ERP Materials 3

Question 1

In ERP materials management, what is 'ABC analysis' used for?

Accepted Answer

Prioritizing inventory items by their consumption value to focus control efforts

Answer

ABC analysis categorizes inventory into A (high value/low volume), B (medium), and C (low value/high volume) groups to apply differentiated management controls.

Question 2

What does 'safety stock' represent in an ERP inventory planning system?

Accepted Answer

Buffer inventory held to protect against demand variability and supply delays

Answer

Safety stock is extra inventory held beyond average demand to prevent stockouts caused by demand spikes or supplier lead time variability.

Question 3

Which ERP transaction is used to move materials between two storage locations within the same plant without changing ownership?

Accepted Answer

Stock transfer posting

Answer

A stock transfer posting moves materials between storage locations or plants within the same company without creating a financial ownership change.

Question 4

What is a 'consignment inventory' arrangement in ERP procurement?

Accepted Answer

Inventory owned by the vendor until the buyer consumes or sells it

Answer

In consignment arrangements, the vendor retains ownership of goods stored at the buyer's location, and the buyer only pays upon consumption.

Question 5

In the context of ERP MRP, what is a 'planned order'?

Accepted Answer

A system-generated procurement or production proposal that can be converted or cancelled

Answer

Planned orders are MRP-generated proposals for purchasing or manufacturing that exist only in the system until a planner converts them to firm orders.

ERP - Management Practice Test

ERP - Management Practice Test

ERP Materials 3