Deck 13: Aggregate Planning and Sop

Question 1

Top executives tend to focus their attention on which type of forecasts?

A)short-range
B)intermediate-range
C)long-range
D)weather
E)the forecast for the next day's absentee levels

Answer 1

C

Question 2

Which of the following is NOT one of the four things needed for aggregate planning?

A)a logical overall unit for measuring sales and output
B)a method to determine the relevant costs
C)a mathematical model that will minimize costs over the intermediate planning period
D)an aggregate demand forecast for an intermediate planning period
E)All of these are needed for aggregate planning.

Answer 2

C

Question 3

What four things are needed to develop an aggregate plan?

Answer 3

(1)a logical overall unit for measuring sales and output; (2)a forecast of demand for a reasonable intermediate planning period in aggregate planning terms; (3)a method to determine the relevant costs; (4)a model that combines forecasts and costs so that scheduling decisions can be made for the planning period

Question 4

Under which of the following do planning tasks associated with job assignments,ordering,job scheduling,and dispatching typically fall?

A)short-range plans
B)intermediate-range plans
C)long-range plans
D)mission-related planning
E)strategic planning

Question 5

Which of the following would most likely fall under the scope of only an operations manager?

A)research and development
B)new product plans
C)capital investments
D)facility location/capacity
E)setting inventory levels

Question 6

Plans for new product development generally fall within the scope of aggregate planning.

Question 7

Which of the following is NOT an input to S&OP?

A)capacity decisions
B)supply-chain support
C)workforce
D)inventory on hand
E)master production schedule

Question 8

Aggregate planning in manufacturing ties organizational strategic goals to a production plan.

Question 9

Under which of the following do planning tasks associated with production planning and budgeting,as well as setting employment,inventory,and subcontracting levels,typically fall?

A)short-range plans
B)intermediate-range plans
C)long-range plans
D)demand options
E)strategic planning

Question 10

One of the four things needed for aggregate planning is a logical overall unit for measuring sales and output.

Question 11

What is the typical time horizon for aggregate planning?

A)less than a month
B)up to 3 months
C)3 to 18 months
D)over one year
E)over 5 years

Question 12

Which of the following is the term used for intermediate-range capacity planning with a time horizon of three to eighteen months?

A)material requirements planning
B)enterprise resource planning
C)strategic planning
D)aggregate planning
E)job scheduling

Question 13

Disaggregation is the process of breaking the aggregate plan into greater detail;one example of this detail is the master production schedule.

Question 14

Aggregate planning occurs over the medium or intermediate future of 3 to 18 months.

Question 15

The objective of aggregate planning is usually to meet forecast demand while smoothing employment and driving down inventory levels over the planning period.

Question 16

Frito-Lay uses aggregate planning to match capacity with demand because of the ________ associated with its specialized processes.

A)high variable cost and high fixed cost
B)high variable cost and low fixed cost
C)low variable cost and high fixed cost
D)low variable cost and low fixed cost
E)none of the above

Question 17

________ is an approach to determine the quantity and timing of production for the intermediate future.

Question 18

The aggregate planning process usually includes dispatching of individual jobs.

Question 19

What is the typical planning horizon for aggregate planning?

Question 20

What is the effort to plan the coordination of demand forecasts with functional areas of the firm and its supply chain?

A)enterprise resource planning
B)material requirements planning
C)capacity planning
D)sales and operations planning
E)new product development

Question 21

What is disaggregation?

Question 22

What directly results from disaggregation of an aggregate plan?

A)a master production schedule
B)priority scheduling
C)a transportation matrix
D)a capacity-demand matrix
E)detailed work schedules

Question 23

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

Question 24

The strategies of aggregate planning are broadly divided into demand options and capacity options.

Question 25

Finding an ideal mixed strategy is complicated by the huge number of possible strategies.

Question 26

Advertising and promotion are methods of manipulating product or service supply in aggregate planning.

Question 27

A(n)________ is the result of the disaggregation of an aggregate plan.

Question 28

Aggregate planning would entail which of the following production aspects at BMW for a 12-month period?

