Deck 13: Resource Management

Question 1

An example of aggregation would be an ice cream manufacturer developing targets for the number of gallons of each flavor to produce along with purchasing requirements for specific ingredients.

Answer 1

False

Question 2

In MRP, it is essential that all dependent demand requirements be ordered at the beginning of the planning period.

Answer 2

False

Question 3

A chase demand aggregate planning strategy may result in substantial overtime, undertime, and rate-change costs.

Answer 3

True

Question 4

When demand is seasonal, inventory cannot be used to stabilize production and employment rates.

Question 5

Aggregate planning and disaggregation methods in goods-producing industries involve fewer levels of planning than service-providing organizations, because service organizations deal with more than just materials.

Question 6

Service firms frequently take their aggregate plans and disaggregate them down to the execution level as detailed front-line staff and resources schedules, job sequences and service encounter execution.

Question 7

End items in a master production schedule or final assembly schedule must be forecast.

Question 8

In a bill of materials, each component is comprised of one or more parent items.

Question 9

The purpose of the master schedule is to translate the aggregate plan into a separate plan for individual finished goods.

Question 10

A scheduled receipt for an outside vendor is called a purchase order.

Question 11

The MPS is developed in the same manner, no matter the type of industry (make-to-stock vs.make-to-order) and the number of items produced (few or many).

Question 12

Good solutions to aggregate planning situations can be found using spreadsheets and trial-and-error.

Question 13

Short-term changes in facilities and equipment are seldom used in traditional aggregate planning methods because of the capital costs involved.

Question 14

After a master production schedule is created for finished goods, the demand for all materials and components necessary can be calculated, not forecasted.

Question 15

The lower the skill requirements of the workforce, the more feasible it is to change workforce levels as an aggregate planning option.

Question 16

A bill of materials characterizes the structure of dependent demand among all items that comprise a finished good.

Question 17

Increasing the output rate without changing existing resources is an example of demand management.

Question 18

"Level 3" planning represents aggregate planning at higher management levels of an organization.

Question 19

Resource management deals primarily with managing inventories in a value chain.

Question 20

A level production strategy maintains constant inventory levels over the planning horizon.

Question 21

Setting order sizes and schedules for individual subassemblies and resources by week or day fits best with which level of the generic framework for resource planning?

A)Aggregate planning - Level 1
B)Disaggregation - Level 2
C)Execution - Level 3
D)Capacity requirements planning

Question 22

Dependent demand does not occur in the service business.

Question 23

Work center load reports are used in capacity requirements planning.

Question 24

Assigning people to tasks, setting priorities for jobs and scheduling equipment fits best with which level of the generic framework for resource planning?

A)Aggregate planning - Level 1
B)Disaggregation - Level 2
C)Execution - Level 3
D)Capacity requirements planning

Question 25

Promotion of weekly discount airfares by an airline would be an example of ____.

A)Demand management
B)Production rate changes
C)Inventory changes
D)Facility, equipment, and transportation changes

Question 26

The primary output of an MRP system is a time-phased report that gives all of the following except

A)The facilities managers a detailed schedule for acquiring additional factory space
B)The accounting and financial functions production information that drives cash flow, budgets, and financial needs
C)The production managers a detailed schedule for manufacturing the product and controlling manufacturing inventories
D)The purchasing department a schedule for obtaining raw material and purchased items

Question 27

Lot sizing is the process of using dependent demand logic to calculate the quantity and timing of orders for all subassemblies and components that support the production of end items.

Question 28

If forecast demand exceeds the total factory or supply capacity, managers might simply decide not to meet forecast demand.This decision would most likely be made at which planning level?

A)Aggregate planning - Level 1
B)Disaggregation - Level 2
C)Execution - Level 3
D)Capacity requirements planning

Question 29

The direct inputs to material requirements planning include all of the following except

A)Master Production Schedule
B)Inventory, SKU, and Transaction files
C)Bills of Material
D)Capacity Requirements Plan

Question 30

Which of the following is not correct regarding aggregate planning?

A)Large number of alternatives
B)Good solutions by trial-and-error method
C)Seasonal fluctuations in demand
D)Costs are sunk and irrelevant

Question 31

A service facility like a hospital cannot use material requirements planning concepts and methods such as bills of labor and the concept of dependent demand.

