Question 1

Which of the following aggregate planning strategies is known to lower employee morale?

Accepted Answer

A)  yield management 
B)  counterseasonal product and service mixing 
C)  changing inventory levels 
D)  varying work force size by hiring or layoffs 
E)  back ordering during high demand periods 
A)  yield management 
B)  counterseasonal product and service mixing 
C)  changing inventory levels 
D)  varying work force size by hiring or layoffs 
E)  back ordering during high demand periods

Question 2

A firm uses the pure chase strategy of aggregate planning. It produced 1000 units in the last period. Demand in the next period is estimated at 800, and demand over the next six periods (its aggregate planning horizon) is estimated to average 900 units. In following the chase strategy, the firm will

Accepted Answer

A)  add 100 units to inventory in the next period 
B)  add 200 units to inventory in the next period 
C)  hire workers to match the 100 unit difference 
D)  lay off workers to match the 200 unit difference 
E)  implement a lower price point to increase demand 
A)  add 100 units to inventory in the next period 
B)  add 200 units to inventory in the next period 
C)  hire workers to match the 100 unit difference 
D)  lay off workers to match the 200 unit difference 
E)  implement a lower price point to increase demand

Question 3

Osprey Fabrication has the following aggregate demand requirements and other data for the upcoming four quarters.
   Which of the following production plans is better: Plan A-chase demand by hiring and layoffs; Plan B-pure level strategy, or Plan C-1350 level with the remainder by subcontracting?

Accepted Answer

Plan A will cost $215,000, Pla

Question 4

Houma Containers, Inc., makes industrial fiberglass tanks that are used on offshore oil platforms. Demand for the next four months and capacities of the plant are shown in the table below. Unit cost on regular time is $400. Overtime cost is 150% of regular time cost. Subcontracting is available in substantial quantity but at a very high cost, $1100 per unit. Holding costs are $200 per tank per month; back orders cost the firm $1000 per unit per month. Houma's management believes that the transportation algorithm can be used to optimize this scheduling problem. The firm has no beginning inventory and anticipates no ending inventory.
   a. How many units will be produced on regular time in June?
b. How many units will be produced by subcontracting over the four-month period?
c. What will be the inventory at the end of April?
d. What will be total production from all sources in April?
e. What will be the total cost of the optimum solution?
f. Does the firm utilize the expensive options of subcontracting and back ordering? When; why?

Accepted Answer

(a) 250; (b) 350; (c) 0, and 50 units ar

Question 5

Describe the advantages and limitations of the transportation method for aggregate planning.

Accepted Answer

Advantages include that it provides opti

Question 6

One of the demand options of aggregate planning is to vary the workforce by hiring or layoffs.

Accepted Answer

A) True 
 B)False

Question 7

Most people would argue that a service firm must follow chase or mixed strategies. On the other hand, most state agencies, which are clearly service-oriented, are not at all able to "chase" demand. Discuss how they manipulate demand to allow the level strategy to be used.

Accepted Answer

This is a critical-thinking item for stu

Question 8

An electronics manufacturer makes video security systems for parking lots. Demand estimates for the next four quarters are 15, 9, 23, and 17 units. Prepare an aggregate plan that uses inventory, regular time, overtime, and back orders. Subcontracting is not allowed. Regular time capacity is 12 units for quarters 1 and 2, 15 units for quarters 3 and 4. Overtime capacity is 6 units per quarter. Regular time cost is $20,000 per system, while overtime cost is $30,000 per unit. Back order cost is $2000 per system per quarter; inventory holding cost is $500 per unit per quarter. Beginning inventory is zero.
Complete the table of data inputs for solving this aggregate planning problem with the transportation method. Specifically, how many sources are there, and how many destinations? What is the supply from each source, and the demand of each destination? What is the cost of each source-destination pair?

Accepted Answer

There are eight sources: regular time an

Question 9

Because service firms do not inventory their output, pure chase strategy is not appropriate.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following uses regression to incorporate historical managerial performance into aggregate planning?

Accepted Answer

A)  transportation method 
B)  simulation 
C)  linear decision rule 
D)  management coefficients model 
E)  keiretsu 
A)  transportation method 
B)  simulation 
C)  linear decision rule 
D)  management coefficients model 
E)  keiretsu

Question 11

Which of the following aggregate planning strategies might direct your client to a competitor?

Accepted Answer

A)  using part-time workers 
B)  subcontracting 
C)  changing inventory level 
D)  varying production rates through overtime or idle time 
E)  varying work force size by hiring or layoffs 
A)  using part-time workers 
B)  subcontracting 
C)  changing inventory level 
D)  varying production rates through overtime or idle time 
E)  varying work force size by hiring or layoffs

Question 12

Mixed strategies in aggregate planning utilize inventory, work force, and production rate changes over the planning horizon.

