ERP Materials 2 — Questions and Answers
Question 1: Which ERP module functionality triggers an automatic purchase requisition when inventory falls below the reorder point?
- Manual procurement entry
- MRP (Material Requirements Planning) (Correct answer)
- Accounts payable processing
- General ledger posting
Correct answer: MRP (Material Requirements Planning)
MRP monitors stock levels and automatically generates purchase requisitions when inventory drops below the defined reorder point.
Question 2: In ERP materials management, what does the term 'goods receipt' refer to?
- Issuing materials to a production order
- Recording the physical arrival of purchased materials into the warehouse (Correct answer)
- Transferring stock between storage locations
- Returning defective goods to a vendor
Correct answer: Recording the physical arrival of purchased materials into the warehouse
A goods receipt is the formal ERP transaction that records purchased materials arriving at the warehouse and updates inventory accordingly.
Question 3: What is a 'blanket purchase order' in ERP procurement?
- An order placed for a single high-value item
- A long-term agreement allowing multiple deliveries up to a set quantity or value (Correct answer)
- An emergency order bypassing normal approval
- An order that covers all vendors simultaneously
Correct answer: A long-term agreement allowing multiple deliveries up to a set quantity or value
A blanket PO is a long-term contract with a vendor that permits multiple partial deliveries against a pre-agreed total quantity or spend.
Question 4: Which costing method assigns the cost of the most recently purchased inventory to goods sold first?
- FIFO
- LIFO (Correct answer)
- Weighted Average
- Standard Cost
Correct answer: LIFO
LIFO (Last-In, First-Out) assumes the most recently purchased items are the first to be consumed or sold.
Question 5: In ERP, what is the purpose of a 'material ledger'?
- Tracking vendor payment terms
- Recording actual costs for materials and enabling actual costing at period end (Correct answer)
- Managing purchase order approvals
- Scheduling warehouse picking routes
Correct answer: Recording actual costs for materials and enabling actual costing at period end
The material ledger captures all price and quantity variances during the period and allows calculation of actual material costs at period close.
Question 6: What is 'cycle counting' in ERP inventory management?
- Counting all inventory items once per year
- Continuously counting subsets of inventory on a rotating schedule (Correct answer)
- Counting items only when a discrepancy is reported
- Counting finished goods before shipment
Correct answer: Continuously counting subsets of inventory on a rotating schedule
Cycle counting is an ongoing process of counting portions of inventory regularly so the entire stock is counted multiple times per year without shutting down operations.
Question 7: Which ERP concept ensures that a purchase order cannot be created without an approved purchase requisition for controlled spending categories?
- Three-way match
- Procurement workflow and approval hierarchy (Correct answer)
- Vendor evaluation scoring
- Goods issue posting
Correct answer: Procurement workflow and approval hierarchy
Procurement workflow and approval hierarchies enforce that purchase requisitions are authorized before a buyer can convert them into purchase orders.
ERP Materials 2
Which ERP module functionality triggers an automatic purchase requisition when inventory falls below the reorder point?