Question 32

A(n) ____ is a statement of how many finished items are to be produced and when they are to be produced.

A)Aggregate Plan
B)Master Production Schedule
C)Material Requirements Plan
D)Capacity Requirements Plan

Question 33

The words "product family," "budget allocation" and "long-term" fit best with which level of the generic framework for resource planning?

A)Aggregate planning - Level 1
B)Disaggregation - Level 2
C)Execution - Level 3
D)Capacity requirements planning

Question 34

The purpose of aggregate planning is to

A)Minimize the work force size
B)Maximize the production rate
C)Minimize the cost of meeting demand
D)Optimize the inventory level

Question 35

Resources include materials, equipment, facilities, information, technical knowledge and skills, and people.

Question 36

Lot sizing rules on a parent item do not affect the gross requirements of all lower level component items.

Question 37

An inventory item can be

A)Only a parent
B)Only a component
C)Both a parent and a component
D)Either a parent or a component, but not both

Question 38

Which of the following is not an aggregate planning decision option?

A)Pricing and promotions
B)Subcontracting
C)Layoffs
D)Building a new plant

Question 39

A POQ for a one-week time period is equivalent to LFL lot sizing.

Question 40

Which aggregate planning strategy generally would result in the least amount of inventory?

A)Level production
B)Chase demand
C)Mixed
D)Period-Order-Quantity (POQ)

Question 41

Differentiate between a level production strategy and a chase demand strategy.

Question 42

Explain the three levels of resource planning.

Question 43

Define a Master Production Schedule (MPS) and explain how it differs from a final assembly schedule.

Question 44

Explain the three lot-sizing methods, and under what circumstances each work best:
a.Lot-for-Lot (LFL)
b.Fixed Order Quantity (FOQ)
c.Periodic Order Quantity (POQ)

Question 45

What are the components of an MRP record?

Question 46

A company currently has no items in inventory.The demand for the next four months is 200, 400, 250 and 350 units.Assuming a level production rate of 250 units per month, determine the month in which a backorder will materialize.

Question 47

Explain a bill of materials (BOM), bill of labor (BOL), and bill of resources (BOR) relate.

Question 48

The Academic Company mixes and bottles a high-energy beverage in various container types and sizes for college students.The aggregate forecast for the next four quarters (1 year) in thousands of gallons is as follows:
Academic's management makes the following assumptions:
• Each employee works 550 standard hours of regular time each quarter.
• On average, it takes 27 hours to produce and package 1 unit (1,000 gallons).
• Regular-time labor costs $6.00/hour; overtime labor costs $9.00/hour.
• Inventory holding cost is approximately $4.50/unit (1,000 gallons) per quarter based upon the ending inventory per quarter.
• Because of extremely hot weather, there is no beginning inventory available to start Quarter 1.
• Management wants a constant work force (no hiring or firing).
• Managers have also decided to always round up the number of employees needed to the next whole integer, i.e., 37.2 yields 38 employees.
a. Determine how many employees would be needed to meet the peak required in Quarter 3.
b. Determine the annual inventory holding cost if Academic decides to use a level production rate of 650 units per quarter.
c. Using a level schedule of 650 units per quarter, what will be the annual employee costs?
d. Using a level schedule of 650 units per quarter, what will be the annual employee costs if only 30 employees are available and overtime is used?
e. If management decides on a chase demand strategy, with production last quarter of 600 units and a rate change cost of $3.00/1000 gallons, determine the total rate change cost.

Question 49

Which lot sizing rule is best when inventory carrying costs are high and setup/order costs are low?

A)Lot for Lot (LFL)
B)Fixed order quantity (FOQ)
C)Periodic order quantity (POQ)
D)Gross Requirements (GR)

Question 50

Describe the options that managers have for developing aggregate plans to respond to fluctuating demand.

Question 51

The Lot-for-Lot (LFL) rule

A)Minimizes purchase or setup costs
B)Allows the firm to take advantage of quantity discounts (price breaks) by suppliers
C)Is best applied when inventory carrying costs are high and setup/order costs are low
D)Masks the true nature of dependent demand

Question 52

What is capacity requirements planning (CRP)?

