Resource Planning Systems MCQs

Chapter 6—Resource Planning Systems

TRUE/FALSE

1. The chase production strategy works well when highly skilled workers are needed, especially in a tight labor market.

ANS:  F                               PTS:  1          

BUSPROG: Analytic           LO:     6-1      Bloom’s: Knowledge           Difficulty: Easy

2. The three basic production strategies for addressing the aggregate planning problem are the chase production strategy, the level production strategy, and the aggregate production strategy.

ANS:  F                               PTS:  1          

BUSPROG: Analytic           LO:     6-1      Bloom’s: Knowledge           Difficulty: Easy

3. A level production strategy works well for make-to-stock manufacturing firms, which typically emphasize immediate delivery of off-the-shelf, standard goods at relatively low prices.

ANS:  T                               PTS:  1          

BUSPROG: Analytic           LO:     6-1      Bloom’s: Comprehension     Difficulty: Easy

4. The mixed strategy uses overtime and subcontracting to cope with the high demand periods.

ANS:  T                               PTS:  1          

BUSPROG: Analytic           LO:     6-1      Bloom’s: Knowledge           Difficulty: Easy

5. MRP is the production planning system intended to develop long-range plans (more than a year away) concerning product families manufactured by the organization.

ANS:  F                               PTS:  1          

BUSPROG: Analytic           LO:     6-2      Bloom’s: Comprehension     Difficulty: Easy

6. A Master Production Schedule is an engineering document that shows an inclusive listing of all component parts and subassemblies making up the end item.

ANS:  F                               PTS:  1          

BUSPROG: Analytic           LO:     6-2      Bloom’s: Knowledge           Difficulty: Easy

7. System nervousness is when even small changes to upper-level production plans cause major changes in lower-level production plans.

ANS:  T                               PTS:  1          

BUSPROG: Analytic           LO:     6-2      Bloom’s: Comprehension     Difficulty: Easy

8. Lead Capacity Strategy is a reactive approach that adjusts its capacity in response to demand.

ANS:  F                               PTS:  1          

BUSPROG: Analytic           LO:     6-2      Bloom’s: Comprehension     Difficulty: Easy

9. An MRP system has a subassembly with a lot size of 500 units. In terms of filling future requirements, this would mean that planned order releases for the subassembly would always have to be exactly 500 units.

ANS:  F                               PTS:  1          

BUSPROG: Analytic           LO:     6-3      Bloom’s: Comprehension     Difficulty: Easy

10. ERP Implosion is the process of converting a parent item's planned order releases into component gross requirements.

ANS:  F                               PTS:  1          

BUSPROG: Analytic           LO:     6-3      Bloom’s: Comprehension     Difficulty: Easy

11. Distribution requirements plan (DRP) operates in a dependent demand situation.

ANS:  F                               PTS:  1          

BUSPROG: Analytic           LO:     6-3      Bloom’s: Comprehension     Difficulty: Easy

12. Legacy systems were designed to perform a very specific operational function.

ANS:  T                               PTS:  1          

BUSPROG: Analytic           LO:     6-4      Bloom’s: Knowledge           Difficulty: Easy

13. ERP systems were designed to coordinate the information requirements for purchasing, planning, scheduling and distribution of an organization operating in a complex multi-unit global environment.

ANS:  T                               PTS:  1          

BUSPROG: Analytic           LO:     6-4      Bloom’s: Knowledge           Difficulty: Easy

14. The legacy MRP system was programmed to coordinate with other functional areas in the firm.

ANS:  F                               PTS:  1          

BUSPROG: Analytic           LO:     6-4      Bloom’s: Comprehension     Difficulty: Easy

15. Legacy MRP systems typically utilized multiple software packages and databases which caused the same information to be stored in multiple locations.

ANS:  T                               PTS:  1          

BUSPROG: Analytic           LO:     6-4      Bloom’s: Comprehension     Difficulty: Easy

16. An ERP system is generally a multi-module application software for managing an enterprise’s internal functional activities, as well as its suppliers and customers.

