Deck 8: Sales and Operations Planning

Question 1

The aggregate operations plan translates annual and quarterly business plans into broad labor and output plans for the intermediate term of 3 to 18 months.

Answer 1

True
Explanation: Aggregate operations plan translates annual and quarterly business plans into broad labor and output plans for the intermediate term (3 to 18 months. )

Question 2

The objective of the aggregate operations plan is to insure that the marketing and sales plans are realistic.

Answer 2

False
Explanation: The objective of the aggregate operations plan is to minimize the cost of resources required to meet demand over that period.

Question 3

Costs incurred in hiring,training and laying off personnel are considered relevant aggregate operations planning costs.

Answer 3

True
Explanation: (Under relevant cost:)Costs associated with changes in the production rate.Typical costs in this category are those involved in hiring,training,and laying off personnel.

Question 4

The sales and marketing plans are typically developed separately from the aggregate operations plan as a way of cross-checking results to insure the integrity of assumptions about the future.

Question 5

The widespread adoption of computing technology has led to the virtual abandonment of simple cut-and-try charting and graphical methods to develop aggregate operations plans.

Question 6

Aggregate sales and operations planning occur in a company about every 3 to 18 months.

Question 7

The sales and operations planning process consists of a series of meetings.

Question 8

The increasing complexity of modern operations management has made simple cut-and-try charting and graphical methods formerly used to develop aggregate operations plans impractical and obsolete.

Question 9

Foregone profit margins are considered as relevant aggregate operations planning costs.

Question 10

Accurate medium-range planning increases the likelihood of operating within the limits of a budget.

Question 11

Fixed and variable costs incurred in producing a given product type in a given time period are relevant aggregate operations planning costs.

Question 12

The aggregate operations plan differs in virtually every aspect in service organizations as contrasted with manufacturing organizations.

Question 13

The sales and operations planning process is made up of a variety of analytical techniques which interact to produce short and intermediate term goals.

Question 14

The aggregate operations plan is developed from the master schedule and the strategic capacity plan.

Question 15

The main purpose of the aggregate production plan is to specify the optimal combination of workforce level and inventory on hand.

Question 16

Aggregation in sales and operations planning is by groups of customers on the supply side and by product families on the demand side of the firm's supply chain.

Question 17

The operations plan should not be updated but should be followed precisely until the longest-term planning horizon has passed.

Question 18

Backordering costs incurred in producing a given product type in a given time period are relevant aggregate operations planning costs.

Question 19

The International Aggregate Planning Society (IAPS)has developed aggregate operations planning guidelines which are followed by a majority of manufacturing firms.

Question 20

Subcontracting is viewed as a risky strategy because the firm may lose control of product design and pricing.

Question 21

In an overview of the major operations planning activities in a typical organization,which of the following activities precedes aggregate sales and operations planning?

A) Process planning
B) Workforce scheduling
C) Master production scheduling
D) Materials requirements planning
E) Order scheduling

Question 22

Order scheduling is the step in the aggregate operations planning process that immediately follows material requirements planning.

Question 23

The aggregate operations planning variable "production rate" refers to the number of units completed per unit of time.

Question 24

In services,once the aggregate staffing level is determined,the focus is on short-term workforce and customer scheduling.

Question 25

The aggregate operations planning variable "workforce level" refers to the number of workers needed to accomplish the planned production.

Question 26

Firms that match the production rate to the order rate by hiring and laying off employees as the order rate varies are following what is known as the chase strategy.

Question 27

The master production schedule is a crucial input into the aggregate operations plan.

Question 28

A rate fence is a logical justification for different prices for what is essentially the same service.

Question 29

Yield management is the process of allocating the right type of capacity to the right type of customer at the right prices at the right time to maximize revenue or yield.

Question 30

One of the conditions that makes yield management effective is when inventory is easily stored and held for a time when demand is stronger.

Question 31

In an overview of the major operations planning activities in a typical logistics organization,which of the following activities follows aggregate sales and operations planning?

A) Process planning
B) Workforce scheduling
C) Vehicle loading
D) Materials requirements planning
E) Order scheduling

Question 32

In a services organization strategic capacity planning follows process planning.

Question 33

Because a level production strategy does not require adjustment in the short-to-medium term,aggregate sales and operations planning is not required.

Question 34

Yield management is an important tool that can be used to shape demand patterns.

Question 35

A rate fence is a person who books airline seats at low rates far in advance and sells the seats at a profit later.

Question 36

In a logistics organization vehicle dispatching immediately precedes vehicle loading.

Question 37

The aggregate operations planning variable "inventory on hand" refers to the balance of unused inventory carried over from the previous time period.

Question 38

Pricing for a service should primarily relate to the cost of providing the service and has little to do with capacity issues the service provider might face.

Question 39

The essence of yield management is the ability to manage supply.

Question 40

Firms facing cyclical demand fluctuations would be wise to introduce complementary products whose cycles are the same as their current products.

Question 41

Which of the following costs are relevant to aggregate operations planning?

A) Sunk costs
B) Transaction costs
C) Backordering costs
D) Legal costs
E) Fixed costs

Question 42

Which of the following is not one of the "number of interesting issues that arise in yield management?"

