The correct answer is B)

Which of the following are advantages of using central Costs are not reduced with central storage. There are labor
storage? costs, racking, paper system, and other costs associated with
central storage.
(Arnold, Introduction to Materials Management, Chapter 12).
I. Ease of control
II. Costs are reduced
III. Inventory record accuracy is easier to attain
1-1
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

Demand on a work center is caused by the next work The correct answer is B)
center. Product is not made unless signaled by the next A pull system starts with demand from a customer and
work center. This is called : signals each preceding operation. Work is not done on a
A) Push system product unless a signal for demand is generated, thus
B) Pull system "pulling" a product through the manufacturing process. (Arnold,
C) Demand system Introduction to Materials Management, Chapter 14).
1-2 D) MRP II system

Flow systems are usually very cost effective for the
following reasons ?
A) Because workstation are designed to produce a
varied product.
B) Because material flows from one workstation to the
next, there is large buildup of WIP inventory.
1-3 C) Because manufacturing lead times are long.
D) Because in their purest form, flow lines are inflexible.
Correct answer : D)
In the flow system, workstations are designed to produce a
limited range of similar products, and there is very little
buildup of WIP inventory. Because in their purest form, flow
lines are inflexible. They can produce only a limited family of
similar parts, and the quantity must be sufficient to justify
economically its use.
(J. R. Tony Arnold, Introduction to Material Management.)

Planning bills can be best described as:

The correct answer is A)
A) Grouping like items together for planning
A planning bill is an artificial grouping of components for
B) Products which the factory plans to build
planning purposes. They are used to simplify planning,
C) Indented bill of materials
forecasting, master production scheduling, and material
D) Phantom bill of materials
requirements planning. They do not represent products which
are buildable.
1-4 (Arnold, Introduction to Materials Management, Chapter 3).

The correct answer is A)

Which of the following demand fulfillment approaches
typically provides the longest delivery time?
A) Engineer-to-order
B) Make-to-order
C) Assemble-to-order
D) Make-to-stock
1-5
 The correct answer is C)
Independent demand can be defined by all of the
Demand calculated from present demand would be dependent
following except :
demand. Its demand is dependent upon a higher level
A) Demand not related to demand from higher
assembly.
level assemblies
(Arnold, Introduction to Material Management, Chapter 4).
B) Forecasted demand
C) Demand calculated based on present demand
2-1 D) Demand from customer orders

Which of the following statements is the advantage of Correct Answer : D)

floating location system ?
A) This system makes it possible to store and retrieve
items with a minimum of record keeping.
B) In some small, manual systems, no records are kept
at all.
2-2
C) This system requires accurate and up-to-date
information on item location.
D) This system improved cube utilization.
A, B are advantage of fixed location system. In fixed
location, an SKU is assigned a permanent location
or locations and no other items are stored there. C is
characteristic of floating location system, but not
advantage. In the floating location system, the same SKU
may be stored in several location at the same
time and different locations at different times.

A company orders from supplier once every ten days
delivery takes three days, average demand for
SKUs is 100 units per week(five working day). They has
determined that safety stock is held at one day's supply,
inventory on hand 10 units, in periodic review system,
which of the following is target level ?
2-3 A) 250 B) 260
C) 270 D) 280
Correct Answer : D)
The quantity equal to the demand during the leadtime plus the
demand during the review period plus safety stock is
called the target level. T = D(R + L) + SS = 20 (10 + 3) +
20 = 280.
(J.R.Arnold. Introduction to Material Management, Chapter 11)

The portion of a company's inventory and planned The correct answer is C)

production which is not already committed is : Available to promise is the portion of inventory and planned
A) Inventory allocation production not already committed to orders. It allows accurate
B) Inventory commitment delivery promises to be made to the customer.
C) Available to promise (Arnold, Introduction to Materials Management, Chapter 3).
D) Multi-plant planning
2-4

The correct answer is C)

Bottlenecks can be best defined as : Bottlenecks occur when the required capacity is greater than
A) Work stations where available capacity is greater the available capacity. This condition then creates queues in
than required capacity front of the work center.
B) Work stations where measured capacity is greater (Arnold, Introduction to Materials Management, Chapter 6).
than required capacity
C) Work stations where required capacity is greater than
2-5
available capacity
D) Work stations where the demonstrated capacity is
greater than the measured capacity
 A shop packet will contain all of the following except: The correct answer is D)
A) Engineering drawings While the customer might be identified, it is not necessary to
B) Bill of materials include the customer information in the shop packet.
C) Route sheets The other items listed in Answers A), B), and C) would
D) Customer information generally be included.
(Arnold, Introduction to Materials Management, Chapter 6)
3-1

The correct answer is C)

Work-in-process inventory serves to decouple which of
the following ?
A) Production from suppliers
B) Finished good inventory from customer demand
C) An operation from succeeding operations
D) Production from distribution channels
3-2

The correct answer is C)

Which of the following is generally a function of the
physical distribution system ?
A) Production activity control
B) Production planning
C) Packaging
D) Bill of material
3-3

If the annual revenue is $750,000, the annual cost of

goods sold is $500,000 a year and the average Correct Answer : C)
inventory is $100,000. What will be the inventory turn Ideally, a manufacturer carries no inventory. However this is
ratio ? not practical since inventory is needed to support
A) 7.5 B) 2.5 C) 5 D) 4 manufacturing and often to supply customers. How much
inventory is enough ? A convenient measure of how effective
inventories are being used is the inventory turns ratio.
3-4 Inventory turns = annual cost of goods sold / average
inventory in dollar = 500,000/100,000 = 5

The ability to negotiate price is dependent on the type of The correct answer is D)
product. Which of the following products could generally Generally, made to order items which are made to specification
be negotiated ? and could be obtained from many sources can be negotiated.
A) Maintenance, repair, and operating supplies (Arnold, Introduction to Materials Management, Chapter 7).
B) Copper, coal, wheat, metal
C) Standard electronic components
3-5 D) Made to order motors
 The sales and operation planning is done at the level :
A) Part(component) B) Subassembly
C) Product family(group) D) Final assembly
4-1
The primary reason to use operation splitting is:
A) Utilize machinery more effectively
B) Increase manpower efficiency
C) Reduce the maintenance costs
D) Reduce leadtime
4-2
A where-used report provides a list of:
A) All work centers where a part is run
B) All parents where a component is used
C) All components where a parent is used
D) All planning bills
4-3
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
4-4
Which of the following best describes an exception
message ?
A) A message to the planner that a problem needs
attention
B) A message that the MRP system is done running
C) A message that the system is in balance
4-5 D) A message to order within leadtime
Correct Answer : C)
Sales and operation planning brings together all the plans for
the business (sales, marketing, development, manufacturing,
sourcing, and financial) into one integrated plan, it is
performed at least one a month and is reviewed by
management at an aggregate(product family) level.
(APICS Dictionary 9th ed., pp 84)
The correct answer is D)
Operation splitting can be defined as splitting the lot size
over multiple machines. This will reduce the leadtime. For
example, if a lot size is split over two machines, the lot size
is essentially cut in half.
(Arnold, Introduction to Materials Management, Chapter 5).
The correct answer is B)
A where-used report provides a list of all parents where a
component is used. It is useful for making mass component
changes.
(Arnold, Introduction to Materials Management, Chapter 4).
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).
The correct answer is A)
An exception message provides the planner with a notice that a
problem needs attention. These exceptions could be late orders
arriving, order not needed, reschedule an order out or in, and
many others. (Arnold, Introduction to Materials Management,
Chapter 4).
 For a given product, the line haul cost is $1.50 per mile. The correct answer is B)
The product will move 400 miles. If 40,000 pounds are The truck will cost $600 to move 400 miles ($1.50 x 400
being shipped, what is the cost per hundred weight ? miles). To calculate the cost per hundred weight, divide the
A) 1.00 total cost for the truck by 400, (40,000 pounds divided by
B) 1.50 100). So, 600 divided by 400 = 1.50/cwt.
C) 2.00 (Arnold, Introduction to Materials Management, Chapter 13).
D) 2.50

5-1

Correct Answer : C

Today's data is 20
Order DUE DATE LT REMAINING
A 30 10
B 40 15
C 35 20
D 45 20
Which of the following statement means the CR of order
5-2 B?
A) The order B is behind schedule.
B) The order B is an schedule.
C) The order B is ahead of schedule.
D) The order B is already late.

The correct answer is C)

In a certain manufacturing environment, routings are fixed, In a flow manufacturing environment, routings are generally
and work centers are arranged in the order of the fixed with work centers arranged according to the flow.
routings. The production at each work center takes a (Arnold, Introduction to Materials Management, Chapter 6).
similar amount of time. This would describe :
A) Project manufacturing
B) Intermittent manufacturing
C) Flow manufacturing
D) Specialty manufacturing
5-3

The time fence zone known as the liquid zone would

The correct answer is A)
have which of the following characteristics ?
The liquid zone is characterized by mostly forecast orders
A) Any change can be made to the MPS within the
and changes can readily be made without an impact to the
production plan
bottom line. The Master Scheduler can make changes in this
B) Changes must be minimized due to the expense
zone or the computer will make changes in this zone.
of changing the MPS
(Arnold, Introduction to Materials Management, Chapter 3).
C) Capacity and materials are committed to
specific orders
5-4
D) Changes should be authorized at the senior
manager level
 A component has a fixed cost of $1,000 and a variable cost The correct answer is C)
of $5.00 per unit to produce. What would the average cost To produce 4,000 units, the total cost would be $21,000 ($5
per unit be if the company produces 4,000 units? x 4,000 units + $1,000 fixed cost). Divide the $21,000 by the
A) $5.00 number of units (4000) to find the cost per unit:$21,000/4,000
B) $5.10 = $5.25.
6-1
C) $5.25 An alternative way to calculate the cost per unit would be to
D) $5.50 divide the fixed cost($1,000) by the units produced(4,000) or
$.25. Add the fixed cost to the variable cost to get the cost
per unit ($5.00 + $.25).
(Arnold, Introduction to Materials Management, Chapter 7)

The correct answer is B)

Which of the following is typically characterized as an
element of the supply chain?
A) Finance
6-2
B) Distribution
C) Quality control
D) Engineering

Correct Answer : A)
As the number of distribution centers increase, the safety stock
A company manufactures stoves. It has one distribution in each decreased. However, the total
center, the average demand is 2000 units and safety safety stock in all distribution centers increased.
stock is 50 units normally. If two distribution center is
added to the company, we can expect which
of the following except ?
A) The safety stock in each distribution center will be
6-3 about 40 units.
B) As the number of distribution centers increases, the
demand in each will decreases.
C) As the number of distribution centers increases, the
safety stock in each will decrease.
D) The total safety stock in all distribution centers will
increase.

The correct answer is C)

Sometimes a periodic review system is the most effective
method to manage inventory. For which of the following
conditions would this method be used?
I. Raw materials required in production
II. Small issues from inventory and
transactions are expensive
6-4 III. Order costs are small
IV. Many items are ordered together
The periodic review system is useful in all cases where there are
small issues from inventory, transactions are expensive,
ordering costs are small, and many items can be ordered
together. For example, supermarkets order by reviewing what is
on the shelf. Because there are so many transactions in a
supermarket, they are expensive. Additionally, they sell one or
two of an item during each cash register transaction.
(Arnold, Introduction to Materials Management, Chapter 11)

A) I, II, and III

B) I, III, and IV
C) II, III, and IV
D) I, II, and IV

All of the following statement are true about product

inspection except ?
A) It is usually not expensive.
B) It does add value for the customer.
C) It does not prevent further defects.
D) In JIT, product inspection is not expense.
6-5
Correct Answer : C)
Production inspection is expensive, often consuming up to five
percent of sales, and it does not added
value for the customer. It does not prevent defects, but only
attempts to identify them after resources
have been expended. In JIT technology, if not add value,
everything are considered as expense.
(BSCM Review Course, Chapter 9)
 The correct answer is B)
A manufacturer makes tables consisting of a top, 4 legs, The capacity for the legs is 2,000 legs per week. Since each
and 4 top trims. Demand for the tables is 600 per week. table takes 4 legs, only enough legs for 500 tables can be
The capacity for the tops is 700 per week, the capacity produced. The bottleneck operation determines the
for legs is 2,000 per week, and the capacity for the trim throughput.
is 2,500 per week. What is the capacity to produce (Arnold, Introduction to Materials Management, Chapter 5).
7-1 tables ?
A) 400
B) 500
C) 600
D) 1000

The correct answer is A)

Which of the following best describes the term bias ? Bias occurs when actual demand varies consistently higher
A) Actual demand consistantly varies from forecast; or lower than the forecast. When bias occurs in the
either above or below forecast, the forecast must be adjusted.
B) The standard deviation is consistently (Arnold, Introduction to Materials Management, Chapter 8).
positive
C) The mean absolute deviation = the forecast
7-2 error
D) The sum of the errors is less than the MAD

The correct answer is C)

The load on a work center is calculated by adding the
Which of the following best describes the term "load" ? required times for all planned and actual orders to be run at
A) Sum of the required times for all actual a work center for a specified time period.
orders to be run at a work center for a (Arnold, Introduction to Materials Management, Chapter 5).
specified time frame
B) Sum of the required times for all planned
orders to be run at a work center for a
7-3 specified time frame
C) Sum of the required times for all planned
and actual orders to be run at a work
center for a specified time period
D) Sum of the required times for all
forecasted orders to be run at the work
center for a specified time period

The correct answer is D)

Net requirements are : Net requirements are calculated by gross requirements -
A) Scheduled receipts - available inventory - scheduled receipts - available inventory.
forecast (Arnold, Introduction to Materials Management, Chapter 4)
B) Forecasts - scheduled receipts - customer orders
C) Forecasts - customer orders and scheduled receipts
D) Gross requirements - scheduled receipts-
7-4 available inventory

Which of the following statement is correct about SOP Correct Answer : A)

(sales and operation planning)
A) The level of detail is not high.
B) Sales and operation planning is set by the master
production schedule.
C) It is a plan for the production of individual end item.
7-5 D) The planning horizon is usually very short.
The level of the detail of sales and operation planning is not
high, i.e., at aggregate or production group level. It is not at
component or part level.
(J. R. Arnold. Introduction to Material Management, 4th ed,
pp. 21)
 Which of the following is most useful for moving
Correct Answer : C
low-value, bulky cargo over long distances with low
Waterways are provided by nature or by nature with the
cost ?
assistance of the government. The carrier thus has no
A) Rail transportation.
capital cost in providing the ways but may have to pay a
B) Road transportation.
fee for using the waterway. The main advantage of water
C) Water transportation.
transport is cost. Operating costs are low, and ships have a
D) Air transportation.
8-1 relatively large capacity.
(J. R. Tony Arnold, Introduction to Material Management,
Chapter 13)

The correct answer is C)

Which of the following best describes the purpose of a
A distribution warehouse is used primarily to break down
distribution warehouse ?
large lots into smaller lots for shipment. A general warehouse
A) A warehouse to store goods for long periods
is used for long term storage.
of time
(Arnold, Introduction to Materials Management, Chapter 13).
B) A storage warehouse for floor stock
8-2
C) A warehouse to move and mix goods
D) A supply chain warehouse for regional storage

The correct answer is A)

Which of the following are steps in developing a Master
The three steps in developing a Master Production Schedule
Production Schedule ?
are :
I. Develop a preliminary MPS
1. Develop a preliminary MPS.
II. Check the schedule against the capacity
2. Check the preliminary MPS against available
available
capacity.
III. Check MPS against the production plan to
8-3 3. Resolve differences between the preliminary
ensure they are equal
MPS and capacity available.
(Arnold, Introduction to Materials Management, Chapter 3).
A) I and II
B) I and III
C) II and III
D) I, II, and III
The correct answer is A)
Which of the following detects bias in a forecast
model ?
A) Tracking signal
B) Mean absolute deviation (MAD)
C) Demand filter
D) Standard deviation
8-4

Which of the following is a characteristic of a bottleneck?

A) Available capacity exceeds required capacity
B) Required capacity exceeds available capacity
C) Demonstrated capacity exceeds required capacity
D) Available capacity exceeds throughput
8-5
The correct answer is B)
A bottleneck work center is defined as one where the
required capacity is greater than the available capacity. When
this occurs, work in process inventory grows. Therefore, work
must be scheduled at a pace equal to the bottleneck work
center.
(Arnold, Introduction to Materials Management, Chapter 5).
 The particular channel in which goods move describes : The correct answer is D)
A) Manufacturing channel The distribution channel is the path that goods move through
B) Marketing channel distribution centers, to wholesalers, and retailers.
C) Capacity channel (Arnold, Introduction to Materials Management, Chapter 13).
D) Distribution channel

9-1

A low level code is best defined as the : The correct answer is B)

A) First work center in which the part is
processed
B) Lowest level on which a part resides in the
BOM
C) Product family which the part belongs to
9-2 D) The most accurate forecast level
The low level code tells the MRP system the lowest level in
which the part resides. The system uses this information to
determine when to total all the requirements for a
component. The end item is the -0- level. (Arnold, Introduction to
Materials Management, Chapter 4).