ANS:  T                               PTS:  1          

BUSPROG: Technology      LO:     6-5      Bloom’s: Knowledge           Difficulty: Easy

17. Two reasons ERP implementations have been known to fail include: lack of top management commitment and lack of communication between the firm and its ERP software provider.

ANS:  T                               PTS:  1          

BUSPROG: Technology       LO:     6-5      Bloom’s: Comprehension     Difficulty: Easy

18. ERP provides the mechanism for supply chain members to share information so that scarce resources can be fully utilized to meet demand, while minimizing the bullwhip effect and supply chain inventories.

ANS:  T                               PTS:  1          

BUSPROG: Technology      LO:     6-5      Bloom’s: Comprehension     Difficulty: Easy

19. In general, single integrator ERP solutions are better suited to more intricate workplaces.

ANS:  F                               PTS:  1          

BUSPROG: Analytic           LO:     6-6      Bloom’s: Comprehension     Difficulty: Easy

20. When a single company that is implementing an ERP system chooses to use one company to provide an operations module, another to provide the sales and marketing application, and yet another company to provide the finance and accounting module, that single company has chosen to utilize the single integrator approach.

ANS:  F                               PTS:  1          

BUSPROG: Technology      LO:     6-6      Bloom’s: Knowledge           Difficulty: Easy

21. The best-of-breed solution picks all the desired applications from a single vendor for the ERP system.

ANS:  F                               PTS:  1          

BUSPROG: Technology      LO:     6-6      Bloom’s: Knowledge           Difficulty: Easy

22. Implementing a best-of-breed solution may cause firms to link databases from multiple software applications of different vendors.

ANS:  T                               PTS:  1          

BUSPROG: Technology      LO:     6-6      Bloom’s: Comprehension     Difficulty: Easy

23. Lack of communication between the implementing firm and its ERP software provider can become a major hindrance for a successful implementation.

ANS:  T                               PTS:  1          

BUSPROG: Technology      LO:     6-6      Bloom’s: Comprehension     Difficulty: Easy

MULTIPLE CHOICE

1. Which of the following basic production strategies works best with make-to-order manufacturing firms?

a.	Capacity Production Strategy
b.	Mixed production Strategy
c.	Level Production Strategy
d.	Chase Production Strategy

ANS:  D                              PTS:  1          

BUSPROG: Analytic           LO:     6-1      Bloom’s: Comprehension     Difficulty: Easy

2. Which of the following results from using the chase production strategy?

a.	The workforce fluctuates in response to the demand pattern
b.	Finished goods inventories remain constant
c.	Both A & B
d.	None of these

ANS:  C                              PTS:  1          

BUSPROG: Analytic           LO:     6-1      Bloom’s: Comprehension     Difficulty: Easy

3. Which strategy allows finished goods inventories to accrue and relies on backlogs to handle the demand?

a.	The Level Production Strategy
b.	Mixed Production Strategy
c.	The Chase Production Strategy
d.	The Aggregate Production Strategy

ANS:  A                              PTS:  1          

BUSPROG: Analytic           LO:     6-1      Bloom’s: Knowledge           Difficulty: Easy

4. Which strategy uses overtime and subcontracting to cope with the high demand periods ?

a.	The Level Production Strategy
b.	Mixed Production Strategy
c.	The Chase Production Strategy
d.	The Aggregate Production Strategy

ANS:  B                              PTS:  1          

BUSPROG: Analytic           LO:     6-1      Bloom’s: Knowledge           Difficulty: Easy

5. The __________ specifies which end product is to be made, how many are required, and when they need to be completed.

a.	Aggregate production plan
b.	Master production schedule
c.	Bill of material
d.	Super bill of materials

ANS:  A                              PTS:  1          

BUSPROG: Analytic           LO:     6-2      Bloom’s: Comprehension     Difficulty: Easy

6. Which of the following seeks to develop short range plans seeking to effectively and efficiently manage components and/or subassemblies over time period of few days to a few weeks?

a.	Resource requirements plan
b.	Material requirements plan
c.	Rough-cut capacity plan
d.	Master production schedule

ANS:  B                              PTS:  1          

BUSPROG: Analytic           LO:     6-2      Bloom’s: Knowledge           Difficulty: Easy

