1. Every company has upstream suppliers and downstream customers. These relationships may be referred to as a

a. total quality management system.

b. kanban system.

c. value chain.

d. just-in-time network.

2. Which of the following items is not included in annual inventory carrying costs?

a. Inventory storage cost

b. Inventory purchase cost

c. Insurance on inventory

d. Property taxes on inventory

3. The approach to producing inventory in which production is conducted in anticipation of customer orders is referred to as a

a. just in time system.

b. push system.

c. value chain.

d. pull system.

4. The primary objective of a pull system of production is to minimize:

a. the purchase cost of inventory.

b. the number of parts needed to produce a product.

c. the number of production supervisors needed in the factory.

d. the cost of carrying inventory.

5. Which of the following is not a stage of development in a product’s life cycle?

a. Maturity

b. Growth

c. Entrenchment

d. Introduction

6. In which stage of the product life cycle are costs usually at their lowest level and profits at their highest levels?

a. Maturity

b. Growth

c. Entrenchment

d. Introduction

7. Select the correct equation for a product’s target cost (TC).

a. TC = Estimated selling price x (Acceptable profit margin + Selling and administrative costs)

b. TC = Estimated selling price / Acceptable profit margin + Selling and administrative costs)

c. TC = Estimated selling price – Acceptable profit margin – Selling and administrative costs

d. TC = Estimated selling price + (Acceptable profit margin – Selling and administrative costs)

8. Which of the following is a primary goal of just-in-time systems?

a. Eliminating any production process that does not add value to the product/service

b. Reducing the total cost of production/performance while increasing quality

c. Continuously improving production/performance efficiency

d. All of the above

9. What is the optimal JIT situation with regard to supplier relationships?

a. Have only one vendor for any given item

b. Use at least two vendors for each item purchased to minimize chances of stockout

c. Acquire all items needed to produce the company’s products from a single vendor

d. None of the above

10. A production system involving a network of robots and material conveyance devices monitored and controlled by computers that allows for rapid production and responsiveness to changes in production needs is referred to as:

a. flexible manufacturing system.

b. computer-integrated manufacturing system.

c. focused factory arrangement system.

d. virtual reality manufacturing system.

11. Select the incorrect statement concerning lean enterprises.

a. Lean manufacturing refers to making only those items in demand by customers and making those items without waste.

b. Like JIT, one of the primary goals of lean manufacturing is to eliminate value-added activities.

c. Lean enterprises seek to lower cycle times and increase quality.

d. Lean manufacturing can lead to reduced product life cycles.

12. Points at which the processing levels are sufficiently slow to produce idle time in other processing mechanisms in the network are referred to as

a. stress points.

b. bottlenecks.

c. traffic jams.

d. backflush points.

13. (LO.10 Appendix) The annual demand for mantle clocks is estimated to be 5,000 units. The annual cost of carrying one unit in inventory is $10, and the cost to initiate a production run is $1,000. There are no clocks on hand and so the company plans to schedule four equal production runs for the coming year. The company operates 250 business days per year. Assume that sales occur uniformly throughout the year and that production is instantaneous. If the company does not maintain a safety stock, the estimated total annual carrying costs for the mantle clock is:

a. $10,250.

b. $6,250.

c. $5,000.

d. $4,000.

14. (LO.10 Appendix) B Company needs help in determining the number of production runs it should schedule for the coming year. It has no beginning inventory, annual demand of 5,000 units, annual cost of carrying one unit in inventory is $10, and the estimated cost of setting up a production run is $1,000. How many production runs are needed for the coming year?

a. 7

b. 5

c. 4

d. 2

15. (LO.10 Appendix) When the level of safety stock is increased:

a. lead time will increase.

b. carrying costs will decrease.

c. the frequency of stock outs will decrease.

d. lead time will decrease.

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