Please note: that these study guides are used by ALL MGNT 3430 students.  This is to ensure that the product is uniform for all the classes.  I will follow this material and the tests to keep a standardized process for all Operations Management students.

Chapter Outlines:

MGMT 3430 Exam II Review Material

You should fare well on the exam IF you follow several simple guidelines:
    1), read and understand all of the chapters assigned;
    2), understand all of the learning objectives summarized at the end of each chapter;
    3), understand the questions sent as review material (below);
    4), understand the principles discussed in class.

Remember, memorizing and understanding are two different things. The type of questions that appear on the test require understanding and synthesis of information not recitation by rote.

LESSON OBJECTIVES

Independent demand inventory Chapter 12
   1.Contrast independent and dependent demand.
   2.Describe the major types of inventories for manufacturers.
   3.Discuss the important costs relevant to inventory control.
   4.Describe ways to measure inventory.
   5.List the major reasons for holding inventories.
   6.Describe the ABC classification approach and explain its value.
   7.Compute economic order quantities for each of the following cases:
        a. constant demand, no shortages
        b. constant demand, shortages allowed
   8.Determine reorder points under the following conditions:
        a. constant demand rate, constant lead time
        b. variable demand rate, constant lead time
   9.Contrast continuous review and periodic review inventory systems.

Dependent demand inventory Chapter 13
   1.Demonstrate how MRP logic uses the dependent demand relationships to determine component order release dates and
     due dates.
   2.Describe how offsetting lead times leads to a loss of visibility for low-level components.
   3.Explain the concept of MRP system nervousness, its causes, and how its effects can be reduced.
   4.Describe different lot sizing rules which are used in MRP systems.
   5.Discuss the key issues in implementing an MRP system.
   6.Describe situations in which a modular BOM would be appropriate.
   7.Contrast MRP and MRP II.

Mid- and short-range cap planning pp. 561-565
   1.Describe how capacity planning relates to MRP.
   2.Compare four capacity planning techniques on the basis of accuracy, information requirements, number of calculations,
     and ease of use.
 
 

THE EXAM

SAMPLE QUESTIONS

Which of the following is NOT an element of medium range planning?
 a.  resource planning
 b.  aggregate production planning
 c.  demand management
 d.  material requirements planning
 e.  rough-cut capacity planning

In time-horizon based aggregate production planning, _____ precedes aggregate production planning; _____ follows it.
 a.  master production scheduling; material requirements planning
 b.  material requirements planning; master production scheduling
 c.  long-range planning; master production scheduling
 d.  medium range planning; master production scheduling
 e.  long-range planning; strategic planning

Which of the following statements regarding aggregate production planning is TRUE?
 a.  Aggregate production planning is the same as master production scheduling.
 b.  Aggregate production planning is medium-term capacity planning that typically encompasses a time horizon of two to eighteen months.
 c.  Aggregate production planning results in a production plan for manufacturing environments, a staffing plan for service situations.
 d.  Aggregate planning is a "micro" approach to planning, focusing on overall capacity rather than individual products or services.
 e.  Only b and c are true

Which of the following is NOT associated with manipulation of product or service demand?
 a.  price incentives
 b.  reservations
 c.  complementary products or services
 d.  inventories
 e.  advertising/promotion

Which of the following is NOT associated with manipulating the supply of a product or service?
 a.  price incentives
 b.  inventories
 c.  cooperative arrangements
 d.  subcontracting
 e.  overtime/slack time

Production rates or work force levels are adjusted to match demand requirements over the planning horizon when a _____ strategy is used.
 a.  pure level
 b.  hierarchical
 c.  long-range
 d.  pure chase
 e.  linear decision rule

Because service firms do not inventory their output, _____ does not apply.
 a.  the pure chase strategy
 b.  the pure level strategy
 c.  hierarchical production planning
 d.  the pure and chaste strategy
 e.  medium range planning

The major types of inventory for a manufacturing facility include raw materials, finished goods and
 a.  returned material from customers.
 b.  work in process.
 c.  in-transit inventories to customers.
 d.  maintenance parts.
 e.  shop supplies.

Which of the following types of items would ordinarily have dependent demand?
 a.  repair parts
 b.  spare parts
 c.  subassemblies
 d.  all of the above
 e.  only a and c

Which of the following is a motive for holding inventory?
 a.  anticipation stock, to meet customer demand
 b.  stock-out inventory, to protect against shortages
 c.  cycle stock, to take advantage of economic order cycles
 d.  movement inventory, to allow for smooth and flexible operations
 e.  all of the above are motives for holding inventory

In an ABC classification scheme, which group of items will be most tightly controlled?
 a.  A items
 b.  B items
 c.  C items
 d.  all items equally controlled
 e.  perpetual inventory items

Which of the following statements about basic EOQ models is TRUE?
 a.  If annual demand were to double, the EOQ would increase.
 b.  If annual demand were to double, both the EOQ and the number of orders per year would increase.
 c.  If the carrying cost were to increase, the EOQ would fall.
 d.  If the ordering cost were to double, the EOQ would rise.
 e.  All of the above statements are true.

In the most basic Economic Order Quantity model (constant demand, no shortages), if the lead time increases from 2 days to 5, the EOQ will
 a.  increase proportionately.
 b.  increase, but not proportionately.
 c.  decrease.
 d.  be unchanged.
 e.  none of the above.

Which of the following statements about EOQ models is FALSE?
 a.  If annual demand were to double, the EOQ would also double.
 b.  If annual demand were to double, both the EOQ and the number of orders per year would increase.
 c.  If the ordering cost were to increase, the EOQ would rise.
 d.  If the setup cost were to decrease, the EOQ would fall.
 e.  All of the above statements are false.

Which one of the following best explains the term "cycle-service level"?
 a.  The risk of a stock out during the lead time.
 b.  The percent of demand that will be satisfied during the lead time.
 c.  The probability that demand will exceed supply during the lead time.
 d.  The probability that demand will exceed supply during the full order cycle.
 e.  The probability that demand will not exceed supply during the lead time.

When the demand rate and the lead time are both constant, the reorder point will equal
 a.  zero.
 b.  the safety stock.
 c.  the expected usage during lead time.
 d.  the cycle-service level.
 e.  the Economic Order Quantity.