Basics of Supply Chain Management (BSCM)

Free Exam Practice Questions

1) Which of the following is a benefit that arises from using a chase strategy in production planning
opposed to a production leveling strategy?

Higher planning accuracy

Less operational disruptions

Lower inventory carrying cost

Stable workforce
1) Which of the following is a benefit that arises from using a chase strategy in production planning
opposed to a production leveling strategy?

Higher planning accuracy

Less operational disruptions

Lower inventory carrying cost

Stable workforce
 Explanation

In a chase strategy, a company manufactures only enough to meet demand which leads to
little or no finished goods inventory and hence lower inventory carrying cost than in a
production leveling strategy.
2) A car factory has on average ten weeks of work in process (WIP) inventory, annual costs of goods
sold are $50.000.000, sales revenue is $130.000.000 and the manufacturing lead time is 6 Weeks.
Assuming that the factory works 350 days a year what is the average dollar value of the work in
process (WIP)?

$5.000.000

$2.000.000

$10.000.000

$3.085.142
2) A car factory has on average ten weeks of work in process (WIP) inventory, annual costs of goods
sold are $50.000.000, sales revenue is $130.000.000 and the manufacturing lead time is 6 Weeks.
Assuming that the factory works 350 days a year what is the average dollar value of the work in
process (WIP)?

$5.000.000

$2.000.000

$10.000.000

$3.085.142
 Explanation
Work in process (WIP) is part of the costs of goods sold (COGS). Production costs like labor,
materials and overhead are applied to WIP throughout the entire manufacturing process
and the value of WIP is therefore estimated to be half of the final value (COGS).

350 days / 7days = 50 Weeks

Weekly Cost of Goods Sold = $50,000,000 per year/ 50 weeks per year= $1.000,000/week

Value of 10 Weeks WIP = 10 weeks x $1.000,000/week x = $5.000.000

3) What is the difference between MRP and MRP II?

MRP II opposed to MRP includes the integration of an ERP System

MRP II provides coordination between the marketing department and production

MRP II is simply a newer version that succeeded MRP

MRP stands for materials requirement plan whereas MRP II stands for manufacturing
resource plan
3) What is the difference between MRP and MRP II?

MRP II opposed to MRP includes the integration of an ERP System

MRP II provides coordination between the marketing department and production

MRP II is simply a newer version that succeeded MRP

MRP stands for materials requirement plan whereas MRP II stands for manufacturing
resource plan
 Explanation

MRP II stands for manufacturing resource plan. The term MRP II is used to distinguish the
manufacturing resource plan (MRP II) from the materials requirement plan (MRP).
4) A flow process layout is also called

Stream layout

Project layout

Product layout

Progress layout
4) A flow process layout is also called

Stream layout

Project layout

Product layout

Progress layout
 Explanation

Flow process layouts are often called product layouts due to the limited range of products
such systems are generally set up for.
5) In forecasting, the mean absolute deviation (MAD) can be used for which of the following
purposes?

Assessing the absolute variability of a set of data

Measuring the total variability of a set of data

Predicting annual product demand

Analyzing the accuracy of future forecasts

5) In forecasting, the mean absolute deviation (MAD) can be used for which of the following
purposes?

Assessing the absolute variability of a set of data

Measuring the total variability of a set of data

Predicting annual product demand

Analyzing the accuracy of future forecasts

 Explanation

The mean absolute deviation (MAD) determines the absolute variability of a data set.
While a total error could sum up to zero due to different error directions the MAD measure
the variability by calculating the total error ignoring the plus and minus signs.
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