7. The _______________ is used to check the feasibility of the Master Production Schedule.

a.	Distribution Requirement Plan
b.	Material Requirement Plan
c.	Capacity Requirement Plan
d.	Rough-Cut Capacity Plan

ANS:  D                              PTS:  1          

BUSPROG: Analytic           LO:     6-2      Bloom’s: Knowledge           Difficulty: Easy

                                

8. Which of the following keeps the production plan’s capacity fixed during the planning horizon?

a.	Materials Requirements Plan
b.	Master Capacity Plan
c.	Aggregate Production Plan
d.	Capacity Requirements Plan

ANS:  C                              PTS:  1          

BUSPROG: Analytic           LO:     6-2      Bloom’s: Knowledge           Difficulty: Easy

9. The ___________ planning horizon is shorter than the aggregate production plan’s, but must be longer than a firm’s production lead time to ensure the end item can be completed within the planning horizon?

a.	Material requirements plan
b.	Master production schedule
c.	Demand time fence
d.	Capacity Requirements Plan

ANS:  B                              PTS:  1          

BUSPROG: Analytic           LO:     6-2      Bloom’s: Knowledge           Difficulty: Easy

10. If an available-to-promise (ATP) for any period is negative, the deficit must be subtracted from the:

a.	Master Production Schedule
b.	Most recent positive ATP
c.	Beginning inventory
d.	Bill of materials

ANS:  B                              PTS:  1          

BUSPROG: Analytic           LO:     6-3      Bloom’s: Knowledge           Difficulty: Easy

11. Calculate the final discrete available-to-promise quantity for Week 1 using the following table.

		Weeks
		1	2	3	4
MPS	BI = 30	10	10	15	10
Committed Customer Orders		20	5	25	15
ATP:D

a.	ATP1 = 0
b.	ATP1 = 10
c.	ATP1 = 15
d.	ATP1 = 20

ANS:  B                              PTS:  1          

BUSPROG: Analytic           LO:     6-3      Bloom’s: Application           Difficulty: Easy

12. Complete the following MRP record and provide the planned order releases for Week 1. Lead time is 2 weeks. Safety stock is 3. Use LFL lot sizes.

Part X		Week
		1	2	3	4
Gross Requirements		32	16	34	40
Scheduled Receipts			10
Projected On-Hand inventory	46
Planned Order Releases

a.	34
b.	26
c.	29
d.	14

ANS:  C                              PTS:  1          

BUSPROG: Analytic           LO:     6-3      Bloom’s: Knowledge           Difficulty: Easy

13. What is the most important output of the MRP?

a.	Bill of materials
b.	Distribution requirements plan
c.	Planned order releases
d.	Aggregate production plan

ANS:  C                              PTS:  1          

BUSPROG: Analytic           LO:     6-3      Bloom’s: Knowledge           Difficulty: Easy

14. In a bill of materials, items at which level are independent demand items?

a.	Level 0
b.	Level 1
c.	Level 2
d.	Level 3

ANS:  A                              PTS:  1          

BUSPROG: Analytic           LO:     6-3      Bloom’s: Knowledge           Difficulty: Easy

15. Which of the following is NOT one of the three basic methods used to calculate the available-to-promise quantities?

a.	Discrete available-to-promise
b.	Cumulative available-to-promise without looking ahead
c.	Indiscrete available-to-promise
d.	Cumulative available-to-promise with looking ahead

ANS:  C                              PTS:  1          

BUSPROG: Analytic           LO:     6-3      Bloom’s: Knowledge           Difficulty: Easy

16. Which of the following MRP terms represents a committed order awaiting delivery for a specific period?

a.	Projected on-hand inventory
b.	Time bucket
c.	Net requirement
d.	Scheduled receipt

ANS:  D                              PTS:  1          

BUSPROG: Analytic           LO:     6-3      Bloom’s: Knowledge           Difficulty: Easy

17. Which of the following MRP terms represents the parts demanded by a parent?

a.	Gross requirement
b.	Component
c.	Net requirement
d.	Scheduled receipt

ANS:  B                              PTS:  1          

BUSPROG: Analytic           LO:     6-3      Bloom’s: Knowledge           Difficulty: Easy