What is the primary consideration used in selecting a new The correct answer is C)
supplier ? In order for the supplier to meet your ongoing needs, they
A) Cleanliness of their facility must have the right manufacturing capabilty and reliability. No
B) Proximity to your factory matter what other attributes they may have, if they cannot
C) Manufacturing capability and reliability meet your needs on a consistent basis, then the supplier
D) ISO certification should not be chosen.
9-3 (Arnold, Introduction to Materials Management, Chapter 7)

The correct answer is C)

Aggregate inventory management is concerned with : Aggregate inventory management is concerned with the cost
A) Managing inventory items and how they are and benefit of carrying raw materials, work-in-process, and
used finished goods inventory. It is financially oriented.
B) Establishing the production plan (Arnold, Introduction to Materials Management, Chapter 9)
C) The cost and benefits of carrying the
different classes of inventory
9-4 D) The distribution network and the movement
of inventory

The objective of scheduling is to : The correct answer is B)

A) Ensure work centers are properly loaded The primary objective of scheduling is to meet delivery dates
B) Meet delivery dates while utilizing manufacturing resources effectively.
C) Provide capable to promise information (Arnold, Introduction to Materials Management, Chapter 3)
D) Meet cost targets

9-5
 What is the correct step in the purchasing cycle ?
. Follow up and expedite as necessary. Correct Answer : B)
The purchasing department receives purchase requisition from
. Receiving purchase requisition.
two different sources depending on whether they are using
. Issue purchase order. an MRP or an EOQ production planning system. In the case
. Selecting suppliers. where they are running an MRP-based system, they get
their current purchase requisitions from the order release
10-1 report. Once the purchasing department has received the
A) , , , B) , , ,
purchase requisitions, then, identify and select suppliers.
C) , , , D) , , ,

Which of the statement is correct total quality control ?

Correct Answer : D
A) Ultimately the company's user is only customer.
Ultimately, the company's user is customer and also the next
B) For manufacturing, quality means inspecting the
operation in the process. Daily monitoring can best be done
product to segregate good from bad parts.
by the operator. If defects are discovered, the process
C) Daily monitoring can best be done by the inspector.
should be stopped, and the cause of the defects corrected.
D) If defects are discovered the process should be
(J. R. Arnold. Introduction to Material Management, Chapter 14)
10-2 stopped.

Which of the following is the responsibility of a planner ?

. Reschedule due date of open order as required. Correct Answer : C)
. Schedule planned order. Planned order are automatically scheduled and controlled by
. Reconcile errors. the computer. The basic responsibilities of a planner are to
launch order to purchasing or manufacturing, reschedule due
dates of open orders as required, reconciles errors and try
A)only B) only C) , only D. ,, to find their cause, and solve critical material shortages by
10-3 expediting or replanning.
(J. R. Arnold. Introduction to Material Management, 4th ed.)

The correct answer is A)

Which of the following is most likely to be a dependent
demand item ?
A) A manufactured subassembly
B) An item in a grocery store
C) A service part
D) An office supply item
10-4

The balance to cube utilization is :

A) Pallet positions The correct answer is B)
B) Accessibility Cube utilization must always be balanced with accessibility to
C) Put away speed the goods when they are needed. For example, a
D) Material handling costs 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
10-5 utilization.
(Arnold, Introduction to Materials Management, Chapter 12)
 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 needs one
D) Materials Requirements Planning cannot operate
11-1 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)

Which of the following are strategies to use in developing a The correct answer is B)
production plan ? The chase strategy means production will vary with demand
I. Chase strategy (inventory stays level). The level strategy establishes
II. Delphi strategy production at the average demand. Fluctuations in demand
III. Level strategy are absorbed by inventory. The third strategy is
subcontracting. Production is kept at the minimum demand
11-2 IV. Backlog strategy
level. Variations in the demand level are absorbed by
subcontracting production.
A) I and II (Arnold, Introduction to Materials Management, Chapter 2)
B) I and III
C) II and IV
D) III and IV

In using exponential smoothing, the old forecast for June Correct Answer : B)
was 100, and the actual demand for June was 150. If a is New forecast = a latest demand + (1 - a) previous forecast
0.1. Which of the following is the forecast for July ? = 0.1150 + 0.9100 = 105.
A) 100 B) 105 C) 110 D) 115

11-3

The correct answer is B)

In a fixed location warehouse system, each SKU has an In fixed location warehouses, cube utilization is poor because
assigned location. While this has many positives, the if a location has no stock, the space remains empty.
negative aspect to fixed location warehousing is that : (Arnold, Introduction to Materials Management, Chapter 12).
A) Warehouses can get messy
B) Cube utilization is poor
C) Inventory accuracy suffers
11-4 D) Items can be damaged in put away

According to the EOQ formula, if the ordering costs for an
item are greatly reduced, what is the likely impact on the
quantity ordered ?
A) Order multiples will increase
B) Order quantities will increase
C) Order multiples will decrease
11-5 D) Order quantities will decrease
The correct answer is D)
According to the EOQ formula, if ordering costs are reduced,
then the quantity ordered will decrease. The EOQ formula
finds the lowest total cost by balancing ordering costs with
the cost of carrying inventory. If the cost of ordering is
reduced, then the quantity needed to balance the order cost
could also be reduced.
(Arnold, Introduction to Materials Management, Chapter 10)
 A functional specification tells Purchasing :
The correct answer is D)
A) When to buy
A functional specification tells Purchasing what to buy.
B) How much to buy
Functional specifications are concerned with the use of the
C) Where to buy
product and what performance characteristics the product
D) What to buy
needs to have. Functional specifications are the most difficult
to define for a buyer.
12-1 (Arnold, Introduction to Materials Management, Chapter 7)

The correct answer is B)

Which of the following links product family planning and
component planning ?
A) Production planning
B) Master scheduling
C) Material requirements planning
D) Resource requirements planning
12-2

The correct answer is B)

Material requirements planning (MRP) schedules a
planned order receipt when
A) a gross requirement exists
B) a net requirement exists
C) an exception is generated
D) safety stock is zero
12-3

Process specifications can be best defined as a The correct answer is B)

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
12-4
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)

Which of the following is not true ? Correct Answer : D)

A) Actual setup times can be improved if setup is done Priority changes often extend actual leadtimes so that it need
while the previous job is running. to find the optimized operation sequence.
B) Group setups can reduce leadtimes. (J. R. Tony Arnold, Introduction to material management,
C) When actual setup time reductions are accomplished Chapter 3)
revise planning lead times to reflect the new setup
12-5
times.
D) Priority changes have nothing to do with actual
leadtime.
 Inventory areas should be locked except for during normal The correct answer is C)
business hours because : Inventory locations should be kept secure so the transactions
A) People are apt to steal are completed and inventories are maintained accurately. If
B) Storeroom personnel know where parts are stored people are allowed to access the inventory without a proper
C) Transactions might not be completed transaction being completed, inventory accuracy will suffer,
D) It's the right thing to do and the system will become less reliable.
13-1 (Arnold, Introduction to Materials Management, Chapter 12)

The correct answer is A)

Providing customers with what they want at low cost
describes the relationship between which of the following?
A) JIT and TQM
B) TQM and production planning
C) MRP II and JIT
D) TQM and CRP
13-2

What is the consolidation of several units into large

units ? Correct Answer : D)
A) Consolidation. B) Assembly. Unitization is the consolidation of several units into large
C) Warehousing. D) Unitization. units, called unit loads, so there is less handling.
A unit load is a load made up of a number of items, or
bulky material, arranged or constrained so the mass can be
picked up or moved as a single unit too large for manual
13-3
handling.
(J. R. Tony Arnold, Introduction to Material Management.
Chapter 13)

In which of the following manufacturing environments would The correct answer is D)

consumer products, such as film, food, etc. be classified ? Consumer products are generally considered make to stock.
A) Assemble to order There are a few standard items assembled from many
B) Engineer to order components.
C) Make to order (Arnold, Introduction to Materials Management, Chapter 3)
D) Make to stock
13-4

The correct answer is B)

A time fence which is included in the frozen zone has which
The frozen time fence should have the least changes made
of the following characteristics ?
because capacity and materials have been committed to
A) Any change can be made as long as it is
specific orders. Changes in this zone should have a senior
within the production plan
level authorization because of the expense of the changes.
B) Capacity and materials have been committed
(Arnold, Introduction to Materials Management, Chapter 3).
to specific orders
13-5 C) Changes can be made if capacity is available
D) Costs for changing are not excessive
 The correct answer is C)

Beginning inventory = 200 units

Ending inventory = 200 units
Sales forecast:
Month 1 2 3 4 5
Quantity 200 300 200 400 300

14-1
What is the required monthly production to achieve level
production ?
A) 220 units
B) 240 units
C) 280 units
D) 340 units

Production plans have all of the following except : The correct answer is D)
A) Shipment plan Production plans are generally monthly statements of
B) Product families shipments, production, and inventory (or backlog), broken
C) Inventory plan down by product families, not end items.
D) Weekly production (Arnold, Introduction to Materials Management, Chapter 2)

14-2

Correct Answer : B)
Which of the following statement is the bet definition
Order qualifiers are competitive characteristics that a firm
about order qualifier ?
must exhibit to be a viable competitor.
A) Competitive characteristics that a firm must exhibit to
For example, a firm may seek to compete on characteristics
be the best competitor.
other than price, but in order to "qualify" to compete., its
B) Competitive characteristics that a firm must exhibit to
cost and the related price must be within a certain range to
14-3 be a viable competitor.
be considered by its customers. Therefore it should be a
C) Competitive characteristics that cause customers to
minimum standard in market.
choose that firm's product.
D) Competitive characteristics that a firm has the best
qualified product.

The correct answer is C)

The end items and quantities to be produced by period
are defined by which of the following ?
A) Strategic business plan
B) Production plan
C) Master production schedule
D) Dispatch list
14-4

A work center has 300 available hours, a utilization rate The correct answer is A)
of 80% and an efficiency rate of 90%. What is the rated The rated capacity is calculated by multiplying the available
capacity of the work center ? hours (300) by the utilization percentage (80%) by the
A) 216 hours efficiency rating of the work center (90%): 300 x .80 x .90 =
B) 240 hours 216.
C) 270 hours (Arnold, Introduction to Materials Management, Chapter 5).
14-5 D) Not enough information to determine
 The correct answer is D)
A work center has 4 machines operating 6 days for 8
Available time is the total number of hours a work center can be
hours per day. What is the available time ?
used. Therefore, 8 x 6 x 4 = 192 hours.
A) 24 hours
(Arnold, Introduction to Materials Management, Chapter 5).
B) 32 hours
C) 48 hours
D) 192 hours
15-1

The correct answer is A)

A company wants to produce 1000 units over the next
To find the answer, divide the planned production (1000) by
four months using a level strategy. The months have 20,
the number of days available in the four months (82) to find
21, 19 and 22 working days in each one. Based on this
the daily production rate (12.2). Multiply the daily production
strategy, how much would be produced in the first
rate (12.2) by the number of days in the first month (20) to
month ?
obtain the first month's production (244).
A) 244
15-2 (Arnold, Introduction to Materials Management, Chapter 1).
B) 254
C) 260
D) 262

The correct answer is A)

Managing bottlenecks is extremely important to the The schedule should be changed as a last resort to meet
throughput of the production facility. All of the following customer deliveries. However, frequent changes will in fact
should be done to manage bottlenecks except : reduce capacity at the bottleneck causing the bottleneck
A) Change the schedule frequently to meet customer condition to grow worse.
promises (Arnold, Introduction to Materials Management, Chapter 6)
B) Maintain a time buffer before each bottleneck
15-3
C) Control the feed rate of material to the bottleneck
D) Increase the bottleneck capacity as much as
possible

The correct answer is C)

Of all the times associated with manufacturing lead times,
Queue time usually accounts for 85%-95% of total lead time.
which generally takes the most time in intermittent
As a result, it is critical that production control aggressively
manufacturing ?
manages the queue time.
A) Run time
(Arnold, Introduction to Materials Management, Chapter 6).
B) Setup time
C) Queue time
15-4 D) Move time

An income statement of a company will show which of the The correct answer is C)
following ? Income statements reflect the revenues and expenses of a
A) Inventory levels company generating either a profit or loss. Cost of products
B) Long term debt sold is subtracted from the revenue to obtain a gross profit.
C) Cost of products sold From the gross profit, expenses are deducted to arrive at a net
D) Net cash available income or loss.
15-5
 The correct answer is C)
A company needs to produce 4000 units over the next The calculation would be as follows:
two months. There are 21 working days in the first 4000 units/40 work days = 100 units per day
month and 19 working days in the second month. What (Arnold, Introduction to Materials Management, Chapter 2).
must the daily rate be with a level strategy ?
A) 50
B) 75
16-1 C) 100
D) 125

Which of the following is a characteristic of exponential Correct Answer : C)

smoothing ?
. It provides a routine method of updating item
forecasts.
. It works well for variable items.
16-2 . It is satisfactory for long-range forecasts.
. If the forecast with the smaller afollow actual
demand more remotely.
Exponential smoothing provides a routine method for regularly
updating item forecasts. If works quite well when dealing with
stable items. Generally, it has been satisfactory for
short-range forecasting. It can detect trends, but will lag
them. Notice the forecast with the larger a follows actual
demand more closely.
(J. R. Arnold. Introduction to Material Management)

A) only B) , only
C) , only D) , , only
The correct answer is B)
A manufactured component is going to be late. Which of
A pegging report or screen would show the source of
the following would a planner review to ensure a
demand for a part up the bill of materials to the customer
customer will not be affected ?
order.
A) Indented bill of materials
(Arnold, Introduction to Materials Management, Chapter 4).
B) Pegging inquiry screen
C) Open purchase order report
16-3 D) Work order routing

Which of the following would be the best measure of

supplier performance ? The correct answer is C)
A) Part price Delivery time and being on time are two important measures
B) Method of delivery of supplier performance. The need for fast delivery and
C) Delivery time on-time delivery allows manufacturers to respond to the
D) Scrap rate market faster. Additionally, on-time delivery and reliable
service allows the manufacturer to keep less inventory to
16-4
offset shortages. As long as the pricing is competitive,
delivery is an important measure.
(Arnold, Introduction to Materials Management, Chapter 7).

For a particular commodity, the line-haul cost is $ 2 per Correct Answer : A)

mile and the distance is 300 miles and a Line haul cost vary directly with the distance shipped, not on the
shipment is 100 cwt. If the shipment is increased to 600 weight shipped.
cwt, which of the following is the saving in the line-haul (J. R. Tony Arnold, Introduction to Material Management,
cost ? Chapter 13)
A) None. B) $ 600. C) $ 5. D) $ 4.
16-5
 Orders which are automatically replanned by the computer The correct answer is D)
are called : Planned orders are replanned by the computer automatically
A) Firm orders based on the activities which are occurring. Firm orders are
B) Scheduled receipts not replanned automatically nor are scheduled receipts.
C) Net requirements (Arnold, Introduction to Materials Management, Chapter 4).
D) Planned orders
17-1

The correct answer is C)

A work center includes four machines working 16 hours per Available time is calculated by multiplying the number of
day, five days per week. What is the weekly available time ? machines (4) by the number of hours they are available
A) 80 hours each day (16) by the number of days each week (5). The
B) 160 hours result would be 4 x 16 x 5 = 320.
C) 320 hours (Arnold, Introduction to Materials Management, Chapter 5)
D) Not enough information to determine
17-2

All of the following statement are correct related to Correct Answer : B)

lot-for-lot except ?
A) It is ordered only amount required.
B) It is used usually C items in ABC classification.
C) It is used for dependent demand items.
D) It is used in JIT environment
17-3
Lot-for-lot is lot-sizing technique that generates planned
orders in quantities equal to the net requirement
in each period. Since items are ordered only when needed, this
system creates no unused lot-size inventory. Because of
this, it is used for expensive components. (A item in ABC
classification)

Which of the following are the roles which warehouses

The correct answer is B)
serve ?
Warehouses serve three important roles :
I. Transportation consolidation
1) Transportation consolidation - consolidate
II. Inventory efficiency
small shipments (LTL) into large shipments
III. Product mixing
(TL)
IV. Customer service
2) Product mixing - group a variety of
17-4
products into one order
A) I, II, and III 3) Customer service - allows products to be
B) I, III, and IV placed closer to the customer
C) II, III, and IV Inventory will typically rise with an increase in the number of
D) I, II, III, and IV warehouses.
(Arnold, Introduction to Materials Management, Chapter 13)

Correct Answer : B)
A manufacturing company produces a particular Overhead = $ 1,000, variable unit cost = $ 6/unit,
component. This component requires an overhead cost break-even point = 300 units. Total cost = $ 1,000 +
$ 1000 and a variable unit cost of $ 6 per unit, so the $ 6 300 = $ 2,800. New break even point = 250 unit.
break-even point occurs when 300 units are sold. New selling price = $ 2,800 / 250 = $ 11.2/unit.
If the firm is willing to decrease the break-even point at
250 units, which of the following should be the selling
17-5
price per unit ?
A) $ 10 B) $ 11.2
C) $ 8.5 D) $ 12.5
 In a JIT manufacturing environment, waste can be The correct answer is C)
described as : In Just-in-time manufacturing, waste can be best described
A) Component scrap as any process which does not add value. The processes
B) Overtime can be overtime, scrap, paperwork, approvals, etc. which do
C) Any process which does not add value not add any value to the product for the customer.
D) Any overhead process (Arnold, Introduction to Materials Management, Chapter 14)
18-1

