ERP MRP, Procurement & Inventory Modules 2 — Questions and Answers
Question 1: In MRP, what does the term 'time bucket' refer to?
- The lead time for a single supplier
- The unit of time used to organize planning periods in the MRP schedule (Correct answer)
- The safety stock buffer measured in days
- The time allowed for quality inspection
Correct answer: The unit of time used to organize planning periods in the MRP schedule
A time bucket is the planning period unit (day, week, or month) used to organize MRP demand and supply calculations.
Question 2: Which procurement document is typically issued to a vendor after a purchase order is accepted, confirming shipment details?
- Goods Receipt
- Advance Shipment Notice (ASN) (Correct answer)
- Invoice
- Request for Quotation
Correct answer: Advance Shipment Notice (ASN)
An ASN is sent by the vendor before delivery to notify the buyer of shipment details such as contents, quantities, and expected arrival.
Question 3: What is 'phantom assembly' in MRP?
- A subassembly that exists only in the BOM and is never stocked as a discrete item (Correct answer)
- An assembly with zero lead time requiring no planning
- A dummy item used to represent scrap in production
- A virtual warehouse location for in-transit inventory
Correct answer: A subassembly that exists only in the BOM and is never stocked as a discrete item
A phantom assembly is a BOM level that represents a transient subassembly passed through directly to the parent without being stocked.
Question 4: Under a consignment inventory arrangement, when does title (ownership) of inventory typically transfer to the buyer?
- When the PO is issued
- When goods arrive at the buyer's warehouse
- When the buyer consumes or sells the goods (Correct answer)
- When the invoice is received
Correct answer: When the buyer consumes or sells the goods
In consignment arrangements, the supplier retains ownership until the buyer uses or sells the goods, at which point title transfers.
Question 5: What is the primary purpose of a 'blanket purchase order' in procurement?
- To order a wide variety of unrelated items in one transaction
- To establish a long-term agreement for recurring purchases at pre-negotiated terms (Correct answer)
- To consolidate invoices from multiple vendors
- To authorize emergency procurement without competitive bidding
Correct answer: To establish a long-term agreement for recurring purchases at pre-negotiated terms
A blanket PO covers multiple deliveries of the same item over a period at agreed pricing, reducing administrative overhead.
Question 6: In inventory management, what does 'cycle counting' replace or supplement?
- Safety stock calculations
- Annual physical inventory counts (Correct answer)
- Reorder point calculations
- ABC classification updates
Correct answer: Annual physical inventory counts
Cycle counting replaces or supplements disruptive annual physical counts by continuously counting small subsets of inventory on a rotating schedule.
Question 7: Which MRP input is used to account for production inefficiencies and yield losses when calculating component requirements?
- Safety stock
- Scrap factor (yield percentage) (Correct answer)
- Lot size
- Planning fence
Correct answer: Scrap factor (yield percentage)
The scrap or yield factor inflates component requirements to compensate for expected losses during the manufacturing process.
ERP MRP, Procurement & Inventory Modules 2
In MRP, what does the term 'time bucket' refer to?