18. Legacy MRP systems had which of the following limitations?

a.	The systems needed continuous modifications
b.	The systems were not user-friendly
c.	The systems were designed to perform a very specific operational function
d.	All of these

ANS:  D                              PTS:  1          

BUSPROG: Analytic           LO:     6-4      Bloom’s: Knowledge           Difficulty: Easy

19. Why are firms migrating to ERP systems?

a.	ERP systems are easy to implement, particularly in large organizations
b.	ERP systems tie together a variety of specialized systems
c.	ERP systems are successful with two-dimensional processes
d.	ERP systems are inexpensive to implement

ANS:  B                              PTS:  1          

BUSPROG: Technology      LO:     6-4      Bloom’s: Comprehension     Difficulty: Easy

20. While ERP is a relatively new technology, it has grown rapidly since the early 1990s. Which of the following is the reason that has contributed to its rapid growth?

a.	The increased use of email during the 1990's
b.	The trend for companies to eliminate their supply chain partners
c.	The year 2000 millennium bug
d.	All of the above

ANS:  C                              PTS:  1          

BUSPROG: Technology      LO:     6-4      Bloom’s: Knowledge           Difficulty: Easy

21. Legacy MRP systems typically utilized multiple software packages and databases which caused:

a.	The system to crash often
b.	The same information to be stored in multiple locations
c.	Data integrity
d.	Planned order releases

ANS:  B                              PTS:  1          

BUSPROG: Analytic           LO:     6-4      Bloom’s: Knowledge           Difficulty: Easy

22. The acronym ERP is short for:

a.	Enterprise Resource Planning
b.	Electronic Resource Provider
c.	Executive Resource Plan
d.	Electronic Requirements Provider

ANS:  A                              PTS:  1          

BUSPROG: Analytic           LO:     6-5      Bloom’s: Knowledge           Difficulty: Easy

23. An advantage/benefit of utilizing an ERP system includes which of the following?

a.	ERP systems are designed to take advantage of Internet technology
b.	ERP systems enable the firm to automate some of the steps of a manufacturing process
c.	Both A & B
d.	None of the above

ANS:  C                              PTS:  1          

BUSPROG: Technology      LO:     6-5      Bloom’s: Comprehension     Difficulty: Easy

24. Which of the following is considered an advantage/benefit of utilizing an ERP system?

a.	Fairly inexpensive to purchase and implement
b.	Enables the company to utilize a single centralized database system, thus eliminating duplicate data entries
c.	Flexible enough that it allows different companies with different business models to mold the new ERP system to fit the company's business model
d.	All of the above

ANS:  B                              PTS:  1          

BUSPROG: Technology      LO:     6-5      Bloom’s: Comprehension     Difficulty: Easy

25. Not all ERP software is designed to provide the exact same tools, nonetheless, some of the common modules usually included in ERP software packages include:

a.	Customer relationship management and Human resource management
b.	Computer assisted drawing and Photo enhancing
c.	Operating systems and Internet browsing
d.	All of the above

ANS:  A                              PTS:  1          

BUSPROG: Analytic           LO:     6-5      Bloom’s: Knowledge           Difficulty: Easy

26. Which of the following is NOT a common module of ERP systems?

a.	Human Resources Management
b.	Customer Relationship Management
c.	Marketing Resources Management
d.	Supply Chain Management

ANS:  C                              PTS:  1          

BUSPROG: Analytic           LO:     6-5      Bloom’s: Knowledge           Difficulty: Easy

27. Which of the following is considered a disadvantage of utilizing an ERP system?

a.	ERP systems reduce the bullwhip effect
b.	ERP systems are very complex and have proven difficult to implement
c.	ERP systems use a single database and common infrastructure
d.	Once ERP information is entered it is made available to all users

ANS:  B                              PTS:  1          

BUSPROG: Analytic           LO:     6-5      Bloom’s: Comprehension     Difficulty: Easy