Which of the following is not related factor to select Correct Answer : D)

suppliers ? Factors in selecting suppliers are technical ability,
A) Technical ability. manufacturing capability, reliability, after-sales service, supplier
B) Location. location, price, etc.
C) Price. (J. R. Tony Arnold, Introduction to Material Management,
D) None. Chapter 7)
18-2

In JIT, this is used to reduce the number of transactions

Correct Answer : C)
that have to be recorded so called ?
Material flows from raw material to work in process to
A) Back up.
finished goods, in backflushing, raw materials are recorded
B) Balancing.
into WIP. When work is completed and becomes finished
C) Backflushing.
goods, the WIP inventory is relieved by multiplying the
D) Dispatching.
number of units completed by the number of parts in the bill
18-3 of material.
(J. R. Arnold. Introduction to Material Management, 4th ed)

A key element in selecting a site for a factory is :

A) Availability of water The correct answer is C)
B) Access to rail sidings In siting a factory, low cost and availability of transportation
C) Cost and availability of transportation are key components. This ensures that raw materials to
D) Warehouse space and cost 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)
18-4

A company has its warehouse divided so order pickers only The correct answer is A)
pick in their area. This warehouse is operating under which In a zone system, the warehouse is divided into zones and
of the following systems ? the order pickers only pick the items in their zone. The
A) Zone system items are sent to the marshalling area to be combined with
B) Area system other items from other zones for that customer. An area
C) Consolidated pick system system allows the picker to pick a complete order by moving
18-5 D) Modified pick system through the warehouse.
(Arnold, Introduction to Materials Management, Chapter 12)
 The forecast for a part is 200 units per week. The actual
shipments for the last 5 weeks have been 250, 260, 210,
240, and 220. If the MAD is 20, what would the tracking
signal equal ?
A) 3
B) 6
19-1 C) 9
D) 12
Which of the following best describes the term capacity ?
A) The quantity of work done
B) The rate of doing work
C) The amount of inventory produced
D) The number of standard hours produced
19-2
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
19-3
A blanket order in purchasing can be best described as
a(n) :
A) Order covering a variety of suppliers
B) Group of operations
C) Long term commitment to a supplier
D) Supplies order
19-4
All of the following statements are true regarding
transportation cost except ?
A) For any given shipment, the line-haul cost per cwt
varies with the cost per mile.
B) For any given shipment, the line-haul cost per cwt
19-5
varies with the weight moved.
C) For any given shipment, the pickup and delivery cast
varies the distance shipped.
D) The terminal-handling costs decrease by reducing
the number of parcel by consolidating shipments.
The correct answer is C)
Tracking signals measure the bias in a forecast. The above
demand would reflect a negative bias in the forecast, as the
forecast is consistently less than the actual demand. To
calculate a tracking signal, divide the sum of the forecast
errors by the MAD. Therefore, 50+60+10+40+20 = 180,
divided by 20 = 9.
(Arnold, Introduction to Materials Management, Chapter 8)
The correct answer is B)
Capacity is concerned with the rate of doing work. According
to the APICS dictionary, capacity is defined as "the capability
of a worker, machine, work center, plan, or organization to
produce output per period of time".
(Arnold, Introduction to Materials Management, Chapter 5)
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).
The correct answer is C)
A blanket purchase order is a long term commitment to a
supplier to purchase a certain quantity of goods over a
specified period of time. Short term releases are then made
against the blanket order.
(Arnold, Introduction to Materials Management, Chapter 7)
Correct Answer : C)
For any given shipment, the line-haul costs vary with the
distance shipped. However, the pickup and delivery,
terminal-handling, and billing costs are fixed. In case of the
pickup and delivery cost, it will be less expensive if the
shipment is consolidated into fewer parcels.
 The correct answer is A)
An important measure of an effective quality measure should
be which of the following ?
A) Easy for the user to understand
B) Based on accounting information
C) Developed by the Quality Department
D) Used to evaluate individual performance
20-1

If the critical ratio is less than 1, an order is :

A) Ahead of schedule
The correct answer is C)
B) On schedule
The critical ratio measures the amount of time remaining to
C) Behind schedule
the amount of work remaining. It is calculated by :
D) Already late

Due date-present date actual time left

--------------------- = ----------------
20-2 Lead time remaining lead time left

If the ratio is less than one it means that the actual time left
is less than the leadtime left. This causes the order to be
behind schedule. A ratio of 1 means the time remaining
equals the remaining leadtime.
(Arnold, Introduction to Materials Management, Chapter 6)

The correct answer is B)

In most companies, material purchases represent what
In most companies today, material costs represent 50% or
percentage of the cost of the product ?
higher of the cost of the product.
A) 30%
(Arnold, Introduction to Materials Management, Chapter 7)
B) 50%
C) 70%
D) 90%
20-3

Which of the following statement is correct regarding Correct Answer : C)

product layout except ? Product layout include continuous, and repetitive production.
A) It is continuous production. In product layout, a limited range of similar product is
B) It is repetitive production. produced, work stations are dedicated to specific operations,
C) Work involves only to those stations required and so demand must be sufficient to justify setting up the
skips the rest. process.
20-4 D) Demand must be sufficient to justify setting up the (Gerhard J. Plenert, The Plant Operation Handbook.)
process.

All of the following would be reasons for anticipation The correct answer is D)
inventory except : Inventory accumulated due to price breaks would be
A) Inventory built ahead of the peak season considered lot size inventory. Anticipation inventory is
B) A potential strike accumulated in "anticipation" of an event (future demand).
C) Vacation shutdown (Arnold, Introduction to Materials Management, Chapter 9).
D) Price breaks
20-5
 Why would a supplier want a long term customer The correct answer is B)
relationship ? A long term supply agreement with a customer allows the
A) Reduced transportation costs supplier to properly plan raw materials, labor, capacity, and
B) Improved ability to plan other resources.
C) Reduced packaging cost (Arnold, Introduction to Materials Management, Chapter 7)
D) Less material handling
21-1

A normal distribution can be graphed as a : The correct answer is D)

A) Parabolic curve In a normal distribution, the actual points are concentrated
B) Trend seasonal curve around the average (mean). The further from the average
C) Positive bias curve the data is, the fewer data points emerge.
D) Bell shaped curve (Arnold, Introduction to Materials Management, Chapter 8)

21-2

All of the following are principles of forecasting except :

A) Forecasts are usually wrong
B) Forecasts are more accurate for end items
C) Forecasts should include an estimate of error
D) Forecasts are more accurate in the near term
21-3
The correct answer is B)
Forecasts are more accurate for product families or groups.
The reason is that aggregate numbers tend to be more
accurate than detailed numbers. So although the sales
forecast error may be very small in a company, predicting
the shipments of an end item will have more error
associated with it.
(Arnold, Introduction to Materials Management, Chapter 8)

The correct answer is C)

The balance sheet for a firm shows which of the following ?

A) Profit or loss for the period
B) Sources and uses of funds
C) Long- and short-term debt
D) Cost of products sold

21-4

The material requirements system receives direct input The correct answer is C)
from : The master production schedule, once established, is
A) Production planning submitted to the MRP system for use in calculating demand
B) Capacity requirements planning for the components.
C) Master production scheduling (Arnold, Introduction to Materials Management, Chapter 4)
D) Purchasing
21-5
 When the MRP requirements change frequently and by
small amounts, this is referred to as : The correct answer is B)
A) Replanning System nervousness occurs when the requirements change
B) Nervousness rapidly and by small amounts. This causes the system to
C) Explosion create messages to reschedule orders. Following these
D) Netting orders would cause chaos on the manufacturing floor and at
22-1
the suppliers.
The most effective ways to reduce system nervousness are
to : 1) use filters to reduce the messages or, 2) use firm
orders which cause the system to minimize the replanning.
(Arnold, Introduction to Materials Management, Chapter 4)

A tracking signal is used to : The correct answer is A)

A) Monitor the quality of the forecast
B) Determine the variation in the production plan
C) Measure whether the schedule is being met
D) Measure the material plan
22-2
Tracking signals are used to measure the quality of the
forecast to determine whether to adjust the forecast. They
usually measure the sum of the errors against a deviation
measure such as MAD.
(Arnold, Introduction to Materials Management, Chapter 8)

The correct answer is B)

Which of the following is an advantage of point-of-use
inventory over central storage ?
A) The ease of control
B) Reduced material handling
C) The ease of maintaining inventory records
D) Reduced safety stock
22-3

The safety stock required depends on all the following

factor except ? Correct Answer : A)
A) SKUs. B) Frequency of ordering. SKU is stockkeeping unit at particular geographic location.
C) Service level. D) Length of the leadtime. The longer the leadtime, the more safety stock has to be
carried to provide a given service level. This is one reason
why it is important to reduce leadtimes as much as possible.
The chances of a stockout are directly proportional to the
22-4
frequency of reorder.
(J. R. Tony Arnold, Introduction to Material Management,
Chapter 11)

Which of the following best describes MRO inventory ?
A) Raw materials used in production
B) Office supplies used in administrative functions
C) Inventory in the distribution network
D) Items used in production but are not part of the
product
22-5
The correct answer is D)
MRO's are items used in production but are not part of the
product. These items would include hand tools, spare parts,
grease, and supplies.
(Arnold, Introduction to Materials Management, Chapter 9)
 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
23-1
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)

The correct answer is D)

Which of the following conditions will cause the EOQ
concept to be invalid ?
I. Products that are made to order
II. Short shelf life products
III. Length of production run is unlimited
23-2 IV. Raw materials which are on MRP
EOQ assumptions are usually valid for finished goods with
independent and uniform demand. However, the
assumptions break down in many real-world cases. For
example, products which have widely fluctuating demand
would not be good candidates for EOQ calculations.
(Arnold, Introduction to Materials Management, Chapter 10).

A) I, II, and III

B) I, III, and IV
C) II, III, and IV
D) I, II, III, and IV

Which of the following best shows firm's ability to pay

back debt ? Correct Answer : B)
A) income statement. B) Cash flow. Income statement and balance sheet show firm's finance
C) Balance sheet. D) Inventory turns. condition but do not best show firm's ability to pay off debt,
and inventory turns show how effectively inventories are
being used. Cash flows the best firm's ability to pay off debt.
It shows the net flow of dollars into or out of the proposed
23-3 project.

The correct answer is B)

The master production schedule is generally a direct
input to
A) Production planning
B) Material requirements planning (MRP)
C) Purchasing planning
D) Production activity control (PAC)
23-4

The correct answer is B)

Given the following annual costs, calculate the cost of
creating one order .
Purchasing department salaries= $200,000
Operating expenses= $50,000
Number of people in department= 5
23-5 Number of orders per year= 5000
The cost of placing an order is found by dividing the total
costs to operate the department divided by the number of
orders placed. In this example, $200,000 + $50,000 divided
by 5,000 orders = $50.
(Arnold, Introduction to Materials Management, Chapter 7).

A) $25
B) $50
C) $75
D) $100
 If priority plans have to be adjusted at any of the
planning levels because of capacity problems, those
should be reflected in the levels above. Thus, there must
be feedback throughout the system so that the planning
can be dept valid at all times. This so called ?
A) Feedback system. B) Auditing system.
24-1 C) Backflush. D) Closed loop MRP.
Correct Answer : D)
Closed-loop MRP is a system built around MRP that
includes the additional planning functions of SOP, MPS,
CRP, purchasing, PAC. The term closed loop implies not only
that each of these elements is included in the overall system,
but also that feedback is provided by the execution functions so
that the plant.

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 accomodate restraints
C) Integrated planning and control system with feedback
from the bottom-up
D) Integrated systems which include financial software,
24-2 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)

In operating a warehouse, the major operating cost is : The correct answer is C)

A) Fork truck maintenance Labor is the major operating cost for a warehouse. As
B) System costs such, productivity needs to be closely measured and
C) Labor monitored.
D) Capital costs (Arnold, Introduction to Materials Management, Chapter 12)

24-3

The correct answer is B)

In most cases, the fastest way to increase capacity to
meet a short-term requirement is to
A) Hire additional workers
B) Use overtime
C) Acquire more equipment
D) Subcontract work
24-4

These competitive characteristics the firm must to be a Correct Answer : D)

viable competitor in the marketplace. What is these Qualifiers are that, for example, a firm may seek to complete
competitive characteristics ? on characteristics other than price, but to "quality" to
A) Order winner. B) Order character. compete, it must dip its costs and the related price within a
C) Order critical. D) Order qualifier. certain range.

24-5
 The correct answer is B)
Which of the following are inputs to a realistic MPS ?
The production plan, forecasts, and capacity constraints are
I. Production plan
all inputs to the MPS. While costs are nice to have, they
II. Forecasts for end items
are not a necessary input.
III. Product costs for end items
(Arnold, Introduction to Materials Management, Chapter 3)
IV. Capacity contraints

25-1
A) I, II, and III B) I, II, and IV
C) II, III, and IV D) I, III, and IV

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
25-2
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)

In order to maximize profit, a company must have all of the

following objectives except : The correct answer is B)
A) Best customer service A company, to maximize profits, must have the lowest
B) Most accurate production forecast production cost, best customer service, lowest inventory
C) Lowest inventory investment investment, and lowest distribution costs. While an accurate
D) Lowest distribution cost production forecast will contribute to low production costs, it
will not guarantee the lowest production costs.
25-3 (Arnold, Introduction to Materials Management, Chapter 1)

Which of the following is the safety stock ?

Correct Answer : B)
A) Anticipation inventory.
Fluctuation inventory is held to cover random unpredictable in
B) Fluctuation inventory.
supply and demand or leadtime. If demand or leadtime is
C) Lot-size inventory.
greater than forecast, a stockout will occur. Safety stock is
D) Transportation inventory.
carried to protect against this possibility. Its purpose is to
prevent disruption in manufacturing or deliveries to customers.
25-4 Lot-size inventory is to take advantage of quantity discounts.

Before a supplier's invoice can be paid, which of the The correct answer is D)
following data must match ? Before a supplier's invoice can be paid, there must be a
I. Quantity must match the purchase order three-way match (computer systems can do this
II. Price must match the purchase order automatically). The price on the purchase order must match
III. Quantity must match the receipt the price on the invoice. The quantity received must match
the purchase order and the invoice must match the quantity
25-5
received. Therefore, the price and quantity on all three
A) I and II
documents (transactions) must match in order to be paid.
B) I and III
(Arnold, Introduction to Materials Management, Chapter 7).
C) II and III
D) I, II, and III
 In price negotiation, which of the following statement is
correct about items of small value ?
A) Price is set by market supply and demand and can
fluctuate widely.
B) There is not much room for negotiation usually.
C) These can generally be negotiated.
26-1 D) The prime objective should be to keep the cost of
ordering low.
Correct Answer : D)
One important factor in the approach to negotiation is the
type of product. There are four types of product :
commodities, standard products, items of small value,
made-to-order items. A is a characteristics of commodities,
B is a characteristics of standard product, C is a
characteristics of made-to-order items. In items of small
value, firm will negotiate a contact with a supplier widely.

Which of the following are major objectives of MRP ?