Question 53

____ are the total demand for an item derived from all of its parents.

A)Planned order releases
B)Gross requirements
C)Scheduled receipts
D)Planned order receipts

Question 54

Which lot sizing rule might base the order quantity on a standard-size container or pallet load?

A)Lot-for-Lot (LFL)
B)Fixed order quantity (FOQ)
C)Periodic order quantity (POQ)
D)Gross Requirements (GR)

Question 55

If a work center load report indicates insufficient capacity, options for correcting the problem include all of the following except

A)Revise the Bill-of-Materials
B)Change the Master Product Schedule
C)Subcontract
D)Transfer personnel between work centers

Question 56

A company currently has no items in inventory.The demand for the next four months is 200, 400, 250 and 350 units.Determine the level production rate if a level strategy is selected with the goal of ending Period 4 with 100 units in inventory.

Question 57

Capacity requirements are computed by multiplying the number of units scheduled for production at a work center by

A)The unit resource requirements minus the setup time
B)The unit resource requirements plus the setup time
C)The unit resource requirements and then adding in the setup time
D)The unit resource requirements and then subtracting the setup time

Question 58

Define Material Requirements Planning (MRP) and how it can benefit an organization.

Question 59

Define resource management and list its key objectives.

Question 60

Which lot sizing rule might use the EOQ calculation?

A)Lot for Lot (LFL)
B)Fixed order quantity (FOQ)
C)Periodic order quantity (POQ)
D)FOQ and POQ

Question 61

A company makes traffic signals for downtown streets.They are interested in developing a product structure tree for one of their traffic signal models.Each traffic signal is composed of a housing and bracket assembly.Each housing assembly is composed of optical and casing sub-assemblies.Each bracket assembly is composed of a hanger part and a wire outlet part.The optical sub-assembly is composed of 4 wire lead sub-assemblies, 3 lens parts, 3 bulbs, and 3 socket parts.Each casing sub-assembly is composed of 3 plastic molds and 3 hardware sub-assemblies.Each wire lead sub-assembly is made up of 1 conductor part, 1 insulation part, and 4 spade connector parts.Each hardware subassembly is made up of 4 nuts, 4 bolts, and 8 washers.

a.How many spade connectors are needed to make one traffic signal?
b.How many bolts are needed to make one traffic signal?

Question 62

It is time for a company to do its MRP schedule, but they aren't sure which lot sizing approach to use: lot-for-lot (LFL), fixed order quantity (FOQ) using the EOQ approach, or period order quantity (POQ).They have the following information regarding the product they wish to produce:
Carrying costs = $1 per unit per week
Set-up costs = $125
Annual demand = 2000 units
Work year = 50 weeks
a.What is the production lot size for week 2 using the LFL method?
b.What is the total cost using the LFL approach?
c.What is the fixed order quantity (EOQ) using the EOQ approach?
d.What is the beginning inventory in week 3 using the FOQ approach?
e.What is the total cost using the FOQ method?
f.What is the period order quantity (POQ)?
g.What is the ending inventory in week 4 using the POQ approach?
h.What is the total cost using the POQ method?

Question 63

Given the information below, complete the MRP record and explain what it tells the inventory analyst to do.

Question 64

The Eugene plant of Basic Computers Inc.(BCI) wants to develop a net requirements schedule for one model of microcomputers.The beginning inventory is 500 units and they like to carry 50 units as safety stock.The estimated demand for the next 6 weeks is 200, 250, 300, 375, 400, and 600 units.
a.What would the net requirements be for week 3?
b.What is the beginning inventory in week 5?

Question 65

A manufacturing company is trying to determine the best lot-sizing approach to take when developing an MRP schedule: lot-for-lot (LFL), fixed order quantity (FOQ) using the EOQ, or period order quantity (POQ).The ordering cost is $504 per order, the inventory carrying cost is $1 per week per unit, and the annual demand for the product is 15,000 units.They are using a work schedule for a 50-week work year.They are disregarding the effects of initial inventory and safety stock at the present time.The estimated net requirements for their product for the next six weeks are:
a.Using LFL, what is the size of the production lot in week 3?
b.Using LFL, what is the total cost for this method?
c.What is the EOQ needed?
d.What is the beginning inventory in week 4 using FOQ method?
e.What is the total cost for using the FOQ approach?
f.What is the POQ size for production lots?
g.What is the ending inventory for week 5 using POQ method?
h.What is the total cost for using the POQ approach?