28. The ___________ solution picks all the desired applications from a single vendor for the ERP system.

a.	Best-of-breed
b.	Elite integrator
c.	Single integrator
d.	Premier application

ANS:  C                              PTS:  1          

BUSPROG: Analytic           LO:     6-6      Bloom’s: Knowledge           Difficulty: Easy

29. Using the ________________ multiple software infrastructures and databases may have to be used to link the multiple applications obtained from different vendors.

a.	Best-of-breed solution
b.	Elite integrator solution
c.	Multi-modular solution
d.	Premier application solution

ANS:  A                              PTS:  1          

BUSPROG: Analytic           LO:     6-6      Bloom’s: Knowledge           Difficulty: Easy

30. According to the textbook, which of the following is considered a reason that ERP implementations fail?

a.	Top management becomes overcommitted to the point where they constantly encourage the employees during implementation
b.	Lack of communication within an organization
c.	Organizations tend to spend too much time and money training their employees on the new system
d.	All of the above

ANS:  B                              PTS:  1          

BUSPROG: Technology      LO:     6-6      Bloom’s: Knowledge           Difficulty: Easy

 

SHORT ANSWER

1. Explain the three basic production strategies used to complete the aggregate plan.

ANS: 

Chase strategy - Adjusts capacity to match demand patterns. Firms must hire and lay off workers to match its production rate to demand. Hiring, training, and termination costs are significant cost components in the chase production strategy.

Level strategy - Relies on a constant output rate and capacity while varying inventory and backlog levels to handle the fluctuating demand patterns. Firms keep their workforce levels constant and rely on fluctuating finished goods inventories and backlogs to meet demand. This strategy it is more suited for firms that require highly skilled labor.

Mixed strategy - Strives to maintain a stable workforce while using short-term means to manage short-term high demand. This strategy uses overtime and subcontracting to cope with the high demand periods. Some firms will schedule preventive maintenance or produce complementary products that require similar resources but different demand cycles during the off-peak demand periods.

PTS:  5                               

BUSPROG: Communication LO:     6-1      Bloom’s: Knowledge           Difficulty: Moderate

                                                                                                                             

2. Complete the Projected on Hand Inventory and Planned Order Release rows.

Item – Speed Boat A		1	2	3	4
Gross Requirements		25	35	40	35
Schedule Receipts		10	40
Projected on Hand Inventory	30
Planned Order Releases
Q = LFL; LT = 2; SS = 10

ANS: 

Item – Speed Boat A		1	2	3	4
Gross Requirements		25	35	40	35
Schedule Receipts		10	40
Projected on Hand Inventory	30	15	20	10	10
Planned Order Releases		30	35
Q = LFL; LT = 2; SS = 10

PTS:  5                               

BUSPROG: Analytic           LO:     6-3      Bloom’s: Application           Difficulty: Moderate

3. Describe the limitations of a legacy MRP system.?

ANS: 

Legacy MRP systems were designed to perform a very specific operational function, and were programmed as independent entities with little regard for meeting requirements or coordinating with other functional areas. Communication between systems is often limited and visibility across functional areas is severely restricted. Legacy systems were implemented to gather data for transactional purposes, and thus lacked analytical capabilities.

PTS:  5                               

BUSPROG: Communication  LO:   6-4      Bloom’s: Comprehension     Difficulty: Moderate

4. What is ERP? Why was it developed?

ANS: 

ERP stands for Enterprise Resource Planning systems. ERP systems are manufacturing information systems that are intended to connect all functional areas and operations of an organization, as well as its suppliers and customers, in some cases, via a common software infrastructure and database. The systems utilize a centralized and shared database that allows the organization to easily share information and communicate quickly with all of its internal functional members as well as any participating supply-chain partners.

PTS:  5                               

BUSPROG: Communication  LO:   6-5      Bloom’s: Comprehension     Difficulty: Moderate

5. What does it mean if your organization has chosen to adopt a best-of-breed solution?

ANS: 

ERP systems utilize numerous applications or modules that are integrated during implementation in hopes of creating a single coordinated system. These applications or modules are developed, sold, and integrated by a number of different providers. Some modules or applications are considered to be better than others. The textbook outlines two solutions in developing a coordinate ERP system. One is a best-of-breed solution and the other is the single integrator solution.

