Q&A Hero

Q: Most small businesses create their own promotional messages. a. True b. False

Q: In MRP, the number of units projected to be available at the beginning of each time period refers to: A) net requirements. B) scheduled receipts. C) planned order releases. D) projected on hand. E) the amount necessary to cover a shortage.

Q: A key decision in developing a promotional strategy is to decide how much you want to spend on it. a. True b. False

Q: An order for 110 units of Product A has been placed. There are currently 60 units of Product A on hand. Each A requires 4 units of Part B. There are 20 units of B available. What are the net requirements for B? A) 20 B) 120 C) 180 D) 240 E) 440

Q: An order for 50 units of Product A and 60 of B has been placed. There are currently 25 units of Product B on hand. Each A requires 2 units of Part C; each B requires 5 units of C. There are 160 units of C available. What are the net requirements for C? A) 115 B) 175 C) 240 D) 690 E) 700

Q: The type of advertising used should be based on the nature of the business, industry practice, available media, and the firm's objectives. a. True b. False

Q: Many small manufacturers, while agreeing that trade-show exhibits can be helpful in promotion, rightly believe that they are not as cost-effective as media advertising. a. True b. False

Q: An order for 110 units of Product M has been placed. There are currently 30 units of Product M on hand. Each M requires 4 units of Component N. There are 20 units of N on hand. What are the net requirements for N? A) 150 B) 170 C) 300 D) 320 E) 440

Q: Which of the following statements regarding the gross material requirements plan is TRUE? A) It shows total demand for an item. B) It shows when an item must be ordered from a supplier or when production must be started. C) It combines a master production schedule with the time-phased schedule. D) It requires several inputs, including an accurate bill of material. E) All of the above are true.

Q: Social networking is an informal communication method that can be controlled by the company through its website. a. True b. False

Q: Which of the following best describes a gross material requirements plan? A) a schedule that shows total demand for an item, and when it must be ordered from a supplier or when production must be started B) an intermediate range plan for the scheduling of families of products C) a chart illustrating whether capacity has been exceeded D) a table that corrects scheduled quantities for inventory on hand E) a schedule showing which products are to be manufactured and in what quantities

Q: A small business in competition with larger firms is seldom in a position to function as a price leader. a. True b. False

Q: A material requirements plan contains information with regard to all of the following EXCEPT: A) quantities and required delivery dates of all subassemblies. B) quantities and required delivery dates of final products. C) the capacity needed to provide the projected output rate. D) inventory on hand for each final product. E) inventory on hand for each subassembly.

Q: In todays competitive environment, a cash-only seller will outsell a credit selling competitor. a. True b. False

Q: If safety stock is desired, it should be built into which portion of MRP? A) any B) none C) raw materials D) finished goods E) either C or D

Q: Home-based businesses will find it easy to obtain merchant status with credit card companies. a. True b. False

Q: Because it is a standard practice for many business types, selling on credit cannot often be avoided. a. True b. False

Q: It is week 1 and there are currently 20 As in stock. We need 300 As at the start of week 5. If there are scheduled receipts planned for week 3 and week 4 of 120 As each and A has a lead time of 1 week, when and how large of an order should be placed to meet the requirement of 300 As? A) Week 1, 300 As B) Week 1, 40 As C) Week 5, 40 As D) Week 4, 40 As E) Week 4, 300 As

Q: Consider the following product structure. If the demand for product A is 30 units, and there are 10 units of B on hand and none of C, how many units of part D will be needed? A) 3 B) 40 C) 70 D) 90 E) 110

Q: Trade credit is extended to consumers purchasing large volumes of products. a. True b. False

Q: When safety stock is deemed absolutely necessary, the usual policy is to build it into (increase) the inventory requirement of the MRP logic.

Q: Variable pricing strategy occurs where a business sets and advertises a fixed price but gives a discount for reasons such as the customers amount purchased. a. True b. False

Q: Gross material requirements do not take into account the amount of inventory on hand.

