Deck 13: Aggregate Operations Planning

Question 1

Aggregate operations planning is used to establish general levels of employment,production levels and changes in inventory levels over an intermediate range of time.

Answer 1

True

Question 2

Backorders can be thought of as negative inventory.

Answer 2

True

Question 3

In aggregate operations planning,both pricing and promotion are options to shift demand to align more closely with capacity.

Answer 3

True

Question 4

Sales and operations planning is typically performed once a year with monthly updates.

Question 5

Make-to-order companies use inventory whereas make-to-stock companies use backorders to shift demand.

Question 6

An advantage of a "chase" strategy in aggregate operations planning is that it provides greater stability in operations based on a steady rate of output.

Question 7

Among the basic capacity options in aggregate operations planning are hiring workers and the use of overtime.

Question 8

Among the basic demand options in aggregate operations planning are promotion and the use of overtime.

Question 9

Aggregate operations planning is not an effective technique for organizations that experience seasonal fluctuations in demand.

Question 10

The goal of aggregate operations planning is to achieve a production plan that will satisfy total forecast demand at minimum cost.

Question 11

Master production scheduling (MPS)involves long term capacity planning that typically covers a time horizon of one to three years.

Question 12

A major factor in choosing a strategy in aggregate operations planning is overall cost.

Question 13

The use of tables and charts in aggregate operations planning enables planners to develop and compare alternative production plans.

Question 14

Trial and error methods are commonly used by aggregate operations planners in developing aggregate operations plans.

Question 15

For aggregate planning,groups of similar products are lumped together and treated as equivalent products for planning purposes.

Question 16

An example of a demand option in aggregate operations planning is the use of backorders.

Question 17

An example of a capacity option in aggregate operations planning is stockpiling inventories.

Question 18

Aggregate operations planners sometimes use optimization techniques such as linear programming for planning.

Question 19

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

Question 20

A "chase" demand strategy in aggregate operations planning would be attempting to match capacity and demand,period by period.

Question 21

Essentially,the output of aggregate operations planning is:

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

Question 22

Master production schedules are often divided into three zones:
the emergency,trading,and planning zones.

Question 23

One option in aggregate planning that shifts the pattern of demand from one period to another is:

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

Question 24

After the first period of the planning horizon,available-to-promise (ATP)inventory is computed only for those periods in which there is a planned production quantity.

Question 25

Master production scheduling has three inputs for each product:
the beginning inventory,quantities already committed to customers,and back orders.

Question 26

Aggregate operations planning is capacity planning for:

A) a long-term horizon of several years.
B) an intermediate-term horizon, typically 12 months.
C) a short-term horizon of four to six weeks.
D) day-to-day production for one or two weeks.
E) machine loading in a plant on hour-by-hour basis.

Question 27

Yield management involves varying the prices of services based on capacity availability to maximize revenue.

Question 28

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

A) Production rates (capacities)
B) Demand forecasts
C) Initial inventory levels
D) Master production schedules
E) Limits on the use of overtime

Question 29

Available-to-promise (ATP)inventory for the first week is equal to the beginning inventory plus planned production quantity,if any,less the committed customer orders before the next planned production quantity.

Question 30

Disaggregating an aggregate production plan leads to a master production schedule.

Question 31

Which of the following are examples of intermediate operations planning decisions?
I)Deciding on the amount of inventory to hold
II)Deciding on which production equipment to purchase
III)Deciding on the location of a production facility

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

Question 32

An example of a capacity option in aggregate operations planning for services is inventory.

Question 33

Aggregate operations planners balance actions that influence:

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

Question 34

In doing "aggregate operations planning" for a firm producing paint,the aggregate operations planners would most likely base their planning on:

A) gallons of paint as an equivalent unit of production, without concern for the different colours to be produced.
B) gallons of paint as an equivalent unit of production,, but be concerned with the different colours to be produced.
C) all the different sizes to be produced such as gallons, quarts, and pints.
D) all the different sizes and all the different colours to be produced.
E) None of the choices.

Question 35

One area that aggregate operations planning decisions relate to is:

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

Question 36

The master production schedule indicates the quantity and timing for planned production of an item.

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

Aggregate operations planning requires which of the following information?
I)A forecast of expected demand
II)Current levels of inventory
III)Policies regarding employment

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

Question 39

Which of the following best describes aggregate operations planning?

A) Linking long term capacity decisions with intermediate term production
B) Integrating several planning techniques to develop an MPS
C) An operations plan to support sales forecasting
D) Using predicted demand to plan the general levels of employment, output, and inventories required
E) An employee scheduling technique

Question 40

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

A) Inventory levels
B) Manpower levels
C) Pricing
D) Production costs
E) Promotion

Question 41

For each product in the schedule,which of the following are outputs from the master production schedule?
I)Planned production
II)Available-to-promise (ATP)inventory
III)Beginning inventory levels
IV)Demand forecasts

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

Question 42

Inventory information for firm ABC: What is the expected inventory at the end of April,2014?

A) 350
B) 250
C) 150
D) 50
E) None of the choices are correct.

Question 43

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

A) hiring part time workers.
B) subcontracting.
C) the use of overtime.
D) varying inventory levels.
E) All of the choices.

