The Okra Colada An okra farm anticipates highly seasonal demand for their product,tender pods of okra that can be made into the new drink sensation,the okra colada.Their estimate of the demand profile appears below.This forecast is based on the demand profile of last year's drink,the tuna colada.Once everyone in the test market had actually sampled the drink,demand fell to zero. \[\begin{array} { | c | c | } \hline \text { Month } & \text { Demand Forecast } \\ \hline \text { January } & 1,200 \\ \hline \text { February } & 2,400 \\ \hline \text { March } & 3,600 \\ \hline \text { April } & 4,800 \\ \hline \text { May } & 2,200 \\ \hline \text { June } & 200 \\ \hline \end{array}\] The costs for the managerial levers appear in this table. $\begin{array}{|l|c|} \hline \text { Item } & \text { Cost } \\ \hline\text { Materials cost/unit } & \$ 10 \\ \hline \text { Inventory holding cost/unit/month } & \$ 2 \\ \hline \text { Marginal cost of stockout/unit/month } & \$ 5 \\ \hline \text { Hiring and training cost/worker } & \$ 300 \\ \hline \text { Layoff cost/worker } & \$ 500 \\ \hline \text { Labor hours required/unit } & 4 \\ \hline \text { Regular time cost/hour } & \$ 4 \\ \hline \text { Over time cost/hour } & \$ 6 \\ \hline \text { Beginning inventory equals } & 1000 \\ \hline \text { Ending inventory greater than } & 500 \\ \hline \text { Marginal subcontracting cost/unit } & \$ 30\\ \hline \end{array}$ The base price per okra colada is $40 per unit and there is no promotion,but management is seriously considering different promotional plans.The beginning workforce level is 80 workers. -Use the Okra Colada scenario to answer this question.What is the minimum value for the cost of a single stockout to ensure that there are no stockouts during the six-month planning period?

A) $15 B) $20 C) $10 D) $25 A) $15 B) $20 C) $10 D) $25 A

An okra farm anticipates highly seasonal demand for their product,tender pods of okra that can be made into the new drink sensation,the okra colada.Their estimate of the demand profile appears below.This forecast is based on the demand profile of last year's drink,the tuna colada.Once everyone in the test market had actually sampled the drink,demand fell to zero. \[\begin{array} { | c | c | } \hline \text { Month } & \text { Demand Forecast } \\ \hline \text { January } & 1,200 \\ \hline \text { February } & 2,400 \\ \hline \text { March } & 3,600 \\ \hline \text { April } & 4,800 \\ \hline \text { May } & 2,200 \\ \hline \text { June } & 200 \\ \hline \end{array}\] The costs for the managerial levers appear in this table. $\begin{array}{|l|c|} \hline \text { Item } & \text { Cost } \\ \hline\text { Materials cost/unit } & \$ 10 \\ \hline \text { Inventory holding cost/unit/month } & \$ 2 \\ \hline \text { Marginal cost of stockout/unit/month } & \$ 5 \\ \hline \text { Hiring and training cost/worker } & \$ 300 \\ \hline \text { Layoff cost/worker } & \$ 500 \\ \hline \text { Labor hours required/unit } & 4 \\ \hline \text { Regular time cost/hour } & \$ 4 \\ \hline \text { Over time cost/hour } & \$ 6 \\ \hline \text { Beginning inventory equals } & 1000 \\ \hline \text { Ending inventory greater than } & 500 \\ \hline \text { Marginal subcontracting cost/unit } & \$ 30\\ \hline \end{array}$ With a base price of $40 per bushel of okra and no promotion,what is the optimal sales and operations plan? Assume that the beginning workforce level is set at 80 workers.

