Deck 16: Sales and Operations Planning

Question 1

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

Answer 1

True

Question 2

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.

Answer 2

False

Question 3

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

Answer 3

False

Question 4

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

Question 5

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

Question 6

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

Question 7

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

Question 8

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.

Question 9

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

Question 10

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

Question 11

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

Question 12

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

Question 15

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

Question 16

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

Question 17

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

Question 18

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 19

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 20

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

Question 21

In a logistics organization vehicle dispatching immediately precedes vehicle loading.

Question 22

In a services organization strategic capacity planning follows process planning.

Question 23

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 24

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

Question 25

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

Question 26

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

Question 27

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

Question 28

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

Question 29

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

Question 30

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

Question 31

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 32

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 33

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

Question 34

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 35

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 36

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

Question 37

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 38

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

Question 39

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

Question 40

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 41

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 42

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 43

An advantage of level scheduling is which of the following?

A)Purchased items from vendors can be delivered when and where needed
B)High level of scheduling allows for workers to have lots of overtime
C)System can better accommodate unexpected large orders
D)Financial requirements are minimized through lower finished goods inventory
E)It is easier to apply linear programming or simulation

Question 44

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 45

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 46

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 47

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

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

Question 48

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 49

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 50

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 51

An advantage of level scheduling is which of the following?

A)Total costs through the entire system are minimized.
B)There is a smooth flow throughout the production system.
C)There is variety for the workers through the mixing of models produced.
D)The risk of backorders is minimized.
E)Customer service is improved.

Question 52

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 53

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 54

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 55

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 56

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 57

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 58

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 59

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 60

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