Test 3 Chapter 11 OPRE

Flashcard maker : Lily Taylor
Aggregate planning is capacity planning that typically covers a time horizon of one to three months.
FALSE
The goal of aggregate planning is to achieve a production plan that attempts to balance the organization’s resources and meet expected demand.
TRUE
Aggregate planners are concerned with the quality and quantity of expected demand.
FALSE
Aggregate planning is used to establish general levels of employment, output, and inventories over an intermediate range of time.
TRUE
The assignment of work to specific machines and people are examples of aggregate planning.
FALSE
The output from aggregate planning is a detailed business plan covering the next 2 to 12 months.
FALSE
Demand can be altered in aggregate planning by promotion and producing additional product using overtime.
FALSE
Capacity can be modified in aggregate planning by promotion and producing additional product using overtime.
FALSE
Organizations facing seasonal changes in demand are prevented from using aggregate planning techniques.
FALSE
Seasonality in demand has the advantage of leveling out requirements for our product or service.
FALSE
A level capacity strategy is also known as a chase demand strategy.
FALSE
An advantage of a “chase” strategy for aggregate planning is that inventories can be kept relatively low.
TRUE
Linear programming models yield the optimal solution.
TRUE
Ultimately the overriding factor in choosing a strategy in aggregate planning is overall cost.
TRUE
Aggregate planners commonly use trial-and-error methods in developing aggregate plans.
TRUE
The use of tables and charts in aggregate planning usually enables planners to arrive at an optimal plan.
FALSE
Aggregate planners typically use mathematical techniques such as linear programming and linear decision rules for planning.
FALSE
Disaggregating an aggregate plan leads to a master schedule.
TRUE
The master schedule indicates the quantity and timing for delivery of a product, but not the dates production will need to start.
TRUE
Departmental budgeting is an example of aggregate planning.
TRUE
Master schedulers are employed primarily by service organizations.
FALSE
Subcontracting “in” would apply to periods in which our organization has excess capacity.
TRUE
Available-to-promise in the first week is equal to beginning inventory plus MPS quantity, if any, less committed customer orders before the next MPS quantity.
TRUE
A time fence in the master schedule is used to prevent unauthorized people from making changes to the schedule.
FALSE
After the first period of the planning horizon, available-to-promise is computed only for those periods in which there is an MPS quantity.
TRUE
In the master production schedule, production is planned for the next period whenever the available-to-promise quantity becomes