Deck 11: Aggregate Planning and Master Scheduling

Question 1

Aggregate planning is capacity planning that typically covers a time horizon of one to three months.

Answer 1

False

Question 2

A level capacity strategy is also known as a chase demand strategy.

Answer 2

False

Question 3

Seasonality in demand has the advantage of leveling out requirements for our product or service.

Answer 3

False

Question 4

Demand can be altered in aggregate planning by promotion and producing additional product using overtime.

Question 5

Linear programming models yield the optimal solution.

Question 6

The assignment of work to specific machines and people are examples of aggregate planning.

Question 7

The output from aggregate planning is a detailed business plan covering the next 2 to 12 months.

Question 8

Ultimately the overriding factor in choosing a strategy in aggregate planning is overall cost.

Question 9

Aggregate planners commonly use trial-and-error methods in developing aggregate plans.

Question 10

Organizations facing seasonal changes in demand are prevented from using aggregate planning techniques.

Question 11

The master schedule indicates the quantity and timing for delivery of a product, but not the dates production will need to start.

Question 12

An advantage of a "chase" strategy for aggregate planning is that inventories can be kept relatively low.

Question 13

Aggregate planners typically use mathematical techniques such as linear programming and linear decision rules for planning.

Question 14

Aggregate planning is used to establish general levels of employment, output, and inventories over an intermediate range of time.

Question 15

The goal of aggregate planning is to achieve a production plan that attempts to balance the organization's resources and meet expected demand.

Question 16

Disaggregating an aggregate plan leads to a master schedule.

Question 17

Departmental budgeting is an example of aggregate planning.

Question 18

Aggregate planners are concerned with the quality and quantity of expected demand.

Question 19

The use of tables and charts in aggregate planning usually enables planners to arrive at an optimal plan.

Question 20

Capacity can be modified in aggregate planning by promotion and producing additional product using overtime.

Question 21

One option for altering the pattern of demand is:

A) back orders.
B) overtime.
C) part-time workers.
D) inventories.
E) subcontracting.

Question 22

Aggregate planners attempt to balance:

A) demand and inventories.
B) demand and costs.
C) capacity and inventories.
D) capacity and costs.
E) capacity and demand.

Question 23

One area to which aggregate planning decisions relate is:

A) job sequencing
B) customer order quantities
C) inventory levels
D) location
E) layout

Question 24

After the first period of the planning horizon, available-to-promise is computed only for those periods in which there is an MPS quantity.

Question 25

In doing aggregate planning for a firm producing paint, the aggregate planners would most likely deal with:

A) just gallons of paint, without concern for the different colors and sizes.
B) gallons of paint, but be concerned with the different colors to be produced.
C) gallons, quarts, pints, and all the different sizes to be produced.
D) all the different sizes and all the different colors by size.
E) all of the different colors targeted for different markets.

Question 26

In the master production schedule, production is planned for the next period whenever the available-to-promise quantity becomes negative.

Question 27

Aggregate planning is capacity planning for:

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

Question 28

Which of the following best describes aggregate planning?

A) the link between intermediate-term planning and short-term operating decisions
B) a collection of objective planning tools
C) make-or-buy decisions
D) an attempt to respond to predicted demand within the constraints set by product, process, and location decisions
E) manpower planning

Question 29

Master schedulers are employed primarily by service organizations.

Question 30

Essentially, the output of aggregate planning is the:

A) marketing plan.
B) production plan.
C) rough-cut capacity plan.
D) assignment plan.
E) material requirements plan.

Question 31

Available-to-promise in the first week is equal to beginning inventory plus MPS quantity, if any, less committed customer orders before the next MPS quantity.

Question 32

A time fence in the master schedule is used to prevent unauthorized people from making changes to the schedule.

Question 33

Which of the following is an input to aggregate planning?

A) ending inventory
B) demand forecasts for each period
C) customer levels
D) setup costs
E) quantity discounts

Question 34

Which of the following is not a basic option for altering the availability of capacity in a service environment?

A) overtime
B) hiring/layoff
C) part time
D) inventory
E) All of the choices are options.

Question 35

Which one of the following would not be considered a decision option for purposes of aggregate planning?

A) inventory levels
B) manpower levels
C) pricing
D) production costs
E) promotion

Question 36

Aggregate planning requires which of the following information?
(I) a forecast of expected demand
(II) current levels of inventory
(III) policies regarding employment levels

A) II only
B) I and II only
C) I and III only
D) I, II, and III
E) II and III only

Question 37

Which one of the following is not a basic option for altering demand?

A) promotion
B) backordering
C) pricing
D) subcontracting
E) All are demand options.

Question 38

Which of the following is not an input to the aggregate planning process?

A) resources available
B) demand forecast
C) policies on workforce changes
D) master production schedules
E) cost information

Question 39

Subcontracting "in" would apply to periods in which our organization has excess capacity.

Question 40

Effectively using labor resources during periods of peak demand and low demand would be the goal of aggregate planners in:

A) manufacturing.
B) military.
C) archeology.
D) libraries.
E) financial services.