. Leveling capacity. Correct Answer : C
. Determining capacity. MRP has two major objectives : determine requirements and
. Determining material requirements. keep priorities current. MRP is to determine what
. Keeping priorities(orders) current. components are needed to meet the master production
schedule and, based on the leadtime, to calculate the period
26-2 when the components must be available. In the
A) and only. B) and only. ever-changing world, MRP must be able to reorganized
C) and only D) All priorities to keep plans current. It must be able to add and
delete, expedite, delay, and changing orders.
(J. R. Arnold. Introduction to Material Management, 4th ed)

The correct answer is C)

Owners equity is
A) Revenue less liabilities
B) Revenue less expenses
C) Assets less liabilities
D) Assets less expenses

26-3

The correct answer is A)

A forecast is typically more accurate for
A) Groups of items rather than for individual items
B) Daily rather than monthly periods of time
C) Physical units rather than monetary units
D) Far out in the future rather than nearer time periods

26-4

Correct Answer : A)
In buyer-planner concept, which of the following is not
To improve the effectiveness of the buyer-planner, many
true ?
companies have combined the two functions of buying and
A) The person who has the responsibilities of buyer's
planning. The planner's job and the buyer's job are
job and planner's job handles more components than
combined into a single job done by one person. However,
either a buyer or a planner.
this person handles fewer components than either a buyer or
B) The planner/buyer is responsible for determining
26-5 a planner, and the buyer/planner has a keener with
material requirements.
suppliers.
C) The planner/buyer is responsible for handling all the
(J. R. Arnold. Introduction to Material Management, Chapter
activities associated with the buying and production
7).
planning functions.
D) There is a smoother flow of information and material
between the supplier and the factory.
 A company needs to increase production in the current The correct answer is A)
week to meet a customer request. The quickest way to Working overtime allows skilled workers to finish the
accomplish this is to : customers job. This would be quicker than hiring workers
A) Work overtime which can take a great deal of time. Temporary workers can
B) Hire more workers be hired quickly, however, the quality would suffer, and
C) Hire temporary workers finding a short term subcontractor would not generally be
27-1 D) Subcontract the work feasible.
(Arnold, Introduction to Materials Management, Chapter 5)

The correct answer is C)

The amount of time needed for each order can be calculated
The time needed for each order can be calculated by adding
by adding :
run time and setup time. The setup time is a fixed time
A) Run time, setup time, queue time, and move time
component and the run time would be represented by a time
B) Run time, setup time, and queue time
per unit run. These would then be combined to calculate the
C) Run time and setup time
time per job.
D) Run time, move time, and queue time
(Arnold, Introduction to Materials Management, Chapter 6)
27-2

The correct answer is D)

Which of the following is true regarding priority ?
Priority refers to the system's ability to maintain the true due
A) It refers to the ability of the plan to meet the
dates for orders. The system constantly evaluates the true
demand
due dates for released orders and will expedite or
B) It refers to the capacity to meet production
reschedule out the orders.
C) It refers to Purchasing's ability to get raw materials
(Arnold, Introduction to Materials Management, Chapter 4).
in a timely manner
27-3 D) It refers to maintaining the correct due dates on
orders

Final assembly scheduling usually occurs when :

The correct answer is A)
A) A customer order is received
Final assembly scheduling occurs only after the customer
B) Planning a build schedule
order is received. The FAS is the actual build schedule
C) The MPS is established
which ensures that the customers get what they want.
D) Capacity is constrained
Generally, FAS occurs when there are a variety of options
for the customer to order.
27-4 (Arnold, Introduction to Materials Management, Chapter 3)

The correct answer is B)

Many different end items are made from a small number
Make to order companies typically make many end items
of components. What manufacturing environment would
from a small number of components. The schedule is
this be ?
developed from actual customer orders.
A) Make to stock
(Arnold, Introduction to Materials Management, Chapter 3).
B) Make to order
C) Assemble to order
27-5 D) Engineer to order
 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
28-1
The minimum planning horizon for the MPS should be :
A) Twelve months in weekly amounts
B) Equal to the longest cumulative lead time
C) As long as it takes to acquire new capacity
D) Twice the longest component lead time
28-2
All of the following statement are correct regarding the mixed Correct Answer : D
model production except ?
A) The number of setup increases.
B) The ability to respond to changes in model demand
increases.
C) Inventory can be a minimum.
28-3 D) The goal is to build every model every week.
Which of the following does a tracking signal identify in a
forecast ?
A) Mean absolute deviation
B) Standard deviation
C) Bias
D) Aggregate summarization
28-4
Operations are scheduled from the date the order is
received. This would best describe :
A) Backward scheduling
B) Master scheduling
C) Capacity scheduling
D) Forward scheduling
28-5
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)
The correct answer is B)
The planning horizon should be equal to the longest
cumulative lead time to purchase components and
manufacture. This allows visibility for planning.
(Arnold, Introduction to Materials Management, Chapter 3)
With the mixed model production, inventory is reduced, and
the ability to respond to changes in model demand
increases. The number of setups increases, but this is not a
problem if setup times are small. The goal is to build every
model every day according to daily demand.
(J. R. Arnold. Introduction to Material Management, 4th ed,
Chapter 14)
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)
The correct answer is D)
Forward scheduling begins when an order is received. The
due date for the customer would be calculated based on
material purchases and operation scheduling. It is used for
developing promise dates for the customer, or determining
whether a late order can be delivered on time.
(Arnold, Introduction to Materials Management, Chapter 6)
 The correct answer is B)
Total employee involvement will result in an increase in
which of the following roles for first-line supervision ?
A) Controlling
B) Coaching
C) Disciplining
D) Reporting
29-1

Available to promise can be best defined as : The correct answer is A)

A) Inventory and planned production not already
committed
B) Customer orders inside lead time which have
been promised
C) Inventory not already committed
29-2 D) Capacity which is not used and therefore
is available
Available to promise is the part of inventory and planned
production which is available to be promised to customers
for delivery. It is calculated by adding scheduled receipts to
the beginning inventory and subtracting actual orders
scheduled before the next scheduled receipt.
(Arnold, Introduction to Materials Management, Chapter 3).

The correct answer is C)

The following formula represents which forecasting Exponential smoothing uses a smoothing constant call alpha.
technique ? It smoothes the variation between latest actual demand and
New forecast = (alpha)(latest demand + the forecasted demand.
(1-alpha)(previous forecast) (Arnold, Introduction to Materials Management, Chapter 8).
A) Weighted moving average
B) Double exponential smoothing
29-3 C) Exponential smoothing
D) Focus forecasting

The correct answer is D)

The seven sources of waste identified by Toyota are
The Toyota Motor Company identified seven sources of
Process, Methods, Movement, Product defects, Waiting times,
waste in manufacturing. Which of the following represent
Overproduction, and Inventory.
those sources of waste ?
(Arnold, Introduction to Materials Management, Chapter 14).
I. Process
II. Overproduction
III. Wait-time
29-4 IV. Movement

A) I, II, and III

B) I, II and IV
C) II, III, and IV
D) I, II, III, and IV

Planning bills can be best described as : The correct answer is C)

A) Bills of material based on forecast demand Planning bills are an artificial grouping of components
B) Bills of material for new products established for planning purposes. They are used to simplify
C) Bills of material which represent average products forecasting and scheduling. They are not buildable products.
D) Bills of material for expected usage (Arnold, Introduction to Materials Management, Chapter 4)

29-5
 The correct answer is C)
Which of the following is used to determine the feasibility
of the material requirements plan ?
A) Resource requirements planning
B) Rough-cut capacity planning
C) Capacity requirements planning
D) Work center capacity control
30-1

The concept of linearity can be best described as : The correct answer is D)

A) Balancing the work at each work station
B) Capacity available for the line to work
C) Scheduling jobs with similar setup times
D) Achieving the plan; no more, no less
30-2
The term linearity is used with Just-in-Time to measure the
achievement of the plan. This ensures that just the demand
is produced and no extra parts are manufactured because
time is available (waste of overproduction).
(Arnold, Introduction to Materials Management, Chapter 5)

The correct answer is B)

For a company, quick setup and changeover provide a
competitive advantage. Which of the following are
advantages created by quick changeovers ?
I. Reduced manufacturing lead time
II. Improved quality
III. Improved maintenance
30-3 IV. Reduced work-in-process
Quick changeover and setup create many advantages,
including reduced work-in-process, reduced lead time,
improved quality, and improved flow. While improved
maintenance is usually necessary for improved changeover, it
is not created by quick setup.
(Arnold, Introduction to Materials Management, Chapter 14)

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 B)

Short term capacity can be increased by overtime, inventory,
You are working as a Master Scheduler in a discrete or subcontracting. Often, hiring qualified people takes much
manufacturing company. A large customer has asked if longer than the other three options.
you can deliver an order, but you have some short term (Arnold, Introduction to Materials Management, Chapter 2).
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
30-4 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

If an annual contract is in place with a supplier, the weekly The correct answer is B)
amount to be ordered is done via : If an annual contract is in place, the weekly amounts would
A) Purchase order be ordered with a release. Often times this is done by the
B) Release planner or supplier schedule, not a buyer. The buyer would
C) Blanket order typically be the one negotiating the contract.
D) Terms statement (Arnold, Introduction to Materials Management, Chapter 7)
30-5
 A company wants to store 15,000 cartons with 20 cartons on
The correct answer is A)
each pallet. The warehouse is set up to store pallets 5
The number of pallet positions can be calculated by dividing
high. How many pallet positions are needed ?
the number of cartons of storage needed by the number of
A) 150
cartons per pallet = total number of pallets needed. Divide
B) 500
the total number of pallets needed by the number of pallets
C) 750
stacked height = the number of positions needed.
31-1 D) 3000
For this problem 15,000 divided by 20 equals 750 pallets
needed; 750 divided by 5 equals 150 positions.
(Arnold, Introduction to Materials Management, Chapter 12.)

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
31-2
The correct answer is B)
The ABC 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).

The correct answer is C)

All of the following are benefits of subcontracting EXCEPT :
There are many benefits to subcontracting as needed to
A) Excess capacity is not left unused
support manufacturing. Although short-term subcontracting will
B) Companies can produce at minimum levels,
most likely increase costs, this may not matter when the lack
reducing facilities cost
of capacity is temporary. The additional cost may be worth it
C) Cost can be minimized
if the product cannot be made otherwise.
D) Overtime can be reduced
31-3 (Arnold, Introduction to Materials Management, Chapter 6)

Which of the following provides better order-promising and

due-date performance Correct answer : A
A) Increasing batch size Manufacturing lead time depends on queue and queue
B) Reducing queue depends on the number and the batch size of the orders in
C) Improving forecast accuracy process. If batch size is reduced, the queue and lead time
D) reducing LT will be reduced. Reducing lead time improves forecast
accuracy and provides better order promising and due-date
31-4
performance.
(J. R. Tony Arnold, Introduction to Material Management,
Chapter 6, 7)

The correct answer is A)

Rough cut capacity planning can be best described as :
Rough cut capacity planning is concerned with making sure
A) Checking to be sure that critical resources
that critical resources are available at the preliminary MPS
are available to support the preliminary MPS
stage before committing to the schedule. Critical resources
B) Making sure warehouse space is available
are bottleneck operations (not every work center), labor, and
for raw materials
materials which may be scarce or have long lead times.
C) Making certain the load at each work center
31-5 (Arnold, Introduction to Materials Management, Chapter 3)
is less than capacity
D) Ensuring resources are available by product
family
 Which of the following will affect available capacity ?
The correct answer is B)
I. Product specifications
Available capacity is affected by many factors including:
II. Product mix
> Product specification changes will cause work content
III. Quantity of customer order
changes
IV. Work pace
> Product mix - a change in product mix to more
32-1 complicated products will affectavailable capacity
A) I, II, and III > Work pace - if the speed of the work changes, so will
B) I, II, and IV available capacity
C) II, III, and IV > Methods - if the equipment or method of each changes,
D) I, III, and IV then so will available capacity.
(Arnold,Introduction to Materials Management, Chapter 5)

Correct answer : D)
Which of the following statement describe best about
According to APICS dictionary 8the edition, work cell is
work cell ?
Dissimilar machines grouped together into a production unit
A) Work cell require short LT and set up time.
to produce a family of parts having similar routing. Work cell
B) Material flow smoothly from one operation to the
permit high variety, low volume manufacturing to be repetitive
next with no delay.
For work cells to be really effective, product design and
32-2 C) A specific production area consisting of one or more process design must work together so parts are designed for
people and machine with identical capacity.
manufacture in work cells.
D) Dissimilar machines grouped together into a
production unit to produce a family of parts having
similar routings

The primary reason for a time fence is to :

A) Determine how to use the forecast
B) Manage schedule changes most effectively
C) Provide a stable schedule for the suppliers
D) Maintain a steady shipment schedule
32-3
The correct answer is B)
Time fences are mainly used to manage the changes that
invariably occur in the master schedule. The frozen zone
usually can be changed only with senior management
approval due to the high cost of changes. The liquid zone
can routinely have changes made because resources have
not been committed. The slushy zone usually requires
negotiated trade-offs between Marketing and Manufacturing. If
capacity is available, then changes can usually be made.
(Arnold, Introduction to Materials Management, Chapter 3).

The correct answer is B)

Which of the following is a good measure of customer
focus ?
A) High organizational turnover
B) High quality levels
C) Many performance measures
D) Many supplier contacts
32-4

The correct answer is C)

Much of the literature written about purchasing refers to
A fair price is one which must be competitive in the market
paying a "fair price". Which of the following would best
place but may not be the lowest. The supplier must be able
describe the term "fair price" ?
to make a profit, especially in an ongoing business
A) The price paid at a trade show
relationship. Getting the lowest price may put the supplier in
B) The lowest price in the market place
a financially weak position.
C) A competitive price in the market place at which the
32-5 (Arnold, Introduction to Materials Management, Chapter 7)
supplier and buyer can make a profit
D) A price at which the fixed costs are absorbed
over the total units produced
 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
33-1
The correct answer is B)
Conformance, as defined by APICS Dictionary, Ninth Edition,
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)

The correct answer is D)

Which of the following shows the demand for capacity at a
Work center load report or display shows the demand for
work center for a specific period of time ?
capacity at a work center for a specified period of time.
A) Bill of resources
(Arnold, Introduction to Materials Management, Chapter 5).
B) Dispatch list
C) Net requirements
D) Work center load
33-2

The correct answer is C)

Capacity requirements planning (CRP) is concerned with
CRP is concerned with very detailed scheduling for individual
which of the following ?
orders at each work center to calculate work center loads.
I. Labor hours for a product family
Resource planning is concerned with checking the resources
II. Individual orders and individual work centers
available for product families while rough cut capacity
III. Calculating work center loads
planning validates the MPS prior to running the schedule.
IV. Validating the capacity for the master production
33-3 (Arnold, Introduction to Materials Management, Chapter 5).
schedule

A) I and II B) I and III

C) II and III D) III and IV

Which of the following activities is not part of physical The correct answer is D)
supply/distribution ? Physical supply/distribution is concerned with the fulfillment of a
A) Transportation customer's order. This would include transportation, order entry,
B) Warehousing and warehousing. Capacity planning, however, is considered
C) Order entry part of the manufacturing process.
D) Capacity planning (Arnold, Introduction to Materials Management, Chapter 1)
33-4

The correct answer is B)

A part made on a work center has a setup time of 50 Elapsed operation time = Setup time + run time per piece
minutes and run time of two minutes per piece. An order for divided by the number of pieces per machine. Therefore,
600 parts needs to be processed on two machines at the Elapsed operation time = 50 + [2 x (600/2)] = 650
same time. The machines can be set up at the same time. (Arnold, Introduction to Materials Management, Chapter 6).
The elapsed operation time will be :
A) 600
33-5
B) 650
C) 1200
D) 1250
 The correct answer is A)
How many of what products are needed and when products
are needed are questions of which of the following ?
A) Priority B) Capacity
C) Revenue D) Margins

34-1

The correct answer is D)

Which of the following would most likely serve as an
effective measure of supplier performance ?
A) Component price
B) Internal scrap rate
C) Transportation mode
D) Delivery time
34-2

Which of the following is not an input to MRP ? The correct answer is D)

A) Master Production Schedule Capacity planning is not an input to MRP. In fact, MRP assumes
B) Inventory records infinite capacity is available in its calculation. (Arnold,
C) Bill of materials Introduction to Materials Management, Chapter 4)
D) Capacity planning

34-3

All of the following statements are correct about bottom-up
replanning except ?
A) Action to correct for charged conditions should occur
as low in the product structure.
B) It use pegging data.
C) This process is accomplished by the computer
34-4 system.
D) Potential solutions include compressing LT.
Correct Answer : C)
In MRP, the process of using pegging data to solve matrial
availability or other problem. This process is accomplished by
the partner. Potential solutions include compressing LT, cutting
order quantity, substituting material, and changing the master
schedule.
(APICS Dictionary 8th ed.)

Which of the following is the advantage of push system in Correct Answer : D)

distribution?
A) Replenishment decisions are made at the field
warehouse itself.
B) It is part JIT system.
C) It has a good ability to react local demand.
34-5 D) Replenishment decision making is centralized usually
at the manufacturing site or central supply facility
In a push system, all forecasting and other decision are made
centrally. Stock pushed out into the system from central supply.
Field warehouse have little or no say in what they receive.
(J. R. Arnold. Introduction to Material Management, 4th ed,
Chapter 11, pp. 294-296)
 The master production schedule (MPS) is The correct answer is A)
A) An anticipated build schedule
B) An input to the production plan
C) A statement of forecast demand
D) Driven by material requirements planning

35-1

The correct answer is C)

On-hand 100
Week 1 2 3 4
Forecast 200 200 200 200
Projected Avail. 100
MPS Receipts 300 300 300

35-2
The projected available at the end of Week 4 is
A) Zero units
B) 100 units
C) 200 units
D) 300 units

The correct answer is D)

Which of the following is used to manage queues and lead
times ?
A) Forward scheduling
B) Rough-cut capacity planning
C) Material requirements planning
D) Input/output control
35-3

Dispatching can be best described as : The correct answer is C)

A) Routing the factory orders Dispatching is the function of releasing orders to the shop floor
B) Developing the work instructions based on the materials requirements plan priorities. (Arnold,
C) Releasing orders to the shop floor Introduction to Materials Management, Chapter 6)
D) Placing purchase orders with suppliers

35-4

Work center load can be best defined as : The correct answer is D)

A) The schedule of jobs released to a work center The load on a work center is defined as "the amount of planned
B) A chart to line balance production work scheduled for and actual work released to a facility, work
C) Production at a constant quantity center, or operation for a specific span of time. (APICS
D) The amount of work released to a work center Dictionary, Ninth Edition)

35-5
 The correct answer is C)
Part A and Part C would be considered parents since they have
In the product structure below, which of the following parts components attached.
would be considered parents ? (Arnold, Introduction to Materials Management, Chapter 4)

. A
_________|_________
| | |
. B C D
_____|_____
36-1 | |
E F

A) A, B, C, D
B) E, F
C) A, C
D) B, D, E, F

The correct answer is A)

Available capacity can be best described as :
Available capacity measures the ability of a resource (e.g.,
A) The ability of a resource to produce a quantity of
machine, plant, etc.) to produce output (e.g., parts) for a
output for a particular period
specified time frame (e.g., hour, day, week, month, etc.).
B) The amount of resource needed to produce the
Answer B) defines the required capacity, while Answer C)
36-2 necessary output for a specified time period
defines the load.
C) The amount of released work to a facility during a
(Arnold, Introduction to Materials Management, Chapter 5)
specified time period
D) The amount of load on a work center to produce
the output necessary

The last operation is scheduled for completion on the due

date. Other previous operations are scheduled so that the The correct answer is A)
due date can be met. This describes : Backward scheduling schedules the last operation on the routing
A) Backward scheduling so that the completion date is the due date. All previous
B) Master scheduling operations are scheduled back from the last operation. The
36-3 C) Capacity scheduling benefit of backward scheduling is that it schedules back from the
D) Forward scheduling customer due date. However, because there is no slack time,
on time delivery and service may suffer.
(Arnold, Introduction to Materials Management, Chapter 6).

