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NEW QUESTION 27
One of the important outputs of an MRP system is the material requirement plan. This plan shows the net requirements for materials or components to make the final product. Which of the following best describes the net material requirements?
- A. Gross requirements – Inventory level – Scheduled receipt
- B. On order + Inventory on-hand
- C. Total requirements – order releases + amount on-hand
- D. Gross requirements + on-order – Inventory on-hand
Answer: A
Explanation:
The net requirements are worked out using the following equation:
Net requirements = Total requirements – Available inventory
Where:
Total requirements = Gross requirements
Available inventory = Inventory on-hand + Units on-order
In the other words: Net requirements = Gross requirements – Inventory on-hand – Units on-order Inventory on-hand is also known as Inventory level, whereas Units on-order can be called Scheduled receipt.
Reference:
LO 2, AC 2.3
NEW QUESTION 28
Which of the following code systems is commonly used by governments as a basis for their Cus-toms tariffs and for the collection of international trade statistics?
- A. The International Mobile Equipment Identity
- B. The Harmonized Commodity Description and Coding System
- C. Global Trade Item Number
- D. Global Location Number
Answer: B
Explanation:
The Harmonized Commodity Description and Coding System, also known as the Harmonized System (HS) of tariff nomenclature is an internationally standardized system of names and numbers to classify traded products. It came into effect in 1988 and has since been developed and maintained by the World Customs Organization (WCO) (formerly the Customs Co-operation Council), an independent intergovernmental organization based in Brussels, Belgium, with over 200 member countries.
The Global Trade Item Number (GTIN) is an identifier for trade items, developed by GS1. Such identifiers are used to look up product information in a database (often by entering the number through a barcode scanner pointed at an actual product) which may belong to a retailer, manufacturer, collector, researcher, or other entity.
The Global Location Number can be used by companies to identify their locations, giving them complete flexibility to identify any type or level of location required.
The International Mobile Equipment Identity (IMEI) is a number, usually unique, to identify 3GPP and iDEN mobile phones, as well as some satellite phones.
Reference:
LO 1, AC 1.2
NEW QUESTION 29
XYZ Ltd is a large retailer who offers a range of products with different margins. The warehouse manager suggests that different product groups should have different level of safety stock. The appropriate level of safety stock is typically determined by…?
- A. Taking the square root of the economic order quantity
- B. Carrying sufficient safety stock so as to eliminate all stockouts
- C. Expected stockout cost multiplies with product margin
- D. Choosing the level of safety stock that assures a given service level
Answer: D
Explanation:
Safety stock is the stock held as a contingency or insurance against disruption or unexpected de-mand. Holding safety stock reduces the risks of stockouts, when an organisation is unable to meet an order or continue production due to lack of finished goods or input materials.
For single items, an extra investment in inventory (higher levels of safety stock) will always in-crease customer service levels. Conversely, higher service levels imply larger quantities of safety stocks and an increased investment in inventory. (Procurement and Supply Chain Management – 9th Edition) However, high levels of safety stocks also increase the inventory cost. There must be a balance between inventory costs and customer service. Thus, calculating the should-be safety stock based on a determined service level has long been recommended by many professionals.
Reference:
LO 2, AC 2.2
NEW QUESTION 30
PPC Refinery (UK) must close down an out-of-date refinery which has very poor environmental performance. The refinery is very sophisticated with many technically complicated machineries, lubricants, coolants and other chemical substances. Decommissioning the refinery is highly risky and hazardous. To manage the decommissioning process well, PPC project team must know these machineries and substances in details. Which document can provide the technical details on the refinery?
- A. Corporate social responsibility policy
- B. Code of Conduct
- C. Non-disclosure agreement
- D. Original specifications
Answer: D
Explanation:
Decommissioning or disposal should start with the original specifications of the assets so that the organisation and supplier can make an appropriate plan. Some specifications also mention the is-sues regarding to end-of-life environmental factors.
Reference:
LO 3, AC 3.3
NEW QUESTION 31
Which of the following is the correct statement about total ordering cost?
- A. Rise as the average stock level rises
- B. Fall with the per period usage rate
- C. Equal the number of orders placed times the cost of placing an order
- D. Rise as the order quantity rises
Answer: C
Explanation:
Typically, ordering costs include expenses for a purchase order, labor costs for the inspection of goods received, labor costs for placing the goods received in stock, labor costs for issuing a supplier’s invoice and labor costs for issuing a supplier payment. These costs are irrelevant from the size of the order and are incurred every time a firm places an order.
The total ordering cost will be equal to ordering cost per order multiply with number of orders.
Reference:
LO 2, AC 2.2
NEW QUESTION 32
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