Question 41

The direct result of disaggregating the aggregate plan is the:

A) marketing plan.
B) production plan.
C) rough-cut capacity plan.
D) master schedule.
E) material requirements plan.

Question 42

The main disadvantage(s) of informal techniques used for aggregate planning is(are):

A) they are expensive to do.
B) they may not result in the best plan.
C) they take a long time to do.
D) they require the use of a computer.
E) the lack of formal education of the planners.

Question 43

Inventory information for firm ABC: $$\begin{array} { l l } \text { Inventory at the end of April, 2008: } & 200 \text { units } \\\text { Expected demand during April, 2008: } & 50 \text { units } \\\text { Production expected during April, 2008: } & 100 \text { units }\end{array}$$ What was the inventory at the end of March 2008?

A) 350
B) 250
C) 150
D) 50
E) 400

Question 44

Uncommitted inventory is called:

A) available-to-promise inventory.
B) free inventory.
C) safety stock.
D) lead time inventory.
E) obsolete inventory.

Question 45

Which of the following is most closely associated with disaggregation?

A) subcontracting
B) master schedule
C) diversity
D) varying inventory levels
E) firing and laying off

Question 46

One option for altering the availability of manufacturing capacity is:

A) pricing.
B) promotion.
C) back orders.
D) inventories.
E) yield management.

Question 47

Using dynamic pricing in response to capacity variability to ensure that perishable inventory is not wasted is known as:

A) yield management.
B) profit minimization.
C) capacity loading.
D) demand optimization.
E) perishability avoidance.

Question 48

One option for altering the availability of capacity is:

A) use of overtime or slack time.
B) pricing.
C) promotion.
D) back orders.
E) rigidly fixing work schedules.

Question 49

Proactive and reactive aggregate planning strategies are best associated with:

A) input and output.
B) make and buy.
C) quantitative and qualitative.
D) exact and approximate.
E) demand and capacity options.

Question 50

Which of the following are typically in play in a circumstance in which yield management is worthwhile?
(I) Perishable capacity
(II) Ample finished goods storage
(III) Demand variability
(IV) Low holding costs

A) I, II, and IV only
B) I and III only
C) III only
D) II and III only
E) II, III, and IV only

Question 51

In practice, the more commonly used techniques for aggregate planning are:

A) mathematical techniques.
B) informal trial-and-error techniques.
C) transportation models.
D) simulation models.
E) linear programming optimization.

Question 52

In using the chase strategy, variations in demand could be met by:

A) varying output during regular time without changing employment levels.
B) varying output during regular time by changing employment levels.
C) varying output with and without changing employment levels.
D) varying inventory levels.
E) price increases.

Question 53

Moving from the aggregate plan to a master production schedule requires:

A) rough-cut capacity planning.
B) disaggregation.
C) suboptimization.
D) strategy formulation.
E) chase strategies.

Question 54

That portion of projected inventory which enables marketing to make realistic commitments about delivery dates for new orders is:

A) beginning inventory.
B) safety stock inventory.
C) available-to-promise inventory.
D) high-margin inventory.
E) master production schedule arrivals.

Question 55

In order to use the level capacity strategy, variations in demand are met by:

A) varying output during regular time without changing employment levels.
B) varying output during regular time by changing employment levels.
C) varying output by changing overtime levels.
D) using combination of inventories, overtime, part time, and back orders.
E) price adjustments.

Question 56

Simulation to produce an aggregate plan:

A) will produce the best plan.
B) is the most widely used technique.
C) is easy to implement.
D) will produce a plan that may not be the best plan.
E) requires a minimum of four iterations to be accurate.

Question 57

Aggregate planners seek to match supply and demand:

A) at minimum overall cost.
B) by changing company policy.
C) by minimizing layoffs.
D) keeping inventories at a minimum.
E) by minimizing hires.

Question 58

Linear programming to produce an aggregate plan:

A) will produce the best plan if accurate inputs are used.
B) is the most widely used technique.
C) is easy to implement.
D) will produce a plan that may not be the best plan.
E) requires an Excel spreadsheet.

Question 59

Inventory information for firm ABC: $$\begin{array} { l l } \text { Inventory at the end of April, 2008: } & 200 \text { units } \\\text { Expected demand during April, 2008: } & 50 \text { units } \\\text { Production expected during April, 2008: } & 100 \text { units }\end{array}$$ What is the expected inventory at the end of April 2008?

A) 350
B) 250
C) 150
D) 50
E) 80

Question 60

Which of the following would not be a strategy associated with adjusting aggregate capacity to meet expected demand?

A) Subcontract.
B) Vary the size of the workforce.
C) Vary the intensity of workforce utilization.
D) Allow inventory levels to vary.
E) Use back orders.

Question 61

Aggregate planning in the case of a high-volume product output business such as a restaurant is directed toward:

A) smoothing the service rate.
B) reducing the size of the workforce.
C) making the kitchen and waitstaff more flexible.
D) coming up with a fixed staffing level.
E) making weekly work schedules more stable.

