Quiz 8: Sales and Operations Planning

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.

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

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

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.

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

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.

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

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

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

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

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

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

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

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

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

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

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

Aggregate planning techniques is developed from the master schedule and the strategic capacity plan.

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.

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.

In a services organization, strategic capacity planning follows process planning.

In a logistics organization, vehicle dispatching immediately precedes vehicle loading.

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.

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

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

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

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

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

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

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

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

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

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

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

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.

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

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

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.

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

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

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

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

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

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

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

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

Which of the following is a production planning strategy presented in the textbook? A) Level B) Strategic C) Balanced D) Synchronous E) Optimal

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

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

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

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

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

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

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

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

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

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

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

Using the cut-and-try method for aggregate operations planning, we can back calculate beginning inventory if we knew the values of other relevant variables. What should have been the initial inventory in units of demand, if the production requirement in units of product is 900, demand forecast is 1,000, and the necessary safety stock is 20 percent of the demand forecast, Choose the right answer for the beginning inventory. A) 300 B) 500 C) 100 D) 1,900 E) Cannot find it

Using the cut-and-try method for aggregate operations planning, we can calculate the ending inventory and then calculate the safety stock as a percent of forecast demand. Suppose that the beginning inventory is 300, the production requirement in units of product is 1,350, demand forecast is 1,500, what is the ending inventory and percent safety stock? A) 200 and 10% B) 150 and 10% C) 300 and 20% D) 450 and 30% E) 150 and 20%

Using constant workforce and varying inventory and stock out, what would be the constant workforce? Production required in periods 1,2 and 3 respectively are 1,200, 1,500 and 900 units. One worker during the panning horizon can produce two units in one day. Number of work days are 22 in period 17 in period 2 and 21 in period 3. Assume that the beginning inventory and the ending inventory required are 300 units each. What is the number of workers required during the planning horizon of three periods? A) 60 B) 600 C) 35 D) 30 E) 300