CMY2602 COMPREHENSIVE EXAM PREP
QUESTIONS AND SOLUTIONS VERIFIED
STUDY RESOURCE
●● gross margin
Answer: The difference between total revenue and cost of goods sold
●● optimization
Answer: Achieving the best possible solution to a problem in terms of a
specified objective function.
●● cycle stock
Answer: One of the two main conceptual components of any item
inventory, the cycle stock is the most active component; the cycle stock
depletes gradually as customer orders are received and is replenished
cyclically when supplier orders are received. The other conceptual
component of the item inventory is the safety stock, which is a cushion
of protection against uncertainty in the demand or in the replenishment
lead time.
●● stockout costs
Answer: Those costs may include lost sales, backorder costs, expediting,
and additional manufacturing and purchasing costs
,●● Interplant demand
Answer: One plant's need for a part or product that is produced by
another plant or division within the same organization. Although it is not
a customer order, it is usually handled by the master production
scheduling system in a similar manner.
●● Demand shaping
Answer: The practice of using the 4 Ps (product, pricing, placement,
promotion) and other market variables to influence the demand of a
product or service so that the demand better matches the available
supply.
●● buffer
Answer: 1) A quantity of materials awaiting further processing. It can
refer to raw materials, semifinished stores or hold points, or a work
backlog that is purposely maintained behind a work center. 2) In the
theory of constraints, these can be time or material and support
throughput and/or due date performance. They can be maintained at the
constraint, convergent points (with a constraint part), divergent points,
and shipping points.
●● standard costs
Answer: The target costs of an operation, process, or product including
direct material, direct labor, and overhead charges.
●● demand forecasting
, Answer: Forecasting the demand for a particular good, component, or
service.
●● return on investment ROI
Answer: A relative measure of financial performance that provides a
means for comparing various investments by calculating the profits
returned during a specified time period.
●● theory of constraints ROI
Answer: calculated as throughput minus operating expense divided by
investment.
●● pull system
Answer: 1) In production, the production of items only as demanded for
use or to replace those taken for use. 2) In material control, the
withdrawal of inventory as demanded by the using operations. Material
is not issued until a signal comes from the user. 3) In distribution, a
system for replenishing field warehouse inventories where
replenishment decisions are made at the field warehouse itself, not at the
central warehouse or plant.
●● vendor
Answer: A business from which merchandise, supplies, or other assets
are purchased.
QUESTIONS AND SOLUTIONS VERIFIED
STUDY RESOURCE
●● gross margin
Answer: The difference between total revenue and cost of goods sold
●● optimization
Answer: Achieving the best possible solution to a problem in terms of a
specified objective function.
●● cycle stock
Answer: One of the two main conceptual components of any item
inventory, the cycle stock is the most active component; the cycle stock
depletes gradually as customer orders are received and is replenished
cyclically when supplier orders are received. The other conceptual
component of the item inventory is the safety stock, which is a cushion
of protection against uncertainty in the demand or in the replenishment
lead time.
●● stockout costs
Answer: Those costs may include lost sales, backorder costs, expediting,
and additional manufacturing and purchasing costs
,●● Interplant demand
Answer: One plant's need for a part or product that is produced by
another plant or division within the same organization. Although it is not
a customer order, it is usually handled by the master production
scheduling system in a similar manner.
●● Demand shaping
Answer: The practice of using the 4 Ps (product, pricing, placement,
promotion) and other market variables to influence the demand of a
product or service so that the demand better matches the available
supply.
●● buffer
Answer: 1) A quantity of materials awaiting further processing. It can
refer to raw materials, semifinished stores or hold points, or a work
backlog that is purposely maintained behind a work center. 2) In the
theory of constraints, these can be time or material and support
throughput and/or due date performance. They can be maintained at the
constraint, convergent points (with a constraint part), divergent points,
and shipping points.
●● standard costs
Answer: The target costs of an operation, process, or product including
direct material, direct labor, and overhead charges.
●● demand forecasting
, Answer: Forecasting the demand for a particular good, component, or
service.
●● return on investment ROI
Answer: A relative measure of financial performance that provides a
means for comparing various investments by calculating the profits
returned during a specified time period.
●● theory of constraints ROI
Answer: calculated as throughput minus operating expense divided by
investment.
●● pull system
Answer: 1) In production, the production of items only as demanded for
use or to replace those taken for use. 2) In material control, the
withdrawal of inventory as demanded by the using operations. Material
is not issued until a signal comes from the user. 3) In distribution, a
system for replenishing field warehouse inventories where
replenishment decisions are made at the field warehouse itself, not at the
central warehouse or plant.
●● vendor
Answer: A business from which merchandise, supplies, or other assets
are purchased.