Over the past three months, the demand for a product has The correct answer is B)
been 240, 260, and 280. Calculate the three month moving The three month moving average is calculated by adding the
average forecast for month four. demand for the three months (240+260+280) and dividing by the
A) 240 number of data (3) or 780/3 = 260. This would be used as the
B) 260 forecast for the fourth month.
(Arnold, Introduction to Materials Management, Chapter 8)
36-4 C) 280
D) 300

The correct answer is C)

Which of the following is typically the largest element of
physical distribution costs ?
A) Order processing
B) Material handling
C) Transportation
D) protective packaging
36-5
 The correct answer is C)
Based on the following information, what is the mean ? The mean is calculated by adding the values and dividing by the
Period Demand number of periods. For this problem:
1 1000 (1000 + 500 + 700 + 600) / 4 = X
2 500 2800/4 = X
3 700 700 = X
37-1 4 600 (Arnold, Introduction to Materials Management, Chapter 11)

A) 500
B) 600
C) 700
D) 800

Which of the following is characteristics of cycle counting ? Correct Answer : B

. It usually check C items in ABC classification In cycle counting, depending on their importance, some items
are counted frequently throughout the year whereas others are
frequently, and find out error and correct.
not. Therefore A items in classification will be checked
. Some items are counted each day.
frequently compared to C
. It reduces partially lost production. items. Because cycle counting uses trained and dedicated
37-2 . It is a system of counting inventory continually
personnel and check selected items each day, it can complete
throughout the year. or reduce lost production partially.
(J. R. Tony Arnold, Introduction to Material Management.)
A) , only B) , , only
C) , only D) , , ,

The function of selecting and sequencing available jobs to The correct answer is C)
be run at each work center is called : Dispatching is the process of selecting and sequencing the
A) Sequencing available jobs to be run at individual work centers. It is a very
B) Prioritizing important function in that jobs need to be prioritized in order to
C) Dispatching meet customer due dates.
D) Cycling (Arnold, Introduction to Materials Management, Chapter 6)
37-3

Correct Answer : A)
Order winners are those competitive characteristics that cause a
Which of the following is the statement about order firm's customers to choose that firm's product and service over
winners ? those of its components.
A) Characteristics that cause a firm's customers to
choose that firm's products and services over
those of its competitors.
37-4 B) Product characteristics that have the highest market
share.
C) Order winners usually focus on product quality for
customer.
D) A company's characteristics that are admired by
their competitors.

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)

37-5
 The correct answer is D)
Which of the following are objectives when establishing The master scheduler, when developing the MPS, must make
the MPS ? sure labor, material, equipment, and inventory are being used
I. Efficient use of resources efficiently in order to maintain high levels of customer service.
II. Efficient final assembly Efficient final assembly would be developed by a final assembly
III. High customer service levels schedule.
38-1 IV. Efficient use of inventory (Arnold, Introduction to Materials Management, Chapter 3)

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 B)

All are advantages of point of use storage except ease of
Which of the following are advantages of point of use
control, which is an advantage of central storage.
storage ?
(Arnold, Introduction to Materials Management, Chapter 12)
I. Ease of control
II. Material handling is reduced
III. Storage costs are reduced
38-2 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

Which of the following would be true in regards to bottleneck

work centers ?
A) Capacity is greater than the preceding work center
B) Throughput is controlled by the bottleneck
C) Demand is less than the capacity
D) Bottlenecks eventually go away
38-3
The correct answer is B)
Bottlenecks are work centers where demand exceeds capacity.
When this occurs, the throughput, or total volume of production,
will be limited by the amount which can pass through the
bottleneck work center. The bottleneck will only disappear when
action is taken to increase the capacity at the work center.
(Arnold, Introduction to Materials Management, Chapter 5)

If a work center has available time of 300 hours per week

The correct answer is B)
and the utilization is 80%, how many hours each week is the
The utilization rate measures the percent of time the machines
work center actually producing parts ?
are actually producing parts. The hours actually worked can be
A) 200 hours
calculated by mutiplying the utilization percentage (80%) by the
B) 240 hours
number of hours available (300) which equals 240 hours.
C) 300 hours
(Arnold, Introduction to Materials Management, Chapter 5)
38-4 D) Not enough information to determine

The correct answer is D)

If a purchased part order is late, which of the following would
be the most likely source to determine which customer order
would be affected ?
A) Where-used report
B) Planning bill
C) Routing
D) Pegging report
38-5
 All of the following are part of physical supply/distribution The correct answer is A)
except : Physical supply/distribution is involved with the movement of
A) Supplier inventory goods from the supplier to the beginning of production, and from
B) Material handling the end of production to the final customers.
C) Order entry (Arnold, Introduction to Materials Management, Chapter 1)
D) Finished goods inventory
39-1

If a company is going to establish a cycle count program, a The correct answer is C)

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
39-2
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)

The correct answer is D)

Which of the following best describes the use of bills of
material in planning systems ?
A) For the engineering design
B) For lot sizing
C) The process to make the item
D) How the product is built
39-3

The correct answer is C)

Which of the following defines the sequence of operations to
be performed to manufacture a part ?
A) Item master
B) Bill of material
C) Routing
D) Shop calendar
39-4

Manufacturing has primary responsibility for which of the The correct answer is C)
following dimensions of quality ?
A) Product performance
B) Aesthetics
C) Conformance
D) After rmarket service
39-5
 A work center is to process a batch of 100 units of a specific Correct Answer : A)
item. The setup time is 1 hour/batch, queue time is 2 Operation time is total setup and run time for a specific task.
hours/batch, move time is 0.1 hour/batch, run time is 0.2 Therefore, operation time = 2 hour + (100 0.2 hour) = 22
hour/unit, wait time is 0.1 hour/batch. Which of the following hours.
is the operation time ? (J. R. Arnold. Introduction to Material Management, 4th ed,
A) 22 hours. B) 24 hours. Chapter 5, pp. 131 - 132)
40-1 C) 26 hours. D) 28 hours.

All of the following statements are in JIT environment
except ?
A) A successful JIT can only be achieved with the
cooperation and involvement of everyone in the
organization.
40-2 B) The JIT process is primarily a planning and control
system.
C) The JIT system emphasizes relationships with
suppliers.
D) In JIT, there is no inventory on hand, and the order
quantity logic is to make exactly what is needed.
Correct Answer : B)
The JIT process is not primarily a planning and control system. It
is a philosophy and a set of
techniques for designing and operating a manufacturing plant.
Planning and control is still needed in JIT
manufacturing.
(J. R. Arnold. Introduction to Material Management, 4th ed,
Chapter 14)

Traditional maintenance is "If it isn't broke, don't fix it" so

called ? Correct Answer : C)
A) Quality maintenance. Traditional maintenance might be called breakdown
B) Preventive maintenance. maintenance where maintenance is done only when a machine
C) Breakdown maintenance. breaks down. For a process to continue to produce the required
D) Immediate maintenance. quality, machinery must be maintained in excellent condition.
40-3 This can best be achieved through a program of preventive
maintenance.
(J. R. Arnold. Introduction to Material Management, Chapter 14)

Purchase requisitions are generally an output from: The correct answer is D)

A) Master production schedule Material requirements planning outputs planned orders for
B) Capacity planning manufacturing and planned requisitions for the purchased
C) Production activity control components. The requisitions are subsequently turned into
D) Material requirements planning purchase orders.
(Arnold, Introduction to Materials Management, Chapter 4)
40-4

The primary reason to use operation overlapping is to

The correct answer is A)
reduce the :
In operation overlapping, the next operation begins work before
A) Overall manufacturing leadtime
the lot is completed at the prior operation. This reduces the
B) Cost of purchased components
overall manufacturing leadtime because the second operation is
C) Machine maintenance
producing parts and not waiting for the lot to be finished. The
D) Labor contribution
leadtime is reduced by the amount of the overlapped operation
40-5 time.
(Arnold, Introduction to Materials Management, Chapter 5)
 The correct answer is C)
All of the following are principles of bottlenecks except:
Time saved at the bottleneck is where capacity is saved
A) Using a non-bottleneck 100% of the time does not
because the entire production process can only go as fast as the
produce 100% utilization
bottleneck.
B) The capacity of the production process depends on
(Arnold, Introduction to Materials Management, Chapter 6).
the capacity of the bottleneck
C) Time saved at the bottleneck saves nothing
41-1 D) Capacity and demand must be considered together.

Which of the following is the cost of good sold ?

. Direct labor. Correct Answer : D)
. Insurance. Income statement shows revenue, expense and income(profit).
. Overhead. Revenue come from the sale of goods or service, and expenses
come from the cost of good sold and the general and
. Taxes.
administrative expense.
Cost of good sold include direct labor, material, and overhead
41-2
A) All B) , , only whereas general and administrative
C) only D) , only expense include advertizing, insurance, taxes, etc. Profit come
from revenue minus expense.

The correct answer is C)

The three month moving average is found by taking the actual
Based on the following data, what would the projected
demand for the last three months divided by three. Therefore,
forecast for month 5 be, using a 3 month moving average ?
the calculation would be:
1 2 3 4
(210+190+170)/3= 570/3=190
Forecast 200 200 200 200
(Arnold, Introduction to Materials Management, Chapter 8).
Actual Demand 190 210 190 170
41-3

A) 170
B) 180
C) 190
D) 200

The correct answer is C)

An item has a lead time of six weeks and an average

demand of 150 units per week. The safety stock for the
item is 300 units and the order quantity is 2,000 units. The
order point for the item is
A) 300 units
B) 900 units
41-4 C) 1,200 units
D) 2,000 units

Which of the following statement correctly describes about

the firm planned order ? Correct Answer : C)
. It means the system won't use the normal lead time A firm planned order is defined as a planned requirement (order)
offset from the net requirement for the order. that can be frozen in
. It is defined as a firm requirement that can be quantity and time. It provides a means for temporarily overriding
41-5 frozen in quantity and time. the system to provide
. It is one of method to reduce system nervousness. stability or to solve problems. It means the system won't use the
normal leadtime offset from the net requirement for the error.
(D. Clay Whyback, Manufacturing planning and control systems,
A) only B) , only Chapter 2)
C) , only D) All
 Which of the following would most likely be a dependent The correct answer is C)
demand item ? Dependent demand is defined as "demand that is directly
A) Safety gloves related to or derived from the bill of material structure for other
B) Office supplies items or end products." (APICS Dictionary, Ninth Edition)
C) Purchased component Therefore, a purchased component would be part of a bill
D) Item being shipped to customer structure and demand would be related to the demand for other
42-1 parts in that structure.

The correct answer is C).

Which of the following best describes scheduling of

operations before a bottleneck work center ?
A) Operations should be scheduled as early as possible.
B) Work centers feeding the bottleneck should be
scheduled to full capacity.
C) Operations should be scheduled to the rate of the
42-2
bottleneck.
D) Setup time should be reduced for operations before
the bottleneck.

The correct answer is D)

Which of the following identifies the demand for capacity at a
work center in a specific time period ?
A) Bill of labor
B) Dispatch list
C) Scheduled receipts
D) Work center load
42-3

The correct answer is A)

Inventory record inaccuracy is caused by many factors, one of
Which of the following are causes of inventory record
which is unsecured stockrooms.
inaccuracy ?
(Arnold, Introduction of Materials Management, Chapter 12).
I. Withdrawal of inventory without authorization
II. Transaction errors in recording inventory issues
III. Poor training of personnel
42-4 IV. Secured stockroom

A) I, II, and III

B) II, III, and IV
C) I, III, and IV
D) I, II, III, and IV

A company makes all decisions regarding forecasting and

The correct answer is B)
orders centrally for its distribution network. This company
The push system "pushes" inventory to distribution centers by
is using which of the following systems ?
making stocking decisions centrally. The advantage is that
A) Pull system
inventory is sent where it is needed most. The disadvantage is
B) Push system
that the coordination is more expensive than the pull system.
C) Just-in-time
(Arnold, Introduction to Materials Management, Chapter 11)
42-5 D) Time phased order point
 Why would a supplier want a long term customer The correct answer is B)
relationship ? A long term supply agreement with a customer allows the
A) Reduced transportation costs supplier to properly plan raw materials, labor, capacity, and
B) Improved ability to plan other resources.
C) Reduced packaging cost (Arnold, Introduction to Materials Management, Chapter 7).
D) Less material handling
43-1

A normal distribution can be graphed as a : The correct answer is D)

A) Parabolic curve In a normal distribution, the actual points are concentrated
B) Trend seasonal curve around the average (mean). The further from the average
C) Positive bias curve the data is, the fewer data points emerge.
D) Bell shaped curve (Arnold, Introduction to Materials Management, Chapter 8)

43-2

All of the following are principles of forecasting except :

A) Forecasts are usually wrong
B) Forecasts are more accurate for end items
C) Forecasts should include an estimate of error
D) Forecasts are more accurate in the near term
43-3
The correct answer is B)
Forecasts are more accurate for product families or groups.
The reason is that aggregate numbers tend to be more
accurate than detailed numbers. So although the sales
forecast error may be very small in a company, predicting
the shipments of an end item will have more error
associated with it.
(Arnold, Introduction to Materials Management, Chapter 8)

The correct answer is C)

The balance sheet for a firm shows which of the following ?

A) Profit or loss for the period
B) Sources and uses of funds
C) Long- and short-term debt
D) Cost of products sold

43-4

The material requirements system receives direct input The correct answer is C)
from : The master production schedule, once established, is
A) Production planning submitted to the MRP system for use in calculating demand
B) Capacity requirements planning for the components.
C) Master production scheduling (Arnold, Introduction to Materials Management, Chapter 4)
D) Purchasing
43-5
 Which of the following best describes the Master Production
Schedule ?
A) It is the actual build schedule for manufacturing
B) It is the final assembly schedule
C) It is driven by materials requirements planning
D) It is the planned build schedule for manufacturing
44-1
The correct answer is D)
The Master Production Schedule is the planned build schedule
for manufacturing. A final assembly schedule is generally
separate from the MPS and the actual build schedule may vary
from what was planned.
(Arnold, Introduction to Materials Management, Chapter 3)

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
44-2
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)

The correct answer is B)

A bill of materials contains :
A bill of materials contains all of the components used in the
I. Components used to make a product
manufacture of end items. In addition, the subassemblies at
II. Labor needed to build the product
various stages of manufacture are described. Labor is defined
III. Assemblies at various stages of production
in the routing, generally in standard hours, and safety stock is
IV. Safety stock by item
not generally maintained on the bill of materials. (Arnold,
44-3 Introduction to Materials Management, Chapter 1).
A) I and II
B) I and III
C) II and III
D) III and IV

If a work center is using a pull signal, they are using what

manufacturing system ? The correct answer is A)
A) Just-in-time B) Control chart method In a just-in-time system of manufacturing, a work center will
C) GANT control D) ERP system provide the previous work center with a signal to "pull" more
materials. This method allows the manufacturing system to
produce more closely to demand, reducing dramatically the
inventory levels needed.
44-4 (Arnold, Introduction to Materials Management, Chapter 14)

The law which states that a small percentage of the group The correct answer is C)
usually accounts for a large percent of the results is ? Pareto was an Italian economist who developed the observation
A) Fredo's law that 80% of the Italian wealth was concentrated in 20% of the
B) Newtons first law population. This observation can apply to many areas and is
C) Pareto's law used to analyze the inventory for classifying A, B, and C items.
D) Nielsen's law Generally, 80% of the inventory dollars rest with 20% of the
44-5 parts.
(Arnold, Introduction to Materials Management, Chapter 9)
 The total volume of production passing through a facility is The correct answer is D)
defined as : Throughput is the total volume passing through a facility.
A) Total output Bottlenecks control the throughput, as production can only
B) Finished goods production proceed as quickly as the slowest bottleneck.
C) Load (Arnold, Introduction to Materials Management, Chapter 6)
D) Throughput
45-1

The correct answer is D)

Week 1 2 3 4 5
Customer Orders 60 30 20 40 The order for 60 can be accepted for week 3, as 70 are
MPS 110 110 available; 20 from week 1 and 50 from week 3.
ATP 20 50 (Arnold, Introduction to Materials Management, Chapter 3).