The best-of-breed solution takes the best application or module for each individual function and supply chain.

The single integrator approach, on the other hand, would utilize all the desired applications from a single vendor.

PTS:  5                               

BUSPROG: Communication LO:     6-6      Bloom’s: Application           Difficulty: Moderate

ESSAY

1. This chapter discussed both materials planning and capacity planning. Consider those concepts in answering the following questions:

a.	Which is more appropriate for a conventional service organization? Why?
b.	Which is more appropriate for a conventional manufacturing organization? Why?
c.	What are the three hierarchical components of materials planning? Provide a brief description of each.
d.	What are the three hierarchical components of capacity planning? Provide a brief description of each.

ANS: 

a.	Which is more appropriate for a conventional service organization? Why?
	Because services are unable to inventory their services, capacity planning is considered more important to service industries than materials planning.
b.	Which is more appropriate for a conventional manufacturing organization? Why?
	Because manufacturers are typically able to build inventories of their products, materials planning is considered more important to manufacturing industries than capacity planning.

The answers to the first two questions should not imply that both capacity planning and materials planning cannot be important in both service and manufacturing industries, but due to nature of what each provides for their customer, services are more often concerned with meeting demand with available capacity while many manufacturers can meet demand with built up inventories. Nonetheless, many modern manufacturers are moving to pull type systems so they too will be concerned with capacity.

c.	What are the three hierarchical components of materials planning? Provide a brief description of each.
	1.	Aggregate Production Plan - APP - long-range materials plan/more than 1 year. This plan is likely to deal with product groups/families. This plan sets the aggregate output rate, workforce size, utilization and inventory, and/or backlog levels for an entire facility.
	2.	Master Production Schedule - MPS - a medium range materials plan/6 to 18 months. The master production schedule deals with end items. It shows the quantity and timing of the end items or services that will be produced.
	3.	Materials Requirement Planning - MRP - a short-range materials plan/days or weeks. MRP deals with components/subassemblies. A detailed planning process for components in parts that supports the Master production schedule. The end item requirements from the Master production schedule are converted into a set of time phased components in part requirements

d.	What are the three hierarchical components of capacity planning? Provide a brief description of each.
	1.	Resource Requirement Planning - RRP - This is a long-range capacity planning module. The RRP is used to check whether aggregate resources are capable of satisfying the aggregate production plan. The RRP typically considers labor hours and machine offers. Additional considerations include new facilities and/or additional capital equipment.
	2.	Rough Cut Capacity Planning - RCCP - the medium-range capacity planning. This plan checks the feasibility of the Master production schedule. The RCCP takes a master production schedule and converts it for production to capacity require. Then it compares the capacity available during each production period.
	3.	Capacity Requirement Planning - CRP - this is short-range capacity planning. This plan is used to check the feasibility of the MRP. This plan computes the capacity requirements at each workstation during specific periods to see whether or not they will be capable of manufacturing the items specified by the MRP.

PTS:   10

BUSPROG: Communication LO:     6-2      Bloom’s: Comprehension     Difficulty: Difficult

3. Calculate the final discrete available-to-promise quantity row using the following table below and explain how the numbers are generated.

		Weeks
		1	2	3	4
MPS	BI = 20	10	15	10	20
Committed Customer Orders		20	5	20	15
ATP:D

ANS: 

		Weeks
		1	2	3	4
MPS	BI = 20	10	15	10	20
Committed Customer Orders		20	5	20	15
ATP:D		10	0	0	5

ATP₁ = 20 +10 – 20 = 10 Then ATP₂ = 15 - 5 = 10. Next ATP₃ = 10 - 20 = -10. Negative not allowed, so use uncommitted inventory from week 2. Revised ATP₂ = 10 - 10 = 0. Revised ATP₃ = 0. ATP₄ = 20 - 15 = 5.