Q: The aging schedule is a categorization of accounts receivable based on the length of time they have been outstanding. a. True b. False

Q: Sellers often decide to offer credit to borrowers because it helps with the exchange of purchased items. a. True b. False

Q: If 100 units of Q are needed and 10 are already in stock, then the gross requirement is 100 and the net requirement is 90.

Q: Four A washers, five B washers, two C bolts, and a D bolt are required to make one grill parts kit. If 100 grill parts kits are needed, how many more washers will be consumed than bolts?

Q: Prestige pricing (setting a high price to convey an image of high quality or uniqueness) is a pricing tactic that reflects competitive advantage. a. True b. False

Q: A manufacturing company is trying to determine the cost of materials used to produce an A. If Fs cost $1 and Ds cost $2 how much does it cost to produce an A (in F and D materials only)?

Q: If demand for a product is elastic, a change in price will have little effect on total revenues. a. True b. False

Q: Construct a product structure tree for a movie purchased in DVD format. Assume that it contains a single DVD disk. Don't be concerned with artworkyou may use labeled boxes for your parts and assemblies.

Q: Cost analysis can identify a level below which a price should not be set under normal circumstances. a. True b. False

Q: Each X requires 2 of component Y and 1 of part W. Each Y requires 10 of Z. Each W requires 3 of Q and 2 of R. Lead times are X = 1 week, Y = 1 week, W = 2 weeks, R = 1 week, Z = 3 weeks, and Q = 3 weeks. Construct the time-phased product structure.

Q: The primary purposes of the Equal Credit Opportunity Act are to inform consumers about terms of a credit agreement and to require creditors to specify how finance charges are computed. a. True b. False

Q: Each R requires 3 of component S and 3 of material A; each S requires 3 of part T. The lead time for assembly of R is 1 week. The lead time for the manufacture of S is 2 weeks. The lead time for material A is 1 week. The lead time for the procurement of T is 4 weeks. Construct the time-phased product structure.

Q: Trade-credit agencies collect credit information on business firms and consumers in a given area. a. True b. False

Q: Consider the following product structure. Forty units of Product A are needed. How many units of B, C, D, E, F, and G are needed?

Q: Markup rates should be high enough to cover a products cost, other expenses, any price reductions, and profit. a. True b. False

Q: Pricing based on what the market will bear works only for non-standardized products in markets where there is low competition. a. True b. False

Q: Consider the following product structure. Fifty units of Product A are needed. How many units of B, C, D, E, and F are needed?

Q: Consider the following product structure. Fifty units of Product A are needed. How many units of B, C, D, and E are needed?

Q: In conducting a comprehensive break-even analysis, a firm must examine both its revenue-cost relationships and sales forecasts. a. True b. False

Q: In many lines of business, trade credit terms are so firmly set by tradition that a unique policy is difficult for a small firm to implement. a. True b. False

Q: Break-even analysis begins by determining what sales level is needed to generate a profit. a. True b. False

Q: What information is necessary for an operations manager to make effective use of a dependent inventory demand model?

Q: Markups may be expressed as a percentage of either the firm's cost or the industry-standard cost. a. True b. False

Q: If the explosion of the bill of material tells MRP how much of each part is needed, how does MRP learn when each of these parts is needed?

Q: A(n) ________ is a bill of material for components, usually subassemblies, that exist only temporarily; they are never inventoried.

Q: Average pricing is an appropriate pricing approach for small businesses because the method takes into consideration both fixed and variable costs. a. True b. False

Q: Bills of material organized by major subassemblies or by product options are called ________.

Q: By convention, what is the top level in a product structure? A) level 0 B) level 1 C) level T D) level 10 E) level 100

Q: The bad-debt ratio is the ratio of bad debts to total sales. a. True b. False

Q: As the result of a 2012 court case, retailers may now add a surcharge to customers bills for using a credit card. a. True b. False

Q: Low-level coding means that: A) a final item has only a few levels in the BOM structure. B) the code being used is the code for the lowest level in the BOM structure. C) a component item is coded at the lowest level at which it appears in the BOM structure. D) the top level of the BOM is below level zero and that BOMs are not organized around the finished product. E) the lowest-paid staff member in the production department performs the coding.

