ERP Materials 5

Question 1

What is 'vendor managed inventory (VMI)' in the context of ERP materials management?

Accepted Answer

An arrangement where the supplier monitors stock levels and replenishes inventory automatically

Answer

In VMI, the supplier takes responsibility for monitoring inventory levels at the customer's location and triggering replenishment, often enabled by ERP data sharing.

Question 2

Which ERP feature prevents a purchase order from being processed for payment if the received quantity significantly differs from the invoiced quantity?

Accepted Answer

Quantity tolerance check in three-way match

Answer

Three-way match compares PO, goods receipt, and invoice quantities, and tolerance limits flag or block invoices where the received quantity deviates beyond the allowed variance.

Question 3

What is 'dead stock' in inventory management?

Accepted Answer

Stock that has not moved in a defined period and is unlikely to be used or sold

Answer

Dead stock refers to inventory items that have had no movement (no receipts or issues) for a defined time period and represent tied-up capital with low utilization.

Question 4

In ERP production planning, what is a 'bill of materials (BOM)'?

Accepted Answer

A structured list of components and quantities required to produce a finished product

Answer

A BOM defines every component, subassembly, and raw material—along with required quantities—needed to manufacture one unit of a finished or semi-finished product.

Question 5

What does 'back-flushing' mean in ERP materials management?

Accepted Answer

Automatically posting material consumption when production output is confirmed, without manual goods issues

Answer

Back-flushing (also called post-deduct or auto-goods-issue) automatically deducts component quantities from inventory at the time production output is confirmed.

ERP - Management Practice Test

ERP - Management Practice Test

ERP Materials 5