Based on the above, what action can the planner take

45-2 regarding an order for 60 in week 3?

A) Reject the order for 60; tell the customer 50

are available
B) Accept the order for week 4 for 60
C) Accept the order for week 2 for 60
D) Accept the order for week 3 for 60

Inventory help make a manufacturing operation more Correct Answer : C)

productive. Which of the statement is not correct ?
A) Inventories allow operations with different rates of
production to operate separately and more
economically.
45-3 B) Inventories allow manufacturing to purchase in larger
quantities.
C) Inventories allow manufacturing to run shorter
production runs.
D) Inventories allow unexpected sale in the peak
periods.
Inventories allow manufacturing to run longer production runs,
which result in lower setup cost per item, an increase in
production capacity due to production resources being used a
greater portion of the item for processing as opposed to setup.
(J. R. Arnold. Introduction to Material Management, 4th ed.,
Chapter 9)

Which of the following are the objectives of the sales and

operations planning ? Correct Answer : B)
The objectives of SOP are as follows : support the business
. Build teamwork.
plan, ensure that the plans realistic, manage change effectively,
. Manage change effectively. manage finished goods inventory and backlog, measure
. Consume the forecast with customer orders performance, build teamwork etc. In demand management,
order entry is a process of consuming the forecast with actual
45-4 orders.
A) only B) , only
(Master planning reprints (Master Planning))
C) , only D) , only

Which of the following manufacturing types would typically

have the longest delivery time ? The correct answer is B)
A) Make-to-order Delivery time is defined as the time elapsed from receipt of the
B) Engineer-to-order customer's order to the delivery of the product to the customer.
C) Make-to-stock Engineer-to-order companies will generally have the longest
D) Assemble-to-order delivery time due to the design and engineering time required to
45-5 create a product. In contrast, make-to-order companies will
make a product from existing components after an order is
received. Mak- 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).
 The correct answer is B)
Based on the following data, what should the monthly The company has a beginning inventory of 500 units and will be
production be to level production ? decreasing the inventory by 300 units over the 5 periods. During
the 5 periods, they will be selling 1800 units. Therefore, the
company will need to produce 1800-300 or 1500 units over 5
Beginning inventory = 500 units
periods which equals 300 per period. (Arnold, Introduction to
Ending inventory = 200 units
Materials Management, Chapter 2).
Sales forecast
46-1 Month 1 2 3 4 5
Quantity 400 300 400 400 300

A) 250
B) 300
C) 350
D) 400

The correct answer is C)

Sales = $16 million

Cost of goods sold = $10 million
General and administrative expenses = $4 million
Average inventory = $2.5 million

46-2 A) 1.5
B) 1.6
C) 4.0
D) 6.4

The correct answer is D)

Which of the following would be included in the cost of All of the above costs would be included in the cost of inventory.
carrying inventory ? Any costs incurred as the result of having inventory should be
I. Heating and lighting a warehouse included.
II. Obsolete inventory (Arnold, Introduction to Materials Management, Chapter 9)
III. Labor to move material
IV. Damaged inventory

46-3
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 A)

The demand at a workstation in a Just-in-Time system
typically comes from
A) A pull signal
46-4 B) A dispatch list
C) The production plan
D) A control chart

The annual demand for a product is 1200 but during July, The correct answer is B)
the product sells 150 units. What is the seasonal index for The seasonal index is calculated by dividing the period average
the product in July ? demand by the average demand for all periods. For this
A) 1.0 problem, seasonal index would equal 150 divided by 100 (1200
B) 1.5 annual divided by 12 months) or 1.5.
(Arnold, Introduction to Materials Management, Chapter 8).
46-5 C) 1.75
D) 2.00
 A company wants to produce at a level rate. Based on the The correct answer is C)
following information, What production rate will provide a The total forecasted demand is equal to 70 for the five periods.
projected inventory of 20 at the end of period five ? In addition to the forecasted demand, the company wants to
1 2 3 4 5 raise the inventory from 10 to 20 by the end of period five,
Forecast Demand 20 10 15 15 10 therefore the total requirement is for 80 units. To produce 80
Planned Production units over five periods in a level manner, the company must
Planned Inventory 10 produce 16 units per period in order to achieve its objective.
47-1 (Arnold, Introduction to Materials Management, Chapter 1)
A) 14
B) 15
C) 16
D) 17

The correct answer is B)

Which of the following combinations is best suited for
developing customer promise dates in the make-to-order
environment ?
A) Forward scheduling and infinite loading
47-2 B) Forward scheduling and finite loading
C) Backward scheduling and infinite loading
D) Backward scheduling and finite loading

For the particular item, the annual demand is 5,200 units, it
is ordered in quantities of 325, and the MAD during the
leadtime is 50 unit. LT is 4 weeks. Which of the following is
nearest order point for this item ?
(safety factor = 1.95)
47-3
Correct Answer : D)
Order point = demand during the leadtime + safety stock during
the leadtime = (4 weeks) (5200/52) + 1.9550 = 497.5
(J. R. Tony Arnold, Introduction to Material Management)

A) 450. B) 460. C) 480. D) 500.

The correct answer is C)

Based on the following information, what would the safety To ensure coverage of product 99.9999% of the time, it would
stock need to be to ensure product is in stock 99.9999% of require 5 MAD for safety stock. Therefore, 5 x 100 = 500.
the time ? (Arnold, Introduction to Materials Management, Chapter 11)

MAD = 100
On hand = 200
Weekly demand = 400
47-4
A) 100
B) 300
C) 500
D) 600

Correct Answer : D)
Which of the following statement is best regarding physical The movement of materials is divided into two functions ;
distribution ? physical supply and physical distribution.
A) Physical distribution is the movement of materials Physical distribution provides a bridge between marketing and
from the distribution center to customer. production. Physical supply is the movement and storage of
B) Physical distribution is the movement of materials goods from suppliers to manufacturing.
47-5
from the suppliers to manufacturing.
C) Physical distribution is the movement of materials
from the suppliers to customer.
D) Physical distribution is the movement of materials
from the product to customer.
 A supervisor's primary role in a total employee involvement
company is : The correct answer is C)
A) Controlling Total employee involvement allows employees to participate in
B) Cheerleading decision making which was previously reserved for
C) Coaching management. In this environment, the supervisor's role is to help
D) Quality control employees succeed by assisting employees in a decision
making process rather than telling employees what to do. This
48-1
coaching process helps employees improve the decisions they
make.
(Arnold, Introduction to Materials Management, Chapter 14)

The correct answer is A)

Which of the following is the most likely impact of doubling
the ordering costs for an item ?
A) The order quantity will increase.
B) The order point will increase.
C) The order quantity will decrease.
D) The order point will decrease.
48-2

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
48-3
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)

The correct answer is B)

Periods: .1 2 3 4 5
Forecast: 20 20 30 20 25
Actual demand: 22 18 25 20 19

The mean absolute deviation (MAD) for the data given is

48-4 A) 2.2
B) 3
C) 11
D) 15

The primary benefit of point of use inventory is :

A) Reduced material handling The correct answer is A)
B) Lower safety stock Point of use inventory results in inventory being stored next to
C) Better cycle count results the location which uses the inventory. This method eliminates
D) Improved quality the material handling related to moving the inventory from the
dock to the central storage and then out to the production line.
Generally, the inventory will arrive and move directly to the using
48-5 location.
(Arnold, Introduction to Materials Management, Chapter 9)
 In which of the following manufacturing environments are
The correct answer is B)
forward scheduling and finite loading best suited for
Forward scheduling assumes that materials are not ordered and
providing customer promise dates ?
operations are not scheduled until the customer order is
A) Make-to-stock
received, regardless of the due date. In a make-to-order
B) Make-to-order
environment, work does not begin until the order is received
C) Assemble-to-order
from the customer. The order is then scheduled forward from the
49-1 D) Configure-to-order
order date and considers the load on the finite capacity of each
work center through which the order must move.
(Arnold, Introduction to Materials Management, Chapter 6)

Companies purchase hedge inventory because :

A) They receive quantity discounts
B) Supply and demand fluctuates randomly
C) Prices fluctuate in worldwide markets
D) Transit lead times impact operations
49-2
The correct answer is C)
Hedge inventory is purchased by companies when prices are
low in the market. Many commodities such as minerals and
grains are traded in open markets with wide fluctuation.
Inventory will be bought when prices are low to take advantage
of the pricing.
(Arnold, Introduction to Materials Management, Chapter 9)

The correct answer is C)

When a company has historical data available for use in
Intrinsic forecasting techniques use internal historical data to
forecasting future demand, the technique for utilizing this
forecast future demand. It is used based on an assumption
data is called :
that historical patterns can predict future patterns.
A) Qualitative forecasting techniques
(Arnold, Introduction to Materials Management, Chapter 8)
B) Extrinsic forecasting techniques
C) Intrinsic forecasting techniques
49-3 D) Causal forecasting techniques

The correct answer is C)

Dependent demand is calculated based on demand for higher
Which of the following would best define dependent
level assemblies. Forecasted demand is independent.
demand ?
(Arnold, Introduction to Material Management, Chapter 4).

I. Demand which is dependent on the forecast

II. Demand which is dependent on demand for a higher
level assembly
49-4
III. Demand which is calculated

A) I only
B) I and II
C) II and III
D) III

The correct answer is B)

Which of the following are objectives of inventory ? In order to maximize profits, a company must manage
I. Maximize customer service inventories, provide great customer service, and have efficient
II. Efficient transaction plant operations, while minimizing the amount of capital used for
III. Low cost plan operations inventory.
IV. Minimum inventory investment (Arnold, Introduction to Materials Management, Chapter 9).
49-5

A) I, II, and III

B) I, III, and IV
C) I, II, and IV
D) II, III, and IV
 Short setup times also have the following advantages
except ? Correct Answer : A)
A) Increased economic order quantity If the setup time can be reduce, the lot size can be reduced. For
B) Reduced queue. example, if the economic order quantity decreases to 50. When
C) Reduced WIP. D) Improved quality order quantities are small, defects have less time to be buried.
(J. R. Tony Arnold, Introduction to Material Management,
50-1 Chapter 14)

Two basic terms in scheduling techniques are forward and

Correct Answer : B)
backward scheduling. Forward scheduling assumes that
Forward scheduling assumes the material procurement and
activities start
operation scheduling for a component starts when the order is
A) At the slack time.
received whatever the due date, and that operations are
B) When the order is received.
scheduled forward from this data.
50-2 C) At a convenience time. (J. R. Arnold. Introduction to Material Management (page 149))
D) At the due date.

Which measures of forecast error express the size of error

irrespective of whether it's positive or negative ?
Correct Answer : B)
. MAD. The MAD express the size of the average error irrespective of
. Standard deviation. whether it's positive or negative. It's the combination of bias and
. Tracking signals. MAD that allow us to evaluate forecasting results.
. Bias Bias is perhaps the most critical, since we can compensate for
forecast errors through safety stock, expediting, faster delivery
means. MAD indicates the expected compensation's size. The
A) only best-known measure of deviation or dispersion from statistics is
50-3
B) , only the standard deviation. When errors are distributed normally,
C) , only standard deviation of forecast error is 1.25 MAD. Bias and
D) All tracking signals have the tendency of the forecast to be either
above or below the actual observation.
(D. Clay Whyback, Manufacturing Planning and Control
Systems, Chapter 16)).

Which of the following is a reason to maintain inventory?

A) Improve customer service The correct answer is A)
B) Reduce transportation costs One of the primary reasons to maintain inventory is to provide
C) Increase machine operating time competitive customer service. By having inventory, a company
D) Reduce costs can avoid costly stockouts, lost sales, and lost customers. In
some industries, such as consumer goods, it is imperative that
50-4
the product be in stock when the customer orders.
(Arnold, Introduction to Materials Management, Chapter 1)

The correct answer is A)

A primary advantage of electronic data interchange (EDI)
with suppliers is that it
A) Reduces paperwork
B) Bypasses the buyer
C) Employs the latest technology
D) Supports unlimited forms of communications
50-5
 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)

51-1

The correct answer is D)

Which of the following production processes is most
appropriate for high-volume bulk products ?
A) Project
B) Jobbing
C) Batch
D) Continuous
51-2

All of the following are related systems and are in JIT

except ? Correct Answer : C)
A) Pull system. In periodic review system, the order is placed every time units,
B) Kanban system. and order quantity is variable. In pull
C) Periodic review system. system, the preceding operation does not produce anything
D) Two bin system. unless a signals sent from the following
51-3 operation to do so. The most well known system is the Kanban
system and it is basically a two bin
system : when one bin is used up, it is sent back to the supplier
operation and is the signal forward to the customer.
(J. R. Arnold. Introduction to Material Management, 4th ed.)

The correct answer is C)

Which of the following is a major consideration when
selecting a supplier ?
A) Supplier employee benefits
B) Supplier forecast accuracy
C) Supplier manufacturing reliability
D) Supplier pre-sales marketing success
51-4

All of the following conditions will trigger an exception
message except :
A) Changes in timing of a scheduled receipt
B) Changes in the inventory on hand balance due to
cycle count adjustment
C) Changes in the forecast
51-5 D) Changes in the assigned planner
The correct answer is D)
All of the conditions will trigger an exception message except for
changing the planner assignment (number). This will cause the
reports to print differently. Any records which cause a change
in the gross requirements, inventory, or scheduled receipts, will
trigger an exception message. (Arnold, Introduction to Materials
Management, Chapter 4)
 The correct answer is D)
The setup time for an operation is two hours and the run
time is 10 minutes per piece. The scheduled operation time
for 100 units is
A) 130 minutes
B) 1,000 minutes
C) 1,100 minutes
52-1 D) 1,120 minutes

All of the following are objectives of Purchasing except :
A) Buy goods and services in the right quantity and
quality
B) Buy goods and services at the lowest cost
possible
C) Maintain good supplier relations
52-2 D) Schedule the suppliers plant so goods arrive on time
The correct answer is D)
Purchasing objectives are the three answers in A), B), and C).
In addition, Purchasing must make sure the company receives
the best possible service and prompt delivery by the supplier.
(Arnold, Introduction to Materials Management, Chapter 7)

You calculate the critical ratio which is .95 for a particular The correct answer is A)
order. The order is : The critical ratio measures the priority of an order to the other
A) Behind schedule orders at a work center. It is calculated by:
B) Ahead of schedule
C) On schedule
D) Critical ratio has nothing to do with order priority Due date - Present date Actual time remaining
----------------------- = ---------------------
52-3
Lead time remaining Lead time remaining

(Arnold, Introduction to Materials Management, Chapter 6).

In addition to calculating requirements, the major objective of

The correct answer is A)
MRP is to :
The two major objectives of MRP are to:
A) Keep the order priorities current
1) Calculate the material requirements based on
B) Maintain the bill of material
demand and on hand inventory.
C) Calculate the inventory needed
2) Keep order priorities current as business needs
D) Ensure forecasted demand is to be used
52-4 change. While MRP does calculate projected
inventory, it is not its primary objective.
(Arnold, Introduction to Materials Management, Chapter 4).

The correct answer is D)

The cost of ordering includes any cost associated with placing
Which of the following are included in the cost of ordering ? orders on the factory or suppliers.
(Arnold, Introduction to Materials Management, Chapter 9)
I. Receivers who take in material
II. Setup costs
III. Cost of material planners
IV. Cost of buyers
52-5

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 D).
A purpose of holding extra inventory is to
A) Allow production to select what to run
B) Minimize the bill of material levels
C) Reduce the number of purchased items
D) Buffer production from demand variation

53-1

Which of the following best describes a routing ?