PTS:  10                             

BUSPROG: Analysis             LO:   6-3      Bloom’s: Application           Difficulty: Difficult

4. Given the following information, complete the MRP records below and explain how the numbers are generated. Note the bill of materials. Also note the lot sizes and lead times. There are no scheduled receipts and no safety stock is required.

PART 1

(Lot size=lot-for-lot)                                WEEK

(Lead time=2 weeks)                   1          2          3           4_

Gross Requirements                                          75        120                   

Sched. Receipts                          ________________________

On-Hand Inventory       65        ________________________               Bill of Materials         

Pl. Order Releases                     ________________________

PART 2

(Lot size=lot-for-lot)                                WEEK

(Lead time=1 week)                     1          2          3           4_

Gross Requirements                 

Sched. Receipts                          ________________________

On-Hand Inventory       20        ________________________  

Pl. Order Releases                     ________________________

         

ANS: 

PART 1

(Lot size=lot-for-lot)                                WEEK

(Lead time=2 weeks)                   1          2          3           4_

Gross Requirements                                          75        120                   

Sched. Receipts                          ________________________

On-Hand Inventory       65        ______________0______0__              

Pl. Order Releases                     10____120_______________

PART 2

(Lot size=lot-for-lot)                                WEEK

(Lead time=1 week)                     1          2          3           4_

Gross Requirements                  20        240

Sched. Receipts                          ________________________

On-Hand Inventory       20        _0______0_______________  

Pl. Order Releases                     240_____________________  

Part 1: Since on-hand inventory is not enough to satisfy the gross requirements in week 3, we must add 10 planned order releases in week 1. To satisfy the gross requirements in week 4 of 120, we must add 120 planned order releases in week 2 (since there is a 2 week lead time for the part).

Part 2: To generate the gross requirements for part 2, we must multiply the planned order releases of part 1 by 2 since the bill-of-materials states that 2 of part 2 are required for each part 1. The on-hand inventory of 20 satisfies the gross requirements for week 1. In order to satisfy the gross requirements of 240 in week 2, we must have planned order releases of 240 in week 1 (since there is a 1 week lead time for the part).

PTS:   10

BUSPROG: Communication  LO:   6-3      Bloom’s: Comprehension       Difficulty: Difficult

5. Your firm is considering modernizing its organizational information systems.

Your boss asks you, "Do you think our company needs an ERP system?" Obviously, without knowing the details of this company or the industry in which it operates, it would be difficult to provide a detailed answer to this question.

Your new project may take days, weeks, or even months to answer accurately, but before you begin your research you should develop a short but detailed outline for a paper that will inform the boss about the basics of ERP, the advantages of ERP, as well as the disadvantages of ERP.

Answer some of these questions within your outline/answer:

·	What is ERP?
·	Why should the organization get an ERP system?
·	Why might the organization not want to get ERP?
·	If we did get an ERP system what would be required for successful implementation?

ANS: 

·	What is ERP?
	An ERP System is an organizational information system that runs on a single database. Some of the key objectives of an ERP system include coordinating the information requirements for many or all of the functional departments of an organization and making data readily available to everyone associated with the supply chain and via a user-friendly system.
·	Why should the organization get an ERP system?
	Some of the benefits to getting in ERP system include utilization of a single database, which requires a fairly simple computer infrastructure, easy access to data and information for all employees of the organization, the potential for improved data analysis because of the easy access to data, greater coordination with supply-chain partners, the potential to hand off important decisions to supply-chain partners who may be more qualified to respond to market changes.
·	Why might we not want to get ERP?
	Investing in an ERP system can be extremely costly. An organization, in addition to paying for the ERP system, will incur high costs to implement the system, train its employees, alter its processes, and convert data from Legacy systems for use on the new ERP system. Also, organizations need to prepare for a drop in productivity due to the learning curve associated with the implementation of the ERP system.
·	If we did get an ERP system what would be required for successful implementation?
	Successful implementation of an ERP system requires the commitment and backing of top management, adequate investment resources, appropriate system training, excellent organizational communication, and an ERP system that's capabilities match the requirements of the organization/processes it will be serving.

PTS:   10

BUSPROG: Communication     LO:      6-5       Bloom’s: Comprehension          Difficulty: Difficult

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