A)number of cars with a hi-fi stereo system to produce
B)number of two-door vs.four-door cars to produce
C)number of green cars to produce
D)total number of cars to produce
E)B,C,and D

Question 29

Disaggregation:

A)breaks the aggregate plan into greater detail.
B)transforms the master production schedule into an aggregate plan.
C)calculates the optimal price points for yield management.
D)converts product schedules and labor assignments to a facility-wide plan.
E)is an assumption required for the use of the transportation model in aggregate planning.

Question 30

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

Question 31

One question that operations managers must answer when generating an aggregate plan is whether prices or other factors should be changed to influence demand.

Question 32

________ is the process of breaking the aggregate plan into greater detail.

Question 33

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

Question 34

The level scheduling strategy allows lower inventories than the pure chase strategy.

Question 35

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

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

Question 36

In aggregate planning,the amount of overtime and the size of the work force are both adjustable elements of capacity.

Question 37

An aggregate plan satisfies forecast demand by potentially adjusting all EXCEPT which of the following?

A)production rates
B)labor levels
C)inventory levels
D)overtime work
E)facility capacity

Question 38

One motive for using demand-influencing aggregate planning options is to create uses for excess capacity within an organization.

Question 39

When developing an aggregate plan,one of the adjustable elements of capacity is the extent of subcontracting.

Question 40

The use of part-time workers as an aggregate planning option may be less costly than using full-time workers,but it may also reduce quality levels.

Question 41

Which of the following is NOT an advantage of level scheduling?

A)stable employment
B)lower absenteeism
C)matching production exactly with sales
D)lower turnover
E)more employee commitment

Question 42

Which of the following is consistent with a pure chase strategy?

A)vary production levels to meet demand requirements
B)vary work force to meet demand requirements
C)vary production levels and work force to meet demand requirements
D)little or no use of inventory to meet demand requirements
E)All of the above are consistent with a pure chase strategy.

Question 43

Which of these aggregate planning strategies is a capacity option?

A)back ordering
B)using part-time workers
C)counterseasonal product mixing
D)changing price
E)promotion

Question 44

Dependence on an external source of supply is found in which of the following aggregate planning strategies?

A)varying production rates through overtime or idle time
B)subcontracting
C)using part-time workers
D)back ordering during high demand periods
E)hiring and laying off

Question 45

Which choice below best describes the counterseasonal product demand option?

A)producing such products as lawnmowers and sunglasses during the winter
B)developing a mix of products that smoothes out their demands
C)lowering prices when demand is slack
D)using subcontractors only when demand is excessive
E)the breaking of the aggregate plan into finer levels of detail

Question 46

Which of the following aggregate planning options attempts to manipulate product or service demand?

A)inventories
B)part-time workers
C)subcontracting
D)overtime/idle time
E)price cuts

Question 47

In aggregate planning,which one of the following is not a basic option for altering demand?

A)promotion
B)subcontracting
C)back ordering
D)pricing
E)personal selling

Question 48

Which of the following aggregate planning strategies is a capacity option?

A)influencing demand by changing price
B)counterseasonal product mixing
C)influencing demand by extending lead times
D)changing inventory levels
E)influencing demand by back ordering

Question 49

Which of these is among the demand options of aggregate planning?

A)subcontracting
B)back-ordering during high-demand periods
C)changing inventory levels
D)varying workforce size
E)varying production rates through overtime or idle time

Question 50

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.Which of the following tactics would be most representative of following a chase strategy?

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 51

Which of the following aggregate planning strategies is a demand option?

A)changing price
B)subcontracting
C)varying production levels
D)changing inventory levels
E)using part-time workers

Question 52

In the service sector,which of the following aggregate planning strategies might direct your client to a competitor?

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 53

Which choice best describes level scheduling?

A)Daily production is variable from period to period.
B)Subcontracting,hiring,and layoffs manipulate supply.
C)Price points are calculated to match demand to capacity.
D)Inventory goes up or down to buffer the difference between demand and production.
E)Overtime is used to handle seasonal demand fluctuations.

Question 54

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

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 55

In level scheduling,what is kept uniform from month to month?

A)product mix
B)inventory levels
C)production/workforce levels
D)demand levels
E)sub-contracting levels

Question 56

Which of the following statements regarding aggregate planning is TRUE?

