MRP Data Analysis & System Implementation 4 — Questions and Answers
Question 1: A multi-level BOM has a finished good (Level 0), sub-assembly (Level 1), and raw material (Level 2). If 100 units of the finished good are needed, the sub-assembly has a quantity per of 2, and the raw material has a quantity per of 3, how many units of raw material are required?
- 200 units
- 300 units
- 600 units (Correct answer)
- 500 units
Correct answer: 600 units
100 finished goods × 2 sub-assemblies × 3 raw materials = 600 raw material units, calculated by multiplying quantities per at each BOM level.
Question 2: During an MRP system implementation, what is the purpose of conducting a 'conference room pilot'?
- Training executives on MRP theory
- Testing system configuration with real company data before go-live (Correct answer)
- Negotiating vendor contracts for materials
- Designing the physical warehouse layout
Correct answer: Testing system configuration with real company data before go-live
A conference room pilot tests the configured system using actual company data and business scenarios to validate that the system works correctly before deployment.
Question 3: Which analysis would best help an MRP planner identify items where the planned order frequency is too high due to small lot sizes?
- Demand variability analysis
- Order frequency versus holding cost trade-off analysis (Correct answer)
- Lead time distribution analysis
- Supplier performance scorecard review
Correct answer: Order frequency versus holding cost trade-off analysis
Analyzing order frequency against holding costs identifies when increasing lot sizes would reduce ordering costs without excessive inventory carrying costs.
Question 4: When transitioning from a reorder point system to MRP, which change most significantly affects how replenishment is triggered?
- Replenishment shifts from quantity-based triggers to time-phased demand-driven schedules (Correct answer)
- Safety stock is eliminated entirely under MRP
- Suppliers are required to hold consignment inventory
- Lead times are automatically shortened by the MRP system
Correct answer: Replenishment shifts from quantity-based triggers to time-phased demand-driven schedules
Unlike reorder points that trigger orders when stock falls below a fixed level, MRP uses time-phased, forward-looking demand plans to schedule replenishment proactively.
Question 5: An MRP report shows a component with consistent 'cancel' exceptions each planning cycle. What does this most likely indicate about the demand for that item?
- Demand has been growing faster than supply
- Demand has decreased, leaving excess orders that are no longer needed (Correct answer)
- The item's lead time has been extended by the supplier
- Safety stock was recently increased for the item
Correct answer: Demand has decreased, leaving excess orders that are no longer needed
Repeated cancel exceptions indicate open orders exceed current net requirements, typically caused by demand reduction after orders were placed.
Question 6: What is the primary purpose of a 'time fence' in MRP planning?
- To set the maximum planning horizon for MRP calculations
- To define a period within which changes to the master production schedule are restricted (Correct answer)
- To establish lead time buffers for all purchased items
- To schedule preventive maintenance windows for production equipment
Correct answer: To define a period within which changes to the master production schedule are restricted
Time fences create a frozen or firm zone near the current date where MPS changes are controlled to prevent disruption to production already in progress.
Question 7: A company implementing MRP discovers that inventory record accuracy (IRA) is only 72%. What minimum IRA level is generally considered necessary for effective MRP operation?
- 75%
- 85%
- 95% (Correct answer)
- 99%
Correct answer: 95%
Industry best practice requires at least 95% inventory record accuracy for MRP to produce reliable plans; lower accuracy causes cascading planning errors.