A) The path materials follow from beginning to end The correct answer is B)
B) The path work follows from work center to work A routing shows the steps of manufacture including:
center as it is completed > Operations to be completed
C) The path information transactions follow to be > Sequence of operations
completed > Work centers
53-2 D) The critical ratio calculated to determine whether jobs > Alternate work centers
are on schedule > Tooling necessary
> Standard setup and run times
Other activities such as receiving or inventory activities would
not typically be on the routing.
(Arnold, Introduction to Materials Management, Chapter 5)

The correct answer is C)

What is the Mean Absolute Deviation for the following data ? The mean absolute deviation is calculated by adding the
absolute (no arithmetic signs) differences between the actual
Periods: 1 2 3 4 5 demand and the forecast, divided by the number of periods. For
Forecast: 100 100 150 150 150 this example, the absolute deviation is calculated by adding
Demand: 90 105 140 160 170 10+5+10+10+20=55. Divide 55 by the number of periods (5) to
53-3 equal 11. (Arnold, Introduction to Materials Management,
Chapter 8).
A) 3
B) 9
C) 11
D) 15

Stockouts cost money for the following reasons :

. Back-order cost. Correct Answer : A
. Lost sales. Stockouts cost money for the following reasons : back order
. Lost customers. costs, lost sales, lost customers. The cost of a stockout varies
depending on the item, the market served, the customer, and
competition. In some markets, customer service is a major
53-4 A) , , and competitive tool, and a stockout can be very expensive.
B) and only (J. R. Arnold. Introduction to Material Management, 4th ed.,
C) and only Chapter 11, pp.287)
D) only

If a variety of products are made in a factory, the most The correct answer is C)
common unit of capacity is : When factories make a variety of products, the most common
A) Machine turns unit of capacity is time or hours. In factories which make
B) Inventory turns common units, a measure of capacity will be the unit of output.
C) Time For example, beer is measured in barrels, automobiles are
D) Dollars measured in cars produced, etc.
53-5 (Arnold, Introduction to Materials Management, Chapter 2)
 When the next operation is allowed to begin before the The correct answer is B)
entire lot is completed on the previous operation, this is Operation overlapping allows the next operation to begin even
called : though the whole lot has not been completed through the
A) Operation splitting previous operations. It can be used to expedite an order.
B) Operation overlapping However, sometimes costs are increased.
C) Work center overlapping (Arnold, Introduction to Materials Management, Chapter 6)
54-1 D) Work center splitting

The annual cost of goods sold for a company is $40 million The correct answer is D)
and the average inventory is $10 million. By how much In order for a company with cost of goods sold of $40 million to
would the inventory need to be reduced to have annual turn the inventory 20 times annually, the inventory would have to
inventory turns equal 20 turns ? be valued at $2 million (40/20). Since the average inventory is
A) $2 million currently valued at $10 million, the inventory would need to be
B) $4 million reduced by $8 million.
54-2 C) $6 million (Arnold, Introduction to Materials Management, Chapter 1)
D) $8 million

A firm is in manufacturing industry, they are willing to keep a Correct Answer : D)

minimum safety stock. Which of the following factor should Sometimes it is desirable that the supplier be located near the
be considered best to select suppliers ? buyer, or at least maintain an inventory locally. A close location
A) Technical ability. B) Manufacturing capability. helps shorten delivery times and means they can keep minimum
C) Price. D) Location. safety stock and means emergency shortages can be
decreased.
54-3

The correct answer is A)

Which of the following are the basic responsibilities of a
planner ?
I. Release orders to manufacturing and purchasing
II. Reschedule dates of existing orders as needed
III. Solve material shortages by replanning
54-4 IV. Oversee the cycle counting program
The planner's responsibilities do not include overseeing the
cycle counting program although inventory errors greatly impact
the planner.
(Arnold, Introduction to Materials Management, Chapter 3)

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 C)

The Bill of Materials is used quite frequently in Capacity planning uses the routing file to determine the load on
manufacturing. All of the following are uses of the BOM the work centers.
except : (Arnold, Introduction to Materials Management, Chapter 4).
A) Product costing
B) Planning
C) Calculating capacity
54-5 D) Engineering change control
 Production activity control can be best described as a : The correct answer is B)
A) Planning system The production activity control system is responsible for
B) Execution system executing the materials requirement plan and the master
C) Scheduling system production schedule.
55-1 D) Ordering system (Arnold, Introduction to Materials Management, Chapter 6)

The correct answer is A)

A firm planned order is used to :
Firm planned orders are used by planners when it is necessary
A) Freeze the planned order against changes in quantity
to "freeze" the planned order. This might be necessary due to
and time
material shortages or capacity problems, e.g., strikes.
B) Convert the planned order to a scheduled receipt
(Arnold, Introduction to Materials Managament, Chapter 4).
C) Simulate the projected inventory balance
55-2 D) Manipulate the data and quantity of the customer
order

The correct answer is D)

Which of the following are factors in selecting suppliers ? All of the factors listed should be considered when trying to
I. Technical capability select a supplier. Other factors include price, credit terms, and
II. Financial reliability quality capabilities.
III. Location (Arnold, Introduction to Materials Management, Chapter 7)
IV. Service after the sale

A) I, II, and III

B) I, III, and IV
55-3 C) II, III, and IV
D) I, II, III, and IV

Which of the following is the input needed for a CRP ? Correct Answer : C)
. MPS. The input needed for a CRP are open shop order, planned order
. Shop order. in MRP, routing, time standards, leadtimes, and workcener
. Planned order. capacities.
(J. R. Arnold. Introduction to Material Management, 4th ed ,
Chapter 5)
55-4 A) , only B) only
C) , only D) None

The correct answer is B)

Which of the following is generally a characteristic of a
product-focused layout ?
A) Large queues at workstations
B) Fixed flow of work
C) Production to a work order
D) General purpose workstations
55-5
 Which of the following would be considered a function of The correct answer is A)
physical distribution ? Physical distribution includes all the activities associated with
A) Material handling physically moving goods; from the supplier to the start of
B) Routings production, and from the end of production to the consumer.
C) Kanban size Material handling is involved with physically moving the goods.
D) Pull signal The others are functions within Manufacturing.
56-1
(Arnold, Introduction to Materials Management, Chapter 13)

Correct Answer : D)
Which of the following statement is the best definition of ANSWER A is delivery leadtime definition, B is the definition of
demand lead time ? cumulative leadtime, C is the definition
A) The time from the receipt of a customer order to the of operation time. Demand leadtime is the amount of time
delivery of the product. potential customers are willing to wait for the delivery of a good
B) The longest planned length of time to accomplish the or a service. Syn : customer tolerance time.
activity in question. (APICS Dictionary 8th ed.)
C) The total setup time plus the run time for a specific
task.
56-2
D) The amount of time potential customers are willing to
wait for the delivery of a good.

Raw material : $100 Correct Answer : D)

WIP : $50 Inventory turns = cost of good sold/average inventory, 4 = X
MRO : $250 /(100 + 50 + 250 + 300), therefore X = 2800.
Finished good inventory : $300 (J. R. Arnold. Introduction to Material Management, Chapter 1).
Inventory turns is 4. What's cost of good of sold ?

56-3 A) $1000 B) $2000

C) $2500 D) $2800

The correct answer is A)

Available capacity can be determined in two ways: Measured capacity is based on historical data, that is, what the
measurement and calculation. Measured capacity is machine or operator has produced in the past.
determined by which of the following methods ? (Arnold, Introduction to Materials Management, Chapter 5).
A) Historical data
B) Available time
C) Machine utilization
56-4 D) Machine efficiency

All of the following are part of manufacturing lead time The correct answer is D)
except : Purchasing time is part of the overall lead time of a product;
A) Queue time however, manufacturing lead time includes queue time, setup
B) Wait time time, run time, wait time, and move time.
C) Move time (Arnold, Introduction to Materials Management, Chapter 6)
56-5 D) Purchasing time
 The correct answer is D)
In projecting demand for a standard design commodity,
which of the following factors is typically most important?
A) Post-sales service
B) Product features
C) Quality controls
D) Competitive pricing
57-1

The correct answer is B)

Which of the following are inputs to the Material The Material Requirements Planning system needs input from
Requirements Planning system ? the Master Production Schedule, inventory records, and the bill
I. Master Production Schedule of materials in order to process information properly. The
II. Inventory records production plan is an input to MPS.
III. Production plan (Arnold, Introduction to Materials Management, Chapter 4)
57-2 IV. Bill of materials

A) I, II, and III

B) I, II, and IV
C) II, III, and IV
D) I, II, III, and IV

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).

57-3

Which of the following statement is the advantage of the

product layout ?
A) Product or volume can be changed relatively easily.
B) It can achieve labor efficiency.
C) It can achieve inventory movement efficiency.
D) It can achieve machinery efficiency.
57-4
Correct Answer : C)
The big advantage of the product layout strategy is the lack of
WIP inventory. It has very little inventory on the line, but you
may have employees or machines that are not being utilized
efficiently. It can achieve inventory movement efficiency.
However, by achieving this level of inventory efficiency, it lose
labor and machinery efficiency.
(Gerhard J. Plenert, The Plant Operation Handbook)

Correct Answer : C)
All of the following is best statement regarding DRP ? DRP translate MRP logic to distribution system. It is a system
A) It translates the logic of MRP to the distribution that forecast when the various demands
system. will be made by the system on central supply. This gives central
B) It is a system that forecast when the various supply and factory the opportunity to
demands will be made by the system on local plan for the goods that will actually be needed.
57-5
supply. (J. R. Arnold. Introduction to Material Management)
C) It is the time-phased replenishment needs of branch
warehouse summed by period.
D) It is a statement of the end item configurations that
are to be assembled.
 The throughput of a manufacturing process is determined The correct answer is A)
by : The factory throughput is regulated by the constraint work
A) Overloaded work centers center. The constraint work center is by definition the work
B) First work center in the process center that has no available capacity. Therefore, the overloaded
C) Underloaded work centers work center regulates the throughput.
D) Last work center in the process (Arnold, Introduction to Materials Management, Chapter 6).
58-1

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
58-2 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).

In quality costs, which of the following includes internal Correct Answer : C)

failure cost ? Quality costs fall into four recognized categories : internal
. Scrap. failures, external failures, appraisal costs, and prevention costs.
. Reinspection. Internal failure costs relate to problem before the product
. Process loss. reaches the customer. External failure costs relate to problems
. inspection. found after the product reaches the customer. Appraisal costs
58-3 are associated with the formal evaluation and audit of quality in
the firm.
A) , only B) , , only
C) , , only D) All

In order for a forecast to signal negative bias, the tracking

signal would be : The correct answer is A)
A) Less than one A tracking signal measures the algebraic deviations of the actual
B) More than one demand to the forecast. It then divides those deviations by the
C) Equal to one MAD. If the deviations divided by the MAD are greater than one,
D) Equal to zero then the forecast exhibits positive bias; less than one, the
forecast exhibits negative bias. Most companies will only adjust
58-4
the forecast when the tracking signal reaches an arbitrary target,
such as +/- 4.
(Arnold, Introduction to Materials Management, Chapter 8)

The movement of finished goods from production to the The correct answer is C)
customer is : Physical distribution is the actual movement of goods from
A) Physical supply production to the customer. Physical supply is the movement
B) Supply chain of raw material from the supplier to manufacturing. (Arnold,
C) Physical distribution Introduction to Materials Management, Chapter 13).
D) Conversion cycle
58-5

In order to back schedule, which of the following information
is necessary ?
I. Quantity and due dates
II. Bill of materials sequence
III. Setup and run times for each operation
59-1 IV. Queue, wait, and move times
The correct answer is B)
The bill of materials sequence is not needed in order to
backward schedule. Backward scheduling involves machine
operation sequence as well as move, queue, and wait times.
The quantity would directly impact the time taken at each work
center.
(Arnold, Introduction to Materials Management, Chapter 5).

A) I, II, and III

B) I, III, and IV
C) II, III, and IV
D) I, II, and IV

The correct answer is D)

Which of the following best describes a kanban system?
A) A quality control system
B) Basically is a push production
C) Requires operator flexibility
D) Basically is a visual reorder point

59-2

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
59-3
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).

The correct answer is B)

A work center has an order to process 500 units of part
Required time equals setup time and run time. For this
1468. It takes .5 hours to setup and 3 minutes for each
example, the required time equals 30 mins (.5 hours) set up time
piece to be run. What is the required time to run the
plus (500 pieces x 3 min./piece) run time = 1530 min. = 25.5
order ?
hours.
A) 25 hours
(Arnold, Introduction to Materials Management, Chapter 5)
B) 25.5 hours
59-4 C) 30 hours
D) 35 hours

In manufacturing process, which of the following layout Correct Answer : A)

keeps the largest inventory and avoids the high In fixed position layout, resources are portable and come to the
costs of moving the product from one workstation to job site to perform activities, e.g., bridge or building construction.
another ? So it can avoids the high costs of moving the product from one
A) Fixed position layout. B) Product layout. workstation to another.
C) Process layout. D) Cellular layout. (APICS Dictionary 8th ed).
59-5
 A pegging report is used to :
A) Trace the origin of demand for a component
B) Trace the capacity requirement for a part
C) Identify the quantity per for a particular parent
D) Establish the demand for a part
60-1
The correct answer is A)
A pegging report is used to trace the origin of demand for a
component. It shows only the parents for which demand exists,
unlike the where-used report which shows every parent in which
a component is used.
(Arnold, Introduction to Materials Management, Chapter 4)

A firm has originally two distribution centers. As time pass,

they will increase their distribution centers step by step. We
can expect which of the following ?
A) The cost of truckload shipments to the distribution
centers to decrease.
B) Customer complaint.
60-2
C) Eventually, as more distribution centers are added,
the marginal savings decrease.
D) The total cost of transportation to increase.
Correct Answer : C)
We can expect the cost of truckload shipment to the distribution
center to increase, the cost of LTL shipment to customers to
decrease. But the total cost of transportation will be reduced
further. Therefore, the cost of TL shipments increases and the
cost of LTL shipments decrease. Notice ! The major saving is
from the addition of the first few distribution centers.
(J. R. Tony Arnold, Introduction to Material Management.
(Chapter 13, pp. 350))

The correct answer is D)

The MPS is used to facilitate communication between which
While the MPS can be used for many purposes, it is primarily a
two groups ?
tool for use by Manufacturing and Sales.
A) Manufacturing and Logistics
(Arnold, Introduction to Materials Management, Chapter 3)
B) Sales and Marketing
C) Manufacturing and Finance
60-3 D) Sales and Manufacturing

The correct answer is D)

A work center has 4 machines available for 8 hours per day,
Efficiency = standard hours of work produced/hours actually
5 days per week. The work center is utilized 100 hours but
worked x 100%. For this example, 120 standard hours of work
produces 120 hours of standard work. The efficiency of the
was produced, divided by 100 hours of actual work = 1.2 x 100%
work center is :
= 120%.
A) 50%
(Arnold, Introduction to Materials Management, Chapter 5).
60-4 B) 62.5%
C) 75%
D) 120%

Today's data is 20. Correct Answer : C)

Order DUE DATE
A 30
B 40
C 35
D 45
Which of the following order should be considered
60-5 carefully ?
A) Order A.
C) Order C.
LT REMAINING If the actual time remaining is less than the leadtime remaining,
10 it implies there is not sufficient time to complete the job and the
15 job is behind schedule. It means that CR less than 1. Thus
20 orders are listed in order of their critical ratio with the lowest one
20 first. CR of Order A is 1. It means the order A is possible in due
date. CR Order B is 20/15. It means the Order B is ahead of
schedule. CR Order C is 15/20. It means the Order C is behind
of schedule. CR Order D is 25/20. It means the order D is ahead
B) Order B. of schedule.
D) Order D (J. R. Arnold. Introduction to Material Management, Chapter 6)
 The correct answer is B)

In a decentralized distribution system, the role of the central

supply organization is to
A) Determine when to replenish stock at the distribution
centers.
B) Respond to demands from the distribution centers.
61-1 C) Coordinate communications among distribution
centers.
D) forecast demand at each distribution center.

The correct answer is B).

Which of the following is most consistent with ABC analysis
and control ?
A) All items should have the same level of control.
B) A small number of items account for a large portion
of annual usage value.
61-2 C) Items need tight control.
D) Perpetual inventory records are required for all items.

The correct answer is A)

Trucks, as a mode of transportation, are best suited for: Trucks are best when there is a need to move small quantities to
A) Moving small quantities to widely dispersed widely dispersed markets. Trains are better for moving large
markets quantities.
B) Moving large quantities to widely dispersed (Arnold, Introduction to Materials Management, Chapter 13).
markets
61-3 C) Moving small quantities to narrowly dispersed
markets
D) Moving large quantities to narrowly dispersed
markets

The correct answer is B)

Month 1 2 3 4 5 6 Total
Projection 100 100 100 100 100 100 600
Demand 95 102 105 98 101 103 604

61-4 The projection for the seventh month using a three-month

moving average would be
A) 100
B) 101
C) 103
D) 105

The correct answer is C)

Based on the following data, what should the monthly The company is beginning with 300 units and wants to increase
production be to achieve level production ? the inventory level by 100 units. In addition, the sales forecast
Beginning inventory = 300 units calls for 1400 units to be sold over the 5 periods. Therefore,
Ending inventory = 400 units 1400 + 100 units need to be produced for a total of 1500 units
Sales forecast over 5 periods, or 300 units per period.
(Arnold, Introduction to Materials Management, Chapter 2)
61-5 Month 1 2 3 4 5
Quantity 300 400 200 300 200

A) 200
B) 250
C) 300
D) 350
 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
62-1
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)

In a certain manufacturing environment, the flow of work is

varied, workers must be flexible, and throughput times are The correct answer is B)
long. This describes : With intermittent manufacturing, the flow of work is varied,
A) Project manufacturing depending on the design. This causes the work flow to be
B) Intermittent manufacturing unbalanced. Machinery and workers need to be flexible and are
generally grouped together by function. Throughput times are
62-2 C) Flow manufacturing
D) Specialty manufacturing generally long depending on the work which needs to be done at
each work center. As a result, scheduling is very complex.
The capacity needed depends on the mix of products moving
through the various work centers.
(Arnold, Introduction to Materials Management, Chapter 6)

What is the major disadvantage of a fixed location The correct answer is B)

warehouse? Fixed location warehouses offer poor cube utilization because
A) Put away time is increased pallet locations are left empty when the product assigned to the
B) Cube utilization is poor location is out of stock. Generally, fixed locations are used in
C) Dock time is increased small warehouses with low throughput.
D) Material handling costs rise (Arnold, Introduction to Materials Management, Chapter 12)
62-3

The correct answer is A)

Which of the following groups should be the first to receive
education on total quality management concepts ?
A) Senior management
B) Quality inspectors
C) Production operators
D) Production supervision
62-4

Each distribution center places orders from central supply as

The correct answer is A)
they are needed. This is called :
When each distribution center orders from central supply or the
A) Pull system
factory independently of what other distribution centers are
B) Push system
doing, it is called a pull system. The advantage is that
C) Just-in-time delivery
coordination and communication is less expensive. The
D) Supply chain management
disadvantage is that the lack of coordination causes problems
62-5 with customer service and inventories.
(Arnold, Introduction to Materials Management, Chapter 11)
 The input rate is controlled by :
A) The material flow from suppliers
B) The tooling requirements
C) The release of orders to the shop
D) The demand from customers
The correct answer is C)
Releasing orders to the shop controls the input rate. If orders
are released faster than they can be produced, then queue,
work-in-progress, and lead times will increase. (Arnold,
Introduction to Materials Management, Chapter 6).