Question 66

A hardware company is interested in developing a net requirement schedule for one of its products, a claw hammer.The beginning inventory for the product is 1500 units and the safety stock is 300 units.The weekly demand over a six-week planning horizon is 400, 850, 560, 900, 600, and 700 units.
a.What would the net requirements be for week 2?
b.What is the ending inventory in week 4?

Question 67

An electronics company wants to develop an MRP schedule for one of its key components, a specialized chip.The lot size is 600, the lead time is 2 weeks, there are 900 units on hand with 300 of those as safety stock and 500 already allocated.There are gross requirements for 2000 units in week 3 and 1500 units in week 5.There are 600 units scheduled to be received in week 1.
a.What is the number of units available in week 3?
b.What is the planned order receipt for week 5?

Question 68

A company that makes inkjet printers is trying to determine a MRP schedule for the print cartridges it needs in its newest model of printer.They have gross requirements of 1000 units in week 2 and 900 units in week 4.The minimum lot size is 500 units and the lead time is 1 week.They currently have 300 units on hand that includes a safety stock of 150 and another 100 units already allocated.They have 500 units scheduled for receipt in week 1.
a.What is the number of units available in week 1?
b.What is the planned order release in week 3?

Question 69

The BOM for Product X is shown below, followed by a table of inventory data.The master production schedule quantity calls for the completion of 300 Xs in Week 7.The lead-time for production of X is 2 weeks and there are currently no units of X available.
a.When and what quantity will be the planned order release for Item C?
b.Determine the week and the quantity of the planned order release for Item D.

Question 70

A manufacturing company is interested in making a product structure tree for one of its major products.They know that product A is made up of assemblies B, C, and D.Each B assembly is made up of one raw material F, and 2 E parts.Each C assembly is composed of 2 G parts and one H subassembly.Each H sub?assembly is made up of 2 F raw materials, 2 1 parts and 2 J parts.

a.How many units of part G are needed to make one unit of product A?
b.How many units of raw material F are needed to make up one unit of product A?

Question 71

A paint company has the following aggregate demand requirements and cost data for the upcoming year by quarter.

a.Determine the change in workforce costs (hiring and firing employees) if the paint company decides to use a chase demand strategy.
b.Determine the inventory holding and backorder costs for the year if the paint company wants to use a level production strategy, ending Quarter 4 with no inventory.

Question 72

A company is interested in developing a quarterly aggregate production plan but they aren't sure if level capacity or matching demand would be better.They have the following information available regarding their production operation:
Number of working days per quarter = 65 days
Number of hours per day per person = 8 hours
Labor standard to produce one unit = 3 hours
Demand for four quarters respectively:
40,000, 42,000, 41,000, and 44,000 units
a.Using a level capacity plan, how many workers would be needed each quarter?
b.For a level capacity plan, what is the beginning inventory in quarter 2?
c.Using a level capacity plan, in how many quarters are the machine requirements over capacity?
d.Using a matching demand plan, how many workers are needed for quarter 1?
e.How many additional workers are needed in quarter 2 under a matching demand plan?

Question 73

A special project in a manufacturing company has the following master production schedule (MPS) for the next eight weeks:
The weekly fabrication and welding capacity (in hours) available and production standards (in hours per unit) are:

a.What is the percent utilization of the fabrication capacity in week 5?
b.What is the percent utilization of the welding capacity in week 2?
c.In how many weeks are the welding area requirements over capacity?

Question 74

A company that makes construction equipment is exploring different lot sizing approaches to its MRP schedule: lot-for-lot (LFL), fixed order quantity (FOQ) using the EOQ, and period order quantity (POQ).It costs $100 to set up the production line to produce hydraulic jacks and the carrying cost per unit per week is $1.Annual demand is expected to be 1550 jacks.For planning purposes, the company uses a 50-week work year and disregards the effects of initial inventory and safety stock.The net requirements for hydraulic jacks for the next six weeks are:
a.Using a LFL approach, what is the lot size in week 3?
b.What is the total cost for the LFL method?
c.What is the Fixed order quantity (FOQ) using the EOQ approach?
d.What is the beginning inventory for week 5 using the FOQ approach?
e.What is the total cost using the FOQ method?
f.What is the period order quantity?
g.What is the ending inventory for week 4 using the POQ method?
h.What is the total cost using the POQ approach?