\[\begin{array} { | c | c | c | c | c |

The Tuna Colada A fishing consortium anticipates highly seasonal demand for their product,yellowtail tuna steaks that can be made into the new drink sensation,the tuna colada.Their estimate of the demand profile appears below.This forecast is based on the demand profile of last year's drink,the okra colada with one key difference.The tuna colada is being positioned as a healthier alternative to eggnog,so demand is expected to climb throughout the planning period with a peak in December. \[\begin{array} { | c | c | } \hline \text { Month } & \text { Demand Forecast } \\ \hline \text { July } & 1,560 \\ \hline \text { August } & 2,200 \\ \hline \text { September } & 2,850 \\ \hline \text { October } & 3,440 \\ \hline \text { November } & 4,020 \\ \hline \text { December } & 5,280 \\ \hline \end{array}\] The costs for the managerial levers appear in this table. $\begin{array}{|l|c|} \hline \text { Item } & \text { Cost } \\ \hline \text { Materials cost/unit } & \$ 10 \\ \hline \text { Inventory holding cost/unit/month } & \$ 4 \\ \hline \text { Marginal cost of stockout/unit/month } & \$ 12 \\ \hline \text { Hiring and training cost/worker } & \$ 200 \\ \hline \text { Layoff cost/worker } & \$ 800 \\ \hline \text { Labor hours required/unit } & 3 \\ \hline \text { Regular time cost/hour } & \$ 16 \\ \hline \text { Over time cost/hour } & \$ 24 \\ \hline \text { Period beginning inventory equals } & 0 \\ \hline \text { Period ending inventory equals } & 0 \\ \hline \text { Marginal subcontracting cost/unit } & \$ 80\\ \hline \end{array}$ The base price per tuna colada is $75 and there is currently no promotion,hence,no forward buying,but management is seriously considering different promotional plans.The beginning workforce level is 80 employees. -Use the Tuna Colada scenario to answer this question.If this problem is solved using linear programming,what is the maximum possible profit?

A) $61,370 B) $34,260 C) -$21,070 D) -$34,260 A) $61,370 B) $34,260 C) -$21,070 D) -$34,260

Exam 9: Sales and Operations Planning: Planning Supply and Demand

The Okra Colada An okra farm anticipates highly seasonal demand for their product,tender pods of okra that can be made into the new drink sensation,the okra colada.Their estimate of the demand profile appears below.This forecast is based on the demand profile of last year's drink,the tuna colada.Once everyone in the test market had actually sampled the drink,demand fell to zero. Month Demand Forecast January 1,200 February 2,400 March 3,600 April 4,800 May 2,200 June 200 The costs for the managerial levers appear in this table. Item Cost Materials cost/unit \ 10 Inventory holding cost/unit/month \ 2 Marginal cost of stockout/unit/month \ 5 Hiring and training cost/worker \ 300 Layoff cost/worker \ 500 Labor hours required/unit 4 Regular time cost/hour \ 4 Over time cost/hour \ 6 Beginning inventory equals 1000 Ending inventory greater than 500 Marginal subcontracting cost/unit \ 30 The base price per okra colada is $40 per unit and there is no promotion,but management is seriously considering different promotional plans.The beginning workforce level is 80 workers. -Use the Okra Colada scenario to answer this question.What is the minimum value for the cost of a single stockout to ensure that there are no stockouts during the six-month planning period?

Free

(Multiple Choice)

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Question 1

Correct Answer:

Verified

A

Predictable variability is change in demand that cannot be forecasted.

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(True/False)

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Question 2

Correct Answer:

Verified

False

When most of the products a firm produces have the same peak demand season,in order to meet predictable variability with inventory,it must

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(Multiple Choice)

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Question 3

Correct Answer:

Verified

C

Customers substituting the firm's product for a competitor's product is

(Multiple Choice)

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Question 4

Which approach to capacity management would schedule the workforce so that the available capacity better matches demand?

(Multiple Choice)

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Question 5

Discuss key issues when managing predictable variability of demand within a supply chain.

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Question 6

Which factor favors promotion during low-demand periods?

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Question 7

The pricing and promotion decisions are often made by

(Multiple Choice)

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Question 8

The disadvantage of building up inventory during the off season to meet demand during peak seasons and keep production stable year round is

(Multiple Choice)

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Question 9

The capacity management approach that uses flexible work hours from the workforce to manage capacity to better meet demand is

(Multiple Choice)

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Question 10

The capacity management approach where a firm purchases peak production from another firm so that internal production remains level and can be done cheaply is

(Multiple Choice)

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Question 11

An okra farm anticipates highly seasonal demand for their product,tender pods of okra that can be made into the new drink sensation,the okra colada.Their estimate of the demand profile appears below.This forecast is based on the demand profile of last year's drink,the tuna colada.Once everyone in the test market had actually sampled the drink,demand fell to zero. Month Demand Forecast January 1,200 February 2,400 March 3,600 April 4,800 May 2,200 June 200 The costs for the managerial levers appear in this table. Item Cost Materials cost/unit \ 10 Inventory holding cost/unit/month \ 2 Marginal cost of stockout/unit/month \ 5 Hiring and training cost/worker \ 300 Layoff cost/worker \ 500 Labor hours required/unit 4 Regular time cost/hour \ 4 Over time cost/hour \ 6 Beginning inventory equals 1000 Ending inventory greater than 500 Marginal subcontracting cost/unit \ 30 With a base price of $40 per bushel of okra and no promotion,what is the optimal sales and operations plan? Assume that the beginning workforce level is set at 80 workers.

