Exam 10: Sales and Operations Planning Aggregate Planning

As potato harvest season approaches, the number of year-round llama wranglers is insufficient to meet the demand, so a few wranglers are hired just for the month it takes to haul the harvest down from the mountains to the anxious potato-festival crowd. This approach to meeting the labor requirements is called:

How can a sales and operations plan be articulated so that all supply chain participants can understand what is needed?

Which of these is NOT an advantage of linking sales and operations planning throughout the supply chain?

Create a level plan with a zero ending inventory for the forecast shown in the table. There is no beginning inventory and regular production capacity is 300 units. Overtime costs $15 extra and is limited to 25 units per month and subcontracting is limited to 60 units per month and costs $10 per unit. Back orders cost $50 per unit and there is a cost of $5 per month to hold a unit in inventory. What is the total plan cost above the regular production cost? Month Forecast Regular Overtime Subcontracting Ending Inventory January 250 February 300 March 400 April 350

What are the possibilities for matching capacity to sales and vice versa when doing S&OP in a service environment?

Regular production costs $25 per unit and selling a unit represents a cash inflow of $30 per unit. Assume that all units reflected on the forecast will be sold. What is the cumulative net cash flow at the end of April? Month Forecast Regular Production Tanuary 250 250 February 200 200 March 300 300 April 400 400

A company has a sales forecast for the following five months as shown in the table. If they have a beginning inventory of 225 units, what amount should be produced under a level plan in order for them to have an ending inventory of zero units at the end of the five-month period? Month Forecast Tanuary 825 February 600 March 650 April 550 May 475

A(n)________ limits our ability to increase profits or cut costs by reducing the set of possible solutions in an optimization model.

Bottom-up planning should be used when the product/service mix is unstable and resource requirements vary greatly across the offerings.

Describe the differences between level, chase, and mixed production plans. Use the forecast in the table to show the differences by creating a plan of each type. There is no beginning inventory and regular production capacity is 350 units. Overtime costs $10 extra and is limited to 50 units per month. Subcontracting is limited to 100 units per month and costs $15 per unit. Back orders cost $40 per unit and there is a cost of $5 per month to hold a unit in inventory. There is room for only 100 units in inventory. Month Forecast Tanuary 250 February 300 March 500 April 350

It costs $12 to make a single unit using regular production and $15 to make a single unit using overtime production. Total overtime production is limited to 500 units for the five month period. The manufacturing plant has a regular production capacity of 250 units per month and 50 units in inventory at the start of the planning period. There is a $5 per unit charge for holding inventory at the end of each month and a limit of 250 units ending inventory for any period. What is the total number of units to be produced using overtime throughout the entire planning period if the forecast must be met and costs are to be minimized with a zero ending inventory each month? Month Forecast Tanuary 250 February 200 March 300 April 400 May 500

In order for ________ planning to work, the mix of products or services must be essentially the same from one time period to the next or the products must have very similar resource requirements.

A company has the cost structure shown in the table and faces a demand in July that exceeds capacity by 200 units. They enter June with an inventory of zero and a demand equal to capacity. Their best course of action in order to completely fill all of the orders for both June and July by the end of July is to: Managerial Lever Cost Regular production \ 1,000/ unit Overtime production \ 1,300/ unit Subcontracting \ 1,200/ unit Inventory holding \ 100/ unit/month Backlog cost \ 400/ unit/month

An organization that meets seasonal swings in demand by hiring and then laying off temporary workers while maintaining a few full-time permanent workers is employing a(n)________ strategy.

Regular production costs $25 per unit and selling a unit represents a cash inflow of $30 per unit. Assume that all units reflected on the forecast will be sold. What is the cumulative net cash flow at the end of April? Month Forecast Regular Production Tanuary 250 250 February 200 200 March 300 300 April 400 400

Detailed planning and control is riskier than strategic planning.

There are few, if any, options for adjusting capacity levels for managers involved in what planning level?

Willow Trees Inc. makes seven different products, four of which are within their first year of existence. The demands for all products, especially the newest ones, are not well known. The newest products are intended to complement their existing products and take different materials, different processes, and an entirely different set of labor skills for production. Which of these statements regarding their likely sales and operations planning activities is BEST?

The alternative production strategies of level, chase, or mixed that are available in top-down planning cannot be used in bottom-up planning.

Net cash flow is the difference between the value added and the cash on hand at the end of the period.