Question 75

A company assembles microcomputers for sale to computer stores.They are trying to decide which lot sizing approach to use for developing their MRP schedules: lot-for-lot (LFL), fixed order quantity (FOQ) using the EOQ approach, or period order quantity (POQ).The set-up cost is $1000 per order, the inventory carrying cost is $2.50 per week per unit and the annual demand for the computers is 10,000 units.The company is using a 50-week work year and disregarding the effects of initial inventory and safety stock.The estimated net requirements for the microcomputers for the next six weeks are:
a.Using the LFL method, what is the size of the production lot for week 2?
b.What is the total cost using the LFL method?
c.What is the economic order quantity (EOQ)?
d.What is the ending inventory in week 3 using the EOQ approach?
e.What is the total cost using the EOQ method?
f.What is the period order quantity (POQ)?
g.What is the beginning inventory in week 4 using the POQ approach?
h.What is the total cost using the POQ method?

Question 76

A local company makes athletic clothing and they are preparing aggregate production plans on a quarterly basis for the coming year for their line of women's wear.They have the following information available to develop a level capacity and a matching demand plan:
Number of working days per quarter = 65 days
Number of hours per day per person = 8 hours
Labor standard to produce one unit = 5 hours
Demand for four quarters respectively:
12,300, 12,500, 12,200, 13,000 units
Cost of hiring a worker = $800
Cost of laying off a worker = $500
Inventory carrying cost per unit per year = $60
a.Using a level capacity plan, how many workers are needed each quarter?
b.For a matching demand plan, how many workers are needed each quarter respectively?
c.What is the inventory carrying cost using a level capacity plan?
d.What is the total cost to hire workers under a matching demand plan?

Question 77

A sheet metal company has developed the following six-month production schedule (in thousands of square yards):
In addition, their monthly labor and machine capacities (in hours) available, and the production standards (in hours per square yard) are:

a.What is the percent utilization of the labor capacity in month 4?
b.What is the percent utilization of the machine capacity in month 3?
c.In how many weeks are the labor requirements over capacity?

Question 78

The bill of material for end item A is shown below:
a.If A has a gross requirement to build 250 units and an on-hand inventory for A of 40, determine the net requirement for D if its current on-hand inventory balance for D is 20 (all other components have no current inventory).
b.Determine the net requirement for F if the gross requirement for A is still 250 and current on-hand inventory balance for A is 40, D is 20 and F is 60.

Question 79

The Pacific Chemical Company produces high quality paint in Oregon for sale throughout the western U.S.The company ships paint in gallon containers.The production manager has developed the following master production schedule (MPS) for the next six months (data is in thousands of gallons):
The company's monthly labor and machine capacity available (in hours) and its production standards (in hours per gallon) are:

a.What is the percent utilization of the labor capacity in week 4?
b.What is the percent utilization of the machine capacity in week 2?
c.In how many weeks are the machine requirements over capacity?

Question 80

Pacific Chemical Products, Inc.produces a liquid laundry detergent and is currently in the process of developing an aggregate plan for the upcoming year.They don't know whether to use a level capacity or a matching demand approach.The costs that they are concerned with are the cost of hiring more workers, the cost of laying off workers, and the cost of carrying inventory.Currently at Pacific it costs $200 to hire a new worker, the cost of laying off one worker is $250, and the inventory carrying cost per unit per quarter is $4.The company has 65 working days per quarter and each person works only an 8 hour day.The labor standard for each gallon of detergent is 1.5 hours and the forecasted demand for the next four quarters is 30,000, 35,000, 47,000, 43,000 gallons.
a.Using a level capacity plan, how many workers are needed each quarter?
b.What is the average inventory level under the level capacity plan?
c.What is the total annual inventory cost under a level capacity plan?
d.Under a matching demand plan, how many workers are needed in the second quarter?
e.What is the total hiring and firing costs using a matching demand plan?