(Essay)

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Question 12

A firm can handle predictable variability by managing

(Multiple Choice)

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Question 13

Which approach to capacity management may be hard to sustain if the labor market is tight?

(Multiple Choice)

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Question 14

The Tuna Colada A fishing consortium anticipates highly seasonal demand for their product,yellowtail tuna steaks that can be made into the new drink sensation,the tuna colada.Their estimate of the demand profile appears below.This forecast is based on the demand profile of last year's drink,the okra colada with one key difference.The tuna colada is being positioned as a healthier alternative to eggnog,so demand is expected to climb throughout the planning period with a peak in December. Month Demand Forecast July 1,560 August 2,200 September 2,850 October 3,440 November 4,020 December 5,280 The costs for the managerial levers appear in this table. Item Cost Materials cost/unit \ 10 Inventory holding cost/unit/month \ 4 Marginal cost of stockout/unit/month \ 12 Hiring and training cost/worker \ 200 Layoff cost/worker \ 800 Labor hours required/unit 3 Regular time cost/hour \ 16 Over time cost/hour \ 24 Period beginning inventory equals 0 Period ending inventory equals 0 Marginal subcontracting cost/unit \ 80 The base price per tuna colada is $75 and there is currently no promotion,hence,no forward buying,but management is seriously considering different promotional plans.The beginning workforce level is 80 employees. -Use the Tuna Colada scenario to answer this question.If this problem is solved using linear programming,what is the maximum possible profit?

(Multiple Choice)

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Question 15

Supply chains can influence demand by using

(Multiple Choice)

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Question 16

The disadvantage of maintaining enough manufacturing capacity to meet demand in any period is

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Question 17

The promotion and pricing decisions made by marketing and sales typically have the objective of

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Question 18

Pricing decisions based only on revenue considerations often result in an increase in overall profitability.

(True/False)

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Question 19

A firm can vary supply of product by controlling

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Question 20

Predictable variability is change in demand that cannot be forecasted.

When most of the products a firm produces have the same peak demand season,in order to meet predictable variability with inventory,it must

Customers substituting the firm's product for a competitor's product is

Which approach to capacity management would schedule the workforce so that the available capacity better matches demand?

Discuss key issues when managing predictable variability of demand within a supply chain.

Which factor favors promotion during low-demand periods?

The pricing and promotion decisions are often made by

The disadvantage of building up inventory during the off season to meet demand during peak seasons and keep production stable year round is

The capacity management approach that uses flexible work hours from the workforce to manage capacity to better meet demand is

The capacity management approach where a firm purchases peak production from another firm so that internal production remains level and can be done cheaply is

A firm can handle predictable variability by managing

Which approach to capacity management may be hard to sustain if the labor market is tight?

Supply chains can influence demand by using

The disadvantage of maintaining enough manufacturing capacity to meet demand in any period is

The promotion and pricing decisions made by marketing and sales typically have the objective of

Pricing decisions based only on revenue considerations often result in an increase in overall profitability.

A firm can vary supply of product by controlling

Understanding the Supply Chain

Achieving Strategic Fit in a Supply Chain

Supply Chain Drivers and Metrics

Designing Distribution Networks and Applications to E-Business

Network Design in the Supply Chain

Designing Global Supply Chain Networks

Demand Forecasting in a Supply Chain

Aggregate Planning in a Supply Chain

Coordination in a Supply Chain

Managing Economies of Scale in a Supply Chain: Cycle Inventory

Managing Uncertainty in a Supply Chain: Safety Inventory

Linking Product Availability to Profits

Transportation in a Supply Chain

Sourcing Decisions in a Supply Chain

Pricing and Revenue Management in a Supply Chain

Sustainability and the Supply Chain

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