Q: Break-even analysis is an accurate tool for pricing because it points directly to the correct price for a given product. a. True b. False

Q: Consider the following product structure. If the demand for product A is 50 units, how many units of component E will be needed? A) 50 B) 100 C) 150 D) 200 E) 300

Q: Credit bureaus maintain credit histories on individuals based on information reported to them by banks, mortgage companies, department stores, and other creditors. a. True b. False

Q: Consider the following product structure. If the demand for product A is 50 units, how many units of component E will be needed? A) 4 B) 100 C) 200 D) 250 E) 300

Q: The minimum record accuracy required for successful MRP is approximately which of the following? A) lower than 90% B) 90% C) 95% D) 97% E) 99%

Q: Under certain circumstances, local, state, and federal laws must be considered in setting prices in a small business. a. True b. False

Q: A grill assembly takes 20 washers. Instead of listing these washers separately, they are grouped into a single kit for production. How is the bill of material for the washers classified? A) "pseudo" B) planning C) modular D) low-level E) A and B

Q: To ensure prompt payment, a business extending credit should have adequate billing records and collection procedures. a. True b. False

Q: A paint company mixes ten different base colors into 3,000 different color options. If production scheduling is organized around the ten different base colors , then the bills of material are classified as which of the following? A) phantom B) planning C) modular D) low-level E) A and B

Q: Because small businesses are small by definition, pricing and credit considerations are relatively unimportant to their overall performance. a. True b. False

Q: Which of the following statements best compares modular bills and phantom bills? A) Both pertain to assemblies that are not inventoried. B) There is no difference between the two. C) Both pertain to assemblies that are inventoried. D) Modular bills are used for assemblies that are not inventoried, unlike phantom bills. E) Modular bills represent subassemblies that actually exist and are inventoried, while phantom bills represent subassemblies that exist only temporarily and are not inventoried.

Q: Under certain conditions, pricing at less than total costs can make sense as a short-term strategy. a. True b. False

Q: Firms making many different final products use ________ to facilitate production scheduling. A) planning bills B) modular bills C) phantom bills D) overdue bills E) gross requirements bills

Q: For installment selling, the amount of credit should not exceed the repossession value of the goods sold. a. True b. False

Q: Effective use of MRP and other dependent demand models does not require which of the following? A) master production schedule B) bill of materials C) inventory availability D) lead times E) cost of individual components

Q: The Consumer Credit Protection Act requires that the finance charge for credit be stated as an annual percentage rate and that creditors specify the procedures used for correcting billing mistakes. a. True b. False

Q: The difference between the unit selling price and the unit variable costs and expenses is known as the a. average price. b. elasticity. c. contribution margin. d. break-even point.

Q: By convention, the top level in a product structure is designated level 1.

Q: If X consists of one A and one B, and each A consists of one F and two Gs, then A is the "parent" component of G.

Q: Fine Framings, a small framing shop, uses markup pricing to arrive at a final selling price. The firm sells its frames at a price of $25, given a $15 unit cost. Fine Framings' markup on the selling price is ____, and its markup on cost is ____. a. 66-2/3%, 40% b. 40%, 66-2/3% c. 167%, 67% d. 250%, 100%

Q: Use product examples to illustrate elastic and inelastic demand.

Q: The time-phased product structure, unlike the bill of material, adds the concept of lead times.

Q: Hillary wants to purchase a refrigerator on credit. If she uses an installment plan, what is most likely to occur? a. A down payment will be required. b. A discounted price on her purchase will not be offered. c. By law, finance charges on her account cannot exceed 20 percent of the purchase price. d. Taxes will not be charged.

Q: Planning bills of material are bills of material for "kits" of inexpensive items such as washers, nuts, and bolts.

Q: Guy owns a lumber yard working directly with home builders and contractors. Margie, a contractor new to the area, wants to set up a credit account with the lumber yard. She has a good history of successful and profitable projects. What questions should Guy ask in evaluating the Margies credit status? Relate to the 5 Cs of credit.

Q: "Phantom bills" are bills of material for subassemblies that do not exist in reality.