Question 62

A firm has 56 units of product X on hand. Forecasts of demand are for 20 units per week. An MPS quantity of 100 units is planned to arrive in period 3. Customer orders are 24 for period 1, 18 for period 2, and 15 for period 3. What is the projected on-hand inventory at the end of period 2?

A) 14
B) 32
C) 12
D) 20
E) impossible to say without more information

Question 63

The more __________ demand is, the more the aggregate plan will tend to reflect the ____________ strategy.

A) stable; level
B) aggregated; outsourcing
C) variable; level
D) complex; uncommitted
E) stable; chase

Question 64

Consider the following information: What is total forecasted demand?

Question 65

Use either the transportation method or linear programming to develop an optimum aggregate plan, given the following data:

Question 66

Which of the following steps is necessary to ensure that a master schedule is valid?

A) worker scheduling
B) order promising
C) inventory counting
D) order booking
E) rough-cut capacity planning

Question 67

Aggregate planning for services is more difficult than aggregate planning for manufacturing because __________ and __________ are more difficult to predict.

A) capacity availability; customer tastes
B) holding costs; overtime costs
C) demand; capacity availability
D) capacity change costs; holding costs
E) hiring costs; holding costs

Question 68

In a service setting, the aggregate plan results in a time-phased projection of __________ requirements.

A) customer
B) staff
C) inventory
D) subcontracting
E) outsourcing

Question 69

Prepare a master schedule based on the following information:
Currently there are 145 units in inventory.

Question 70

One thing that makes aggregate planning in services easier than aggregate planning in manufacturing is:

A) inventory is cheaper to hold.
B) labor availability is more predictable.
C) inventory is less perishable.
D) labor is more flexible.
E) demand is less variable.

Question 71

What quantity is available for commitment to new customers in either of the first two periods?

A) 21
B) 1
C) 20
D) 4
E) impossible to say without more information

Question 72

Which of the following differs between aggregate planning in services and aggregate planning in manufacturing?

A) uncertainty in demand
B) costs of storing inventory
C) the perishability of capacity
D) cost of overtime
E) cost of hiring

Question 73

A company's product line consists of 40 percent Product A, 40 percent Product B, and 20 percent ProductC. The aggregate plan calls for total production that averages 1,100 units per quarter. Quarter 1 production will be 800 units, quarter 2 production will be 1,400 units, and quarter 3 production will be 1,200 units. How many units of Product A will be produced in quarter 4?

A) 320 units
B) 400 units
C) 440 units
D) 480 units

Question 74

A firm has 56 units of product X on hand. Forecasts of demand are for 20 units per week. An MPS quantity of 100 units is planned to arrive in period 3. Customer orders are 24 for period 1, 18 for period 2, and 15 for period 3. What quantity is available for commitment to new customers prior to the receipt of the MPS quantity in week 3?

A) 14
B) 32
C) 12
D) 20
E) impossible to say without more information

Question 75

When the opportunity cost of lost revenue is relatively high, _________ become(s) relatively more attractive.

A) layoffs
B) back orders
C) excess capacity
D) disaggregation
E) minimal inventory

Question 76

Given the projected demands for the next six months, prepare an aggregate plan that uses inventory, regular time and overtime, and back orders. The plan must wind up with no units in ending inventory in period 6. Regular time capacity is 150 units per month. Overtime capacity is 20 units per month. Overtime cost is $30 per unit, back order cost is $20 per unit, inventory holding cost is $5 per unit, regular time cost is $20 per unit, and beginning inventory is zero.

Question 77

A manager has prepared a forecast of expected aggregate demand for the next six months. Develop an aggregate plan to meet this demand given this additional information: A level production rate of 100 units per month will be used. Back orders are allowed, and they are charged at the rate of $8 per unit per month. Inventory holding costs are $1 per unit per month in ending inventory. Determine the cost of this plan if regular time cost is $20 per unit and beginning inventory is zero.

Question 78

A master production schedule quantity of 300 units will arrive in week 6. Weekly demand over weeks 3 through 10 is forecasted at 50 units. At present, orders have been booked in various quantities in weeks 1, 2, 3, and 4. What is available to promise for week 6?

A) 50
B) 6
C) 300
D) 100
E) cannot be determined without projected on-hand information

Question 79

A firm has 43 units of a certain product on hand. Forecasts for the first two planning periods are 20 units each. A production quantity of 80 units is planned to be available in period 3. Customer orders are 22 for period 1 and 17 for period 2. What is the projected on-hand inventory at the end of period 2?

A) 21
B) 1
C) 12
D) 20
E) impossible to say without more information

Question 80

At XYZ Corp., the aggregate planning unit reflects the fact that 50 percent of its output is product version A, 30 percent is version B, and 20 percent is versionC. Suppose that over the coming year forecasted total demand (in planning units) is for 10,400 units. Once the production plan is disaggregated, what will the weekly forecast for version A be (assume 52 weeks per year)?

A) 1,000
B) 200
C) 400
D) 100