Question 44

One option for altering the period when manufacturing capacity is available is:

A) pricing.
B) promotion.
C) use of slack time for training.
D) stockpiling inventories.
E) All of the choices are options.

Question 45

Which of the following is not true about using overtime for changing capacity?

A) It can be implemented quickly.
B) It avoids the challenges of hiring more workers.
C) It typically results in higher productivity.
D) It typically increases payroll costs.
E) All of the choices

Question 46

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

A) Overtime
B) Hiring/layoff
C) Part time
D) Inventory
E) All of these are basic options

Question 47

The main disadvantage(s)of trial-and-error techniques used for aggregate operations planning is (are):

A) that they are expensive to do.
B) that they may not result in the best plan.
C) that they take a long time to do.
D) that they require the use of a computer.
E) All of the choices are disadvantages.

Question 48

Inventory information for firm ABC: What was the inventory at the end of March,2014?

A) 350
B) 250
C) 150
D) 50
E) None of the choices are correct.

Question 49

Which of the following is not true about the transportation model as an approach to aggregate operations planning?

A) It can only be used when there is no hiring or laying off.
B) It is more complex to solve than a linear programming model.
C) It requires capacity and cost information.
D) It assumes linear terms and relationships among variables.
E) All of the choices are true.

Question 50

The result of disaggregating the aggregate operations plan is the:

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

Question 51

One option for altering the capacity available in aggregate planning is:

A) use of overtime or slack time.
B) pricing.
C) promotion.
D) backorders.
E) None of the choices.

Question 52

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

A) Hiring part time workers
B) Vary the size of the workforce
C) Use overtime to increase workforce utilization
D) Allow inventory levels to vary
E) Use backorders

Question 53

Which of the following is a consideration in the decision to use hiring and laying off permanent full-time workers as a capacity option?

A) Union contract restrictions
B) Nature of the operation regarding accommodating changes in staffing levels
C) Available supply of workers
D) Skill level of workers
E) All of the choices are considered

Question 54

Which of the following is an input of the master production schedule?
I)Beginning inventory
II)Demand forecasts for each period of the schedule
III)Orders already committed to customers

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

Question 55

The two primary factors in choosing an aggregate operations planning strategy are:

A) company policy and the master schedule.
B) overall costs and the master schedule.
C) company policy and overall costs.
D) company policy and the demand forecast.
E) overall costs and the demand forecast.

Question 56

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

A) optimization techniques.
B) trial-and-error techniques.
C) marketing campaigns to influence demand.
D) simulation models.
E) some other technique not listed.

Question 57

Which term is most closely associated with the term disaggregation?

A) Subcontracting
B) Master schedule
C) Backordering
D) Varying inventory levels
E) Firing and laying off

Question 58

In order to use the "level output/workforce strategy",variations in demand are met by:

A) varying output during regular time without changing employment levels.
B) keeping output level by changing workforce levels.
C) relying on overtime to adjust capacity.
D) using some combination of inventories, subcontracting and back orders.
E) All of the choices.

Question 59

Aggregate operations planners seek to match supply and demand:
I)at minimum overall cost.
II)by staying within company policy.
III)keeping inventories at a minimum.

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

Question 60

Linear programming models used to produce an aggregate operations plan:
I)are based on a total cost formula as a linear objective function.
II)is the most widely used technique for aggregate operations planning.
III)establishes an optimal (least cost)solution (if it exists).

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

Question 61

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) marketable inventory.
E) None of the choices.

Question 62

Given the projected demands for the next six months,prepare an aggregate production plan that uses inventory,regular time and overtime,and backorders.Regular time is 150 units per month.Overtime is a maximum of 20 units per month.Overtime cost is $30 per unit,backorder cost is $20 per unit,inventory holding cost is $5 per unit,regular time cost of $20 per unit,and beginning inventory is zero.

Question 63

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 additional information

Question 64

Prepare a master production schedule based on the following information:
Beginning inventory:
145
Schedule production whenever projected-on-hand drops below 20.
Production lot size is 250 units.

Question 65

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 66

Using the given information,determine the following.
a.What is total forecasted demand?
b.What is total regular time capacity?
c.How should overtime capacity be utilized?
d.What are total regular time costs?
e.What are total overtime costs?
f.What are total carrying costs?
g.What are total backorder costs?
h.What are total costs for each period?
i.What are total costs for the six periods?
j.If hiring cost is $500 and firing cost if $400,would it be more economical on a per unit basis to use overtime or to hire and fire a temporary person (who can produce a maximum of 40 units per period)?
What would be the difference in total costs for the six periods?

Question 67

What quantity is available for commitment to new customers prior to the receipt of the production quantity in week 3?

A) 14
B) 32
C) 12
D) 20
E) Impossible to say without additional information

Question 68

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

Question 69

Use the transportation method to develop an optimum aggregate production plan,given the following data:

Question 70

What quantity is available for commitment to new customers prior to the receipt of the production quantity in week 3?

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

Question 71

Master production schedules are often divided into which of the following zones?
I)Emergency
II)Production
III)Trading
IV)Planning

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