A)In a pure level strategy,production rates or work force levels are adjusted to match demand requirements over the planning horizon.
B)A pure level strategy allows lower inventories when compared to pure chase and hybrid strategies.
C)Mixed strategies in aggregate planning may utilize inventory,work force,and production rate changes over the planning horizon.
D)Because service firms have no inventory,the pure chase strategy does not apply.
E)A disadvantage of the option of changing inventory levels is that it forces abrupt production changes.

Question 57

Which of the following actions is consistent with the use of level scheduling?

A)use inventory to meet demand requirements
B)use overtime to meet higher-than-average demand requirements
C)vary production levels to meet demand requirements
D)vary work force to meet demand requirements
E)none of the above

Question 58

Which of the following is NOT consistent with level scheduling?

A)varying the use of subcontracting
B)finding alternative work for employees during low-demand periods
C)using built-up inventory to meet demand requirements
D)varying production levels and/or work force to meet demand requirements
E)All of the above are inconsistent with the pure level strategy.

Question 59

Which of the following statements about aggregate planning is TRUE?

A)An advantage of the counterseasonal product and service mixing option is that it matches seasonal fluctuations without hiring/training costs.
B)In aggregate planning,back orders are a means of manipulating supply while part-time workers are a way of manipulating product or service demand.
C)A pure chase strategy allows lower inventories when compared to a pure level scheduling.
D)A disadvantage of subcontracting is that it may require skills or equipment outside the firm's areas of expertise.
E)The option of varying workforce size by hiring or layoffs is used where the size of the labor pool is small.

Question 60

Which of the following aggregate planning options is NOT associated with manipulation of product or service demand?

A)price cuts or discounts
B)promotion
C)subcontracting
D)counterseasonal products or services
E)advertising

Question 61

________ maintains a constant output rate,or work force level,over the planning horizon.

Question 62

________ is a capacity option that works especially well in the service sector where labor needs are relatively unskilled.

Question 63

A firm practices a 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 layoff cost is $5 per unit.Over the next year,what will be the sum of hiring and layoff costs?

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

Question 64

The textbook illustrates demand management in the form of price cuts or discounts.Can demand manipulation for aggregate planning involve price increases? Explain;provide an example.

Question 65

Explain the fundamental difference between the "capacity options" and the "demand options" of aggregate planning strategies.

Question 66

The transportation method of linear programming is an optimizing approach to aggregate planning.

Question 67

Among the mathematical approaches to aggregate planning,________ is good at working with inventories,holding costs,overtime,and subcontracting,but not with hiring and layoffs.

Question 68

Compare the chase strategy versus level scheduling.

Question 69

Identify (a)the demand options for aggregate planning;and (b)the capacity (supply)options for aggregate planning.

Question 70

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.

Question 71

If a service firm were to attempt level scheduling for aggregate planning,should its level of output be at average demand,peak demand,or minimum demand?

Question 72

Graphical techniques are easy to understand and use,but are not well-suited for generating optimal strategies.

Question 73

A firm uses graphical techniques in its aggregate planning efforts.Over the next twelve months (its intermediate period),it estimates the sum of demands to be 105,000 units.The firm has 250 production days per year.In January,which has 22 production days,demand is estimated to be 11,000 units.A graph of demand versus level production will show that:

A)the January requirement is below level production of 420 units.
B)level production is approximately 1000 units per day.
C)level production of 420 units per day is below the January requirement.
D)level production is approximately 420 units per month.
E)the firm must hire workers between December and January.

Question 74

Which of the following aggregate planning methods does not work if hiring and layoffs are possible?

A)the linear decision rule
B)simulation
C)the management coefficients model
D)the transportation method
E)graphical methods

Question 75

"An optimal plan for minimizing the cost of allocating capacity to meet demand over several planning periods" best describes which of the following?

A)the linear decision rule
B)simulation
C)the management coefficients model
D)the transportation method
E)graphical methods

Question 76

________ for developing aggregate plans work with a few variables at a time and are easy to understand and use.

Question 77

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. )

A)100
B)125
C)150
D)50
E)none of the above

Question 78

Developing a mix of ________ products is a widely used demand smoothing technique.

Question 79

The ________ strategy sets production equal to forecasted demand.

Question 80

What is a disadvantage common to the following two strategies: (1)varying inventory levels and (2)back ordering during periods of high demand?