APICS Supply Planning 5 — Questions and Answers
Question 1: A supply planner is analyzing 'pegging' information in the MRP system. What does pegging allow the planner to determine?
- The total on-hand inventory across all warehouse locations
- The specific parent orders or customer demands that created a particular component requirement (Correct answer)
- The optimal reorder point for safety stock items
- The supplier's promised delivery dates for open purchase orders
Correct answer: The specific parent orders or customer demands that created a particular component requirement
Pegging traces a lower-level requirement back up through the BOM to identify the specific parent orders or ultimate customer demands that generated the need.
Question 2: Which of the following describes 'time phasing' in MRP?
- Grouping orders by supplier to reduce transaction costs
- Placing requirements and planned orders in specific future time periods based on when they are needed (Correct answer)
- Adjusting safety stock levels based on seasonal demand changes
- Splitting a large production order into smaller batches across shifts
Correct answer: Placing requirements and planned orders in specific future time periods based on when they are needed
Time phasing assigns requirements and planned orders to specific calendar periods so the system knows exactly when materials must be available and when orders must be released.
Question 3: A supply chain manager wants to implement vendor-managed inventory (VMI). What is the primary responsibility that shifts to the supplier under VMI?
- Setting the final selling price for the buyer's customers
- Monitoring the buyer's inventory levels and deciding when and how much to replenish (Correct answer)
- Managing the buyer's internal production scheduling
- Conducting quality inspections at the buyer's facility
Correct answer: Monitoring the buyer's inventory levels and deciding when and how much to replenish
Under VMI, the supplier takes responsibility for monitoring the customer's inventory and triggering replenishment orders, typically within agreed min/max parameters.
Question 4: In supply planning, what is the primary purpose of a 'planning bill of materials' (planning BOM)?
- To replace the standard engineering BOM for cost accounting purposes
- To facilitate master scheduling of a product family when end-item demand is uncertain by expressing options as percentages (Correct answer)
- To document approved substitute components for procurement
- To track actual material consumption versus planned usage
Correct answer: To facilitate master scheduling of a product family when end-item demand is uncertain by expressing options as percentages
A planning BOM uses percentage values for options and features to allow the MPS to be built at the product-family level before specific end-item mix is known.
Question 5: Which supply planning action is most appropriate when MRP generates an exception message of 'reschedule in'?
- Cancel the order immediately to free up cash
- Move the due date of an existing order to an earlier date to meet the requirement sooner (Correct answer)
- Increase the order quantity to cover additional demand
- Release a new planned order to supplement the existing one
Correct answer: Move the due date of an existing order to an earlier date to meet the requirement sooner
A 'reschedule in' exception means an existing open order is due later than when it is needed — the planner should expedite or move its due date earlier.
Question 6: A company operates with a 'level production strategy' in aggregate planning. A key trade-off of this strategy compared to a chase strategy is:
- Lower labor costs but higher material costs
- Stable workforce and lower hiring/layoff costs, but potentially higher finished goods inventory costs (Correct answer)
- Higher overtime costs but lower setup costs
- Reduced lead times but higher transportation costs
Correct answer: Stable workforce and lower hiring/layoff costs, but potentially higher finished goods inventory costs
Level production maintains a constant output rate regardless of demand, which stabilizes the workforce but requires building and holding inventory during low-demand periods.
Question 7: In supply planning, what does a 'projected available balance' (PAB) represent in an MRP time-phased record?
- The cash balance available to fund new purchase orders
- The expected on-hand inventory at the end of each time period after accounting for scheduled receipts and requirements (Correct answer)
- The total backlog of customer orders not yet fulfilled
- The difference between forecasted and actual demand in each period
Correct answer: The expected on-hand inventory at the end of each time period after accounting for scheduled receipts and requirements
PAB is the running calculation of expected ending inventory in each MRP period, computed as beginning inventory plus receipts minus requirements.
APICS Supply Planning 5
A supply planner is analyzing 'pegging' information in the MRP system.
What does pegging allow the planner to determine?