63-1

When it comes to transportation, which of the following is
true ?
A) Truckers, airlines, and the railways accept less than full
load, but usually water carriers do not accept LCL
shipment.
B) Transportation costs can be increased by using
63-2
warehouse.
C) TL shipments from several suppliers can be
consolidated at a warehouse before being shipped
LTL to the factory.
D) Transportation consolidation in physical distribution is
sometimes called break-bulk.
Correct Answer : D)
Truckers, airline, and water carriers accept less than full load,
but railways usually do not accept LCL(less than carload)
shipment. Transportation costs can be decreased by using
warehouses. Transportation costs be decreased by using
warehouses. This is accomplished by consolidating small
shipment into large shipments. It means that LTL shipments
from several suppliers can be consolidated at warehouse before
being shipped TL to the factory.

As a company increases the number of warehouses from

The correct answer is C)
one to two, there is an impact on safety stock. Safety stock
The safety stock will increase by an amount which can be
will :
calculated, but it will not double automatically. The amount of
A) Increase by a factor of 2
the increase will depend on service levels by part, the demand
B) Decrease by half
variation, and other factors. As the number of warehouses
C) Increase, and the percent can be calculated
increases, demand at each will decrease, causing greater
63-3 D) Decrease by a calculated percentage
variations in product demand. Therefore, safety stock will
increase appropriately.
(Arnold, Introduction to Materials Management, Chapter 13)

An anticipated build schedule can be best described as : The correct answer is D)

A) Production plan As defined by the ninth edition of the APICS dictionary, the
B) Capacity plan master production schedule is "the anticipated build schedule for
C) Materials requirements plan those items assigned to the master scheduler."
D) Master production schedule

63-4

The correct answer is C)

Which of the following provides a buffer for seasonal
demand ?
A) Lot-size inventory
B) Fluctuation inventory
C) Anticipation inventory
D) Decoupling inventory
63-5
 The annual usage is 2000 units and demand is relatively Correct Answer : D)
constant throughout the year. The cost of carrying inventory The EOQ occurred at an order quantity in which the ordering
is 20%, the cost per unit is $ 2, ordering costs are $ 10. costs equal the carrying costs.
Which of the following is the EOQ ? J. R. Tony Arnold, Introduction to Material Management.
A) 200. B) 300. C) 400. D) 500. Chapter 9)

64-1

Even in an intermittent manufacturing shop, certain JIT

principles can be applied. Which of the following principles The correct answer is C)
can be used in an intermittent manufacturing shop ? An intermittent manufacturer is characterized by processing in
I. Employee involvement batches, and large variation in design and order quantities. At
II. Total preventive maintenance the extreme, every job could be made to customer specification.
III. Inventory reduction The product lacks a continuous flow. However, JIT principle can
be applied for employee involvement, workplace layout, total
64-2 IV. Continuous flow lines
quality control, preventive maintenance, setup time reduction,
supplier partnerships, and inventory reduction.
A) I and III only B) II and IV only (Arnold, Introduction to Materials Management, Chapter 14).
C) I, II, and III D) I, II, III, and IV

The correct answer is C)

Sometimes a common unit of measure is not available for
Standard time, measured as labor hours, can be used as the
use in measuring output. In these cases, what measure
common measure of output and work content. It can be used for
would be used ?
loading and scheduling.
A) Machine speed
(Arnold, Introduction to Materials Management, Chapter 5)
B) Number of assemblies
C) Standard time
64-3 D) Acceptable quality parts

The correct answer is C)

The capacity of which of the following determines the
throughput of a manufacturing process ?
A) Initial work centers
B) Finishing work centers
C) Overloaded work centers
D) Underloaded work centers
64-4

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
64-5
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)
 The correct answer is D)
Which of the following would be included in demand All of the answers would be part of demand management, plus
management ? order entry and order promising.
(Arnold, Introduction to Materials Management, Chapter 8)
I. Forecasted requirements
II. Service parts requirements
65-1
III. Branch warehouse requirements
IV. Inter-plant orders

A) I, II, and III B) II, III, and IV

C) I, III, and IV D) I, II, III, and IV

In order to reduce the number of transactions which occur in The correct answer is C)
a JIT environment, companies use a system called : Backflushing is a system for doing inventory and labor
A) Transaction prevention transactions based on the finished goods production. With this
B) Pre-deduct system, one transaction will create the many issues transactions
C) Backflushing for inventory. This process works best when the leadtime for the
D) Bar coding product is short and the product flows down a production line.
65-2
(Arnold, Introduction to Materials Management, Chapter 14)

The correct answer is C)

The lot size rule described as lot-for-lot will do which of the
A lot-for-lot ordering rule will order just the amount needed
following ?
based on the net requirement.
A) Order a fixed amount
(Arnold, Introduction to Materials Management, Chapter 10)
B) Order a lot equal to so many periods
C) Order just the amount needed
D) Order in fixed intervals
65-3

The correct answer is D)

For 100 A's the product will need 200 C's. Because 3 E's go
Based on the following product structure how many E's are
into each C, 600 E's (200 x 3) will be required.
needed for 100 A's ?
(Arnold, Introduction to Materials Management, Chapter 4)

A
__________|__________
| | |
65-4
B(1) C(2) D(1)
_____|_______
| |
E(3) F(2)

A) 100 B) 300 C) 400 D) 600

A company's strategic plan : The correct answer is C)

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
65-5 D) Outlines new products for the next year
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.
(Arnold, Introduction to Materials Management, Chapter 2).
 All of the following activities are part of the physical The correct answer is D)
distribution system except : Physical distribution includes the activities of transportation,
A) Transportation distribution, inventory, warehousing, material handling,
B) Warehousing packaging, and order processing. Forecasting is not a physical
C) Material handling distribution activity.
D) Forecasting of customer orders (Arnold, Introduction to Materials Management, Chapter 13)
66-1

The correct answer is D)

In a decentralized distribution system, the role of the central
supply organization is to
A) Determine when to replenish stock at the distribution
centers
B) Respond to demands from the distribution centers
C) Coordinate communications among distribution centers
66-2 D) Forecast demand at each distribution center

Of the following choices, which would be the preferred
method to minimize system nervousness ?
A) Increase the order quantities
B) Increase the lead time
C) Use firm planned orders
D) Ignore the exception messages
66-3
The correct answer is C)
Firm planned orders will reduce system nervousness, especially
inside the manufacturing lead time. The planner could ignore
the exception messages, however, this could become a
dangerous practice.
(Arnold, Introduction to Materials Management, Chapter 4)

Correct Answer : C)
All of the following include inventory carrying cost
except ?
A) Opportunity cost. B) Obsolescence.
C) Lost capacity cost. D Deterioration.

66-4

Which of the following is input to MRP system ?

. CRP. Correct Answer : B)
. Inventory record. Inputs to the material requirement planning system ar MPS,
inventory record, BOM. MPS drives the MRP system by
. Routing file.
providing the initial input for the items needed. A major input to
the MRP is inventory. When a calculation is made to find out
A) only B) only how many are needed, the quantities available must be
66-5 considered. The BOM shows all the parts required to make one
C) , only D) None
of the item.
 The correct answer is C)
Which of the following statements would be true regarding
Delivery time is defined as the time elapsed between receipt of
the delivery time in an engineer to order company ?
the customer's order and the delivery to the customer.
A) Delivery time is shorter than a make-to-order
Engineer-to-order companies have the longest delivery time due
company
to the engineering which must occur before the product can be
B) It would be the same as a make-to-stock item
manufactured for delivery.
C) It would be longer than an assemble-to-order
67-1 (Arnold, Introduction to Materials Management, Chapter 13)
company
D) It would be shorter than an assemble-to-order
company

The correct answer is D)

Which of the following best describes the advantage of a
planner/buyer position ?
I. Smooth flow of information between supplier and the
factory
II. Improved coordination of factory requirements and the
supplier
67-2 II. Improved flow of materials through the factory
V. Ability to match material requirements with suppliers
capability
The planner/buyer concept improves coordination between the
factory and supplier. By eliminating the extra handoff between
planner and buyer, communication will improve. While materials
will flow more smoothly into the facility, the flow through the
factory is dependent on many other factors. (Arnold,
Introduction to Materials Management, Chapter 7).

A) I, II ,and III B) I, III, and IV

C) II, III, and IV D) I, II, and IV

Which of the following types of inventory is the most active

Correct Answer : A)
component that depletes gradually as customer orders are
Cycle stock is one of the two main conceptual components of
received
any inventory, the cycle stock is the most
A) Cycle stock. B) Safety stock.
active component, i,e., that which depletes gradually as
C) SKU D) MRO
customer orders are received and is replenished cyclically when
supplier order are received.
67-3 (APICS Dictionary 8th ed. )

Which of the following is major objective of MRP ?

. Implement.
Correct Answer : C)
. Determining capacity.
MRP has two major objectives : determine requirements and
. Determining requirement. keep priorities current. MRP is to determine
. Keep priorities current. what components are needed to meet the master production
schedule and, based on leadtime, to
67-4 calculate the periods when the components must be available.
A) , only B) , only
In the ever-changing world, MRP must be able to reorganize
C) , only D) All priorities to keep plans current.
(J. R. Arnold. Introduction to Material Management, Chapter 4).

Physical supply/distribution includes all the activity

except ? Correct Answer : D)
A) Packaging. B) Material handling. Physical supply/distribution include all the activities involved in
C) Order entry. D) None. moving goods, from the supplier to the
beginning of the production process, from the end of the
production process to the consumer. The
activities involved are transportation, distribution inventory,
67-5
warehousing, packaging, material handling, order
entry etc.
(J. R. Arnold. Introduction to Material Management, 4th ed)
 Which of the following is method of reducing system
nervousness ? Correct Answer : D)
A) Bottom up replanning. Sometimes requirements change rapidly and by small amounts,
B) Pegging. causing the MRP to change back and
C) Exception message. forth. System nervousness is the characteristics in the MRP
D) Firm planned order. system when minor changes in higher level records or the MPS
68-1 cause significant timing or quantity changes in lower level
schedules and orders. So firm planned order is one method of
reducing system nervousness.
(J. R. Arnold. Introduction to Material Management, 4th ed.)

Which of the following are required factors in selecting a The correct answer is B)
supplier ? The required factors in selecting a supplier are technical ability,
manufacturing capability, reliability, service after the sale,
supplier location, and price. While having advanced systems
I. Technical capability
capability would be a plus, a supplier would not be eliminated
II. Manufacturing capability
from consideration if their systems were poor. Many good
68-2 III. Advanced systems capability suppliers do not have advanced systems.
IV. Reliability
(Arnold, Introduction to Materials Management, Chapter 7).

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 A)

Which of the following best describes a normal distribution?

Normal distribution refers to the statistical distribution of values

A) Most values clustered near a central point
where the majority of values will accumulate around the mean.
B) Warehouses centrally located to markets
The resulting graph is shaped like a bell. It is often known as a
C) Values accumulated at six sigma
68-3 "bell curve". (Arnold, Introduction to Materials Management,
D) A critical ratio of 1.0
Chapter 11).

is the process of placing the exploded

requirements in their proper periods based on leadtime. It is Correct Answer : C)
a basic MRP technique. Offsetting is the process of placing the exploded requirements in
A) Releasing. B) Pegging. their proper periods based on leadtime. It is a technique used in
C) Offsetting. D) Grossing. MRP where a planned order receipts in one time period will
require the release of that order in an earlier time period based
on the leadtime for the item.
68-4 (J. R. Arnold. Introduction to Material Management, 4th ed.
(pp.83 - 85))

The correct answer is D)

Based on the following information, what is the order point ?
Order point = demand during lead time + safety
Lead time = 3 weeks
stock: for this problem:
Demand/week = 200
OP = (200 x 3) + 100
Safety stock = 100
OP = 600 + 100
OP = 700
68-5 A) 200 B) 300 (Arnold, Introduction to Materials Management, Chapter 11).
C) 600 D) 700
 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
69-1
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)

Correct Answer : C
Which of the following is characteristics of inventory In the periodic review system, the review period is fixed, and the
management that uses the periodic review system ? order quantity is allowed to vary. The system requires a larger
. The interval between orders varies depending on the inventory to cover the maximum expected demanding during the
actual usage. leadtime plus a review interval.
. Order quantity is allowed to vary.
. It requires a larger safety stock than continuous
69-2
review system.

A) only B) , only
C) and only D) , ,

In make to stock requirements, customer orders are satisfied The correct answer is C)
from : Make to stock companies ship customer orders from finished
A) Available capacity goods. Make to order companies ship from available capacity.
B) Work in process inventory (Arnold, Introduction to Materials Management, Chapter 3).
C) Finished goods inventory
D) Raw material inventory
69-3

Input/ouput control is used to manage:

The correct answer is B)
A) Supplier leadtimes
Input/output control manages the queues by regulating the flow
B) Queues and leadtimes
of work into the work centers. By regulating the inflow of work to
C) Capacity planning
equal the outflow of work, the work will flow smoothly to meet
D) System runtimes
the leadtimes needed. Generally, the input/output control is
measured in hours.
69-4 (Arnold, Introduction to Materials Management, Chapter 6).

All of the following statement are true about locating stock

except ?
A) Group functionally related items together.
B) Working and reserve stock together.
C) Group fast moving items together.
D) Group physically similar items together.
69-5
Correct Answer : B(
Relatively small quantities of working stock can be located close
to the marshalling and shipping area whereas reserve stock
used to replenish the working stock can be located more
remotely. This allows order picking to occur in a compact area
and replenishment of the working stock in bulk by pallet or
container load.
(J. R. Tony Arnold, Introduction to Material Management)
 A work center has 4 machines available 8 hours per day for The correct answer is C)
5 days per week. During the week, they produce for 128 Utilization = hours actually worked/available hours. In this
hours. The utilization is : example, there are 4 machines x 5 days x 8 hours = 160
A) 70% available hours. Therefore, 128 hours of actual work divided by
B) 75% 160 available hours = 80% utilization.
(Arnold, Introduction to Materials Management, Chapter 5)
70-1 C) 80%
D) 85%

The correct answer is A)

Which of the following is used to rank the frequency of
problems ?
A) Pareto analysis
B) Cause-and-effect diagram
C) Process flow diagram
D) Root cause analysis
70-2

In adding value, all of the following statements are correct
expect ?
A) In the JIT, the objective is to eliminate all
non-value-added activities in producing.
B) The most critical in achieving the goal of value-added
70-3
is the labor, not materials usually.
C) Adding value to a product does not mean adding cost.
D) In manufacturing, the difference between the selling
price and cost of raw material is what value the firm
added to raw material.
Correct answer : B)
The most critical in achieving the goal of value-added is the
materials, and labor is the least important usually. Other are all
correct statements. Adding value to a product does not mean
adding cost. Many activities increase cost with out adding value.
(Gerhard J. Plenert, The Plant Operations Handbook, Chapter
14)

The correct answer is A)

Items 349 and 350 are based on the following information for
a single work center.

Number of machines = 4 Actual output

Number of shifts = 1 Week 1 = 160 hours
Shift length = 40 hours Week 2 = 140 hours
70-4 Efficiency = 90% Week 3 = 150 hours
Utilization = 90% Week 4 = 150 hours

Which of the following is the rated capacity for the work

center?
A) 130 hours B) 144 hours
C) 150 hours D) 160 hours

Which of the following is the demonstrated capacity for the The correct answer is C)
work center ?
A) 130 hours B) 144 hours
C) 150 hours D) 160 hours

70-5