A Computerized Inventory System That Simulates Needed Materials Requirements for the Finished

question 309

Multiple Choice

A computerized inventory system that simulates needed materials requirements for the finished product, and then compares production needs to available inventory balances to determine when orders should be placed is the ________.

• A) basic economic order quantity system
• B) materials requirement planning system
• C) just-in-time system
• D) red-line method

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Definitions:

Manufacturing Overhead

All indirect costs associated with the production of goods, such as utilities, maintenance, and manager salaries.

Committed Fixed Costs

Investments in facilities, equipment, and basic organizational structure that can’t be significantly reduced even for short periods of time without making fundamental changes.

Short Run

A period in economics during which the quantities of some inputs cannot be changed, limiting the capacity to adjust production levels.

Step-Variable Cost

Refers to a cost that remains fixed for a certain level of production or activity, but can increase in a step manner when a certain threshold is exceeded.