A) Pricing structures must appear logical to the customer and justify different prices
B) Designing yield management programs that cannot be imitated by a competitor
C) How to handle variability in customer arrivals,duration,and interval
D) Managing the service process
E) Training workers and managers to work in a yield management environment

Question 43

Using the cut-and-try method for aggregate operations planning we can determine the production requirement in units of product.If the beginning inventory is 400 units,the demand forecast is 900 units,and the required safety stock is 10% of the demand forecast,what is the production requirement? _________________________________

Question 44

From an operational perspective yield management is least effective under which of the following circumstances?

A) Demand can be segmented by customer
B) The product can be sold in advance
C) The product can be kept to be sold when demand is stronger
D) Fixed costs are high and variable costs are low
E) Demand is highly variable

Question 45

In conducting aggregate operations planning there are a number of required inputs.Which of the following are inputs considered external to the firm?

A) Competitor behavior and economic conditions
B) Market demand and inventory levels
C) Subcontractor capacity and current workforce
D) Economic conditions and current physical capacity
E) Raw material availability and inventory levels

Question 46

In conducting aggregate operations planning there are a number of required inputs.Which of the following are considered inputs internal to the firm?

A) Inventory levels and economic conditions
B) Market demand and subcontractor capacity
C) Current physical capacity and current workforce
D) Competitor behavior and current workforce
E) Current physical capacity and raw material availability

Question 47

Using the cut-and-try method for aggregate operations planning we can determine the production requirement in units of product.If the beginning inventory is 500 units,the demand forecast is 1,000,and the necessary safety stock is 10% of the demand forecast,which of the following is the production requirement?

A) 1,000
B) 600
C) 550
D) 450
E) 100

Question 48

Which of the following is considered a "pure" production planning strategy?

A) Variable workforce,stable work hours
B) Lag demand
C) Level playing field
D) Stable workforce,variable work hours
E) Product warehouse

Question 49

Which of the following methods discussed in the text requires generating several alternative aggregate plans?

A) Trial and error
B) Production smoothing
C) Graphing and charting
D) Aggregate plan simulation
E) Cut and try

Question 50

Using the cut-and-try method for aggregate operations planning we can determine the production requirement in units of product.If the beginning inventory is 100 units,the demand forecast is 1,200,and the necessary safety stock is 20% of the demand forecast,which of the following is the production requirement?

A) 1,200
B) 1,300
C) 1,340
D) 1,500
E) 1,540

Question 51

Maintaining a stable workforce working at a constant output rate while shortages and surpluses are absorbed by fluctuating inventory levels,order backlogs and allowing lost sales is which of the following production planning strategies?

A) Stable workforce,variable work hours
B) Chase
C) Level
D) Full employment
E) Skill maintenance

Question 52

From an operational perspective yield management is least effective under which of the following circumstances?

A) Demand can be segmented by customer
B) The product can be sold in advance
C) Demand is highly variable
D) Fixed costs are high and variable costs are low
E) Demand is stable and close to capacity

Question 53

In an overview of the major operations planning activities in a typical service organization,which of the following activities follows aggregate sales and operations planning?

A) Process planning
B) Workforce scheduling
C) Master scheduling
D) Materials requirements planning
E) Order scheduling

Question 54

Matching the production rate to the order rate by hiring and laying off employees as the order rate varies is which of the following pure production planning strategies?

A) Stable workforce,variable work hours
B) Chase
C) Level
D) Meeting demand
E) Minimizing inventory

Question 55

Which of the following is a production planning strategy presented in the textbook?

A) Level
B) Strategic
C) Balanced
D) Synchronous
E) Optimal

Question 56

From an operational perspective yield management is most effective under which of the following circumstances?

A) Demand cannot be segmented by customer
B) Inventory is perishable
C) Fixed costs are low and variable costs are high
D) The customer is a "captive" of the system
E) The firm doing yield management is very profitable

Question 57

In an overview of the major operations planning activities in a typical logistics organization,which of the following activities most immediately follows aggregate sales and operations planning?

A) Process planning
B) Strategic capacity planning
C) Vehicle dispatching
D) Vehicle capacity planning
E) Warehouse receipt planning

Question 58

The main purpose of aggregate operations planning is to specify the optimal combination of which of the following?

A) Workforce levels and inventory on hand
B) Inventory on hand and financing costs for that inventory
C) The strategic plan and the products available for sale
D) The workforce level and the degree of automation
E) Operational costs and the cash flow to support operations

Question 59

What are the four main categories of cost relevant to aggregate operations planning?
1.____________________________
2.____________________________
3.____________________________
4.____________________________

Question 60

In conducting aggregate operations planning there are a number of required inputs.Which of the following are inputs considered external to the firm?

A) Inventory levels and market demand
B) Raw material availability and competitor's behavior
C) Current workforce and economic conditions
D) Current physical capacity and market demand
E) Subcontractor capacity and inventory levels

Question 61

What are the three basic production planning strategies?
1.____________________________
2.____________________________
3.____________________________

Question 62

What are the five conditions named in the text that support yield management from an operational perspective?
1.____________________________
2.____________________________
3.____________________________
4.____________________________
5.____________________________

Question 63

Using the cut-and-try method for aggregate operations planning we can determine the production requirement in units of product.If beginning inventory is 4,000 units,the demand forecast is 2,900 units,and the required safety stock is 10% of the demand forecast,what is the production requirement? ________________________________

Question 64

Explain how yield management works and why some companies are able to use it to manage demand patterns?

Question 65

Describe the aggregate sales and operations planning process.