MRP, Procurement & Inventory Modules Flashcards

What is the 'planning horizon' in MRP?

Answer: The farthest future date for which MRP generates planned orders

The planning horizon is the total time span into the future that MRP covers when generating planned orders and material requirements.

A three-way match in accounts payable compares which three documents?

Answer: Purchase Order, Goods Receipt, and Vendor Invoice

The three-way match validates that the PO, goods receipt, and vendor invoice agree on quantities, prices, and terms before approving payment.

In inventory valuation, which costing method assigns the most recent purchase cost to items sold?

Answer: LIFO (Last In, First Out)

LIFO assumes the last items purchased are the first sold, so cost of goods sold reflects the most recent purchase prices.

What does 'available-to-promise (ATP)' functionality in an ERP system tell you?

Answer: The quantity of a product that can be committed to a new customer order based on supply and demand

ATP calculates uncommitted inventory plus planned receipts minus existing demand to determine what quantity can be promised for new orders.

Which inventory control technique classifies items into three tiers based on annual consumption value?

Answer: ABC analysis

ABC analysis categorizes inventory so that A-items (high value) receive tighter controls, while C-items (low value) are managed with less oversight.

In MRP, a 'firm planned order' differs from a regular planned order because it:

Answer: Is frozen and not changed by MRP unless manually overridden by a planner

A firm planned order is manually locked by a planner so that MRP does not automatically reschedule or delete it during replanning.

What is 'vendor-managed inventory (VMI)'?

Answer: The vendor monitors the buyer's inventory levels and is responsible for replenishment

In VMI, the vendor has access to the buyer's inventory data and takes responsibility for maintaining agreed stock levels at the buyer's location.