Accepted Answer

A) True 
 B)False

Question 13

Aggregate planning is capacity planning for

Accepted Answer

A)  the long range 
B)  the intermediate range 
C)  the short range 
D)  typically one to three months 
E)  typically three or more years 
A)  the long range 
B)  the intermediate range 
C)  the short range 
D)  typically one to three months 
E)  typically three or more years

Question 14

Yield management is most likely to be used in which one of the following situations?

Accepted Answer

A)  a fast food restaurant with wide demand fluctuations during the day 
B)  a dental clinic that wants to fill its appointment book 
C)  a firm with a good counterseasonal product mix 
D)  a shipping company that can change its fleet size easily 
E)  an airline attempting to fill "perishable" seats at maximum revenue 
A)  a fast food restaurant with wide demand fluctuations during the day 
B)  a dental clinic that wants to fill its appointment book 
C)  a firm with a good counterseasonal product mix 
D)  a shipping company that can change its fleet size easily 
E)  an airline attempting to fill "perishable" seats at maximum revenue

Question 15

"Yield management" is best described as

Accepted Answer

A)  a situation where management yields to labor demands 
B)  a situation where the labor union yields to management demands 
C)  a process designed to increase the rate of output 
D)  capacity allocation to different classes of customers in order to maximize profits 
E)  management's selection of a product mix yielding maximum profits 
A)  a situation where management yields to labor demands 
B)  a situation where the labor union yields to management demands 
C)  a process designed to increase the rate of output 
D)  capacity allocation to different classes of customers in order to maximize profits 
E)  management's selection of a product mix yielding maximum profits

Question 16

What is the typical planning horizon for aggregate planning?

Accepted Answer

The typical planning

Question 17

A manager is applying the transportation model of linear programming to solve an aggregate planning problem. Demand in period 1 is 100 units and in period 2 demand is 150 units. The manager has 125 hours of regular employment available for $10/hour each period. In addition, 50 hours of overtime are available for $15/hour each period. If holding costs are $2 per unit each period, how many hours of regular employment should be used in period 1 (assume demand must be met in both periods 1 and 2 for the lowest possible cost and that production is 1 unit per hour)?

Accepted Answer

In period 2 all regular work will be use

Question 18

The objective of aggregate planning is to meet demand while __________ over the planning period.

Accepted Answer

A)  minimizing cost 
B)  maximizing service level 
C)  minimizing stock out 
D)  minimizing fixed cost 
E)  all of the above 
A)  minimizing cost 
B)  maximizing service level 
C)  minimizing stock out 
D)  minimizing fixed cost 
E)  all of the above

Question 19

A firm practices the pure chase strategy. Production last quarter was 1000. Demand over the next four quarters is estimated to be 900, 700, 1000, and 1000. Hiring cost is $20 per unit, and firing cost is $5 per unit. Over the next year, the sum of hiring and layoff costs will be

Accepted Answer

A)  $500 
B)  $2,500 
C)  $7,500 
D)  $7,000 
E)  $12,500 
A)  $500 
B)  $2,500 
C)  $7,500 
D)  $7,000 
E)  $12,500

Question 20

One reason complex models have not found widespread use and application is that

Accepted Answer

A)  managers are lazy 
B)  managers cannot understand how they work 
C)  the models are inaccurate 
D)  good models are time-consuming and managers must often react swiftly to dynamic demand 
E)  the statement is false; complex models are widely used and accepted 
A)  managers are lazy 
B)  managers cannot understand how they work 
C)  the models are inaccurate 
D)  good models are time-consuming and managers must often react swiftly to dynamic demand 
E)  the statement is false; complex models are widely used and accepted

Exam 13: Aggregate Planning

Which of the following aggregate planning strategies is known to lower employee morale?

Osprey Fabrication has the following aggregate demand requirements and other data for the upcoming four quarters. Which of the following production plans is better: Plan A-chase demand by hiring and layoffs; Plan B-pure level strategy, or Plan C-1350 level with the remainder by subcontracting?

Describe the advantages and limitations of the transportation method for aggregate planning.

One of the demand options of aggregate planning is to vary the workforce by hiring or layoffs.

Most people would argue that a service firm must follow chase or mixed strategies. On the other hand, most state agencies, which are clearly service-oriented, are not at all able to "chase" demand. Discuss how they manipulate demand to allow the level strategy to be used.

Because service firms do not inventory their output, pure chase strategy is not appropriate.

Which of the following uses regression to incorporate historical managerial performance into aggregate planning?

Which of the following aggregate planning strategies might direct your client to a competitor?

Mixed strategies in aggregate planning utilize inventory, work force, and production rate changes over the planning horizon.

Aggregate planning is capacity planning for

Yield management is most likely to be used in which one of the following situations?

"Yield management" is best described as

What is the typical planning horizon for aggregate planning?

The objective of aggregate planning is to meet demand while __________ over the planning period.

A firm practices the pure chase strategy. Production last quarter was 1000. Demand over the next four quarters is estimated to be 900, 700, 1000, and 1000. Hiring cost is $20 per unit, and firing cost is $5 per unit. Over the next year, the sum of hiring and layoff costs will be

One reason complex models have not found widespread use and application is that

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