnold, Introduction to Materials Management, Chapter 3). [pic] Question Number: 84 BASICS OF SUPPLY CHAIN MGMT (BSCM) :Demand Planning

Final assembly scheduling usually occurs when: A) a customer order is received. B) planning a build schedule. C) the MPS is established. D) capacity is constrained. The correct answer is: A Final assembly scheduling occurs only after the customer order is received. The FAS is the actual build schedule which ensures that the customers get what they want. Generally, FAS occurs when there are a variety of options for the customer to order. (Arnold, Introduction to Materials Management, Chapter 3). [pic] Question Number: 85 BASICS OF SUPPLY CHAIN MGMT (BSCM) :Demand Planning

In make to stock requirements, customer orders are satisfied from: A) available capacity. B) work in process inventory. C) finished goods inventory. D) raw material inventory. The correct answer is: C Make-to-stock companies ship customer orders from finished goods. Make to order companies ship from available capacity. (Arnold, Introduction to Materials Management, Chapter 3). [pic] Question Number: 86 BASICS OF SUPPLY CHAIN MGMT (BSCM) :Demand Planning Independent demand can be defined by all of the following except: A) Demand not related to demand from higher level assemblies B) Forecasted demand

C) Demand calculated based on present demand D) Demand from customer orders The correct answer is: C Demand calculated from present demand would be dependent demand. Its demand is dependent upon a higher level assembly. (Arnold, Introduction to Material Management, Chapter 4). [pic] Question Number: 87 BASICS OF SUPPLY CHAIN MGMT (BSCM) :Demand Planning Which of the following would best define dependent demand? I. Demand which is dependent on the forecast II. Demand which is dependent on demand for a higher level assembly III. Demand which is calculated A) I B) I and II C) II and III D) III

The correct answer is: C Dependent demand is calculated based on demand for higher level assemblies. Forecasted demand is independent. (Arnold, Introduction to Material Management, Chapter 4). [pic] Question Number: 88 BASICS OF SUPPLY CHAIN MGMT (BSCM) :Demand Planning Which of the following is not an input to MRP? A) Master Production Schedule B) Inventory records C) Bill of materials D) Capacity planning The correct answer is: D Capacity planning is not an input to MRP. In fact, MRP assumes infinite capacity is available in its calculation. (Arnold, Introduction to Materials Management, Chapter 4). pic] Question Number: 89 BASICS OF SUPPLY CHAIN MGMT (BSCM) :Demand Planning Planning bills can be best described as: A) bills of material based on forecast demand. B) bills of material for new products. C) bills of material which represent average products. D) bills of material for expected usage. The correct answer is: C Planning bills are an artificial grouping of components established for planning purposes. They are used to simplify forecasting and scheduling. They are not buildable products. (Arnold, Introduction to Materials Management, Chapter 4). [pic] Question Number: 90

BASICS OF SUPPLY CHAIN MGMT (BSCM) :Demand Planning A firm planned order is used to: A) freeze the planned order against changes in quantity and time. B) convert the planned order to a scheduled receipt. C) simulate the projected inventory balance. D) manipulate the data and quantity of the customer order. The correct answer is: A Firm planned orders are used by planners when it is necessary to “freeze” the planned order. This might be necessary due to material shortages or capacity problems, e. g. , strikes. (Arnold, Introduction to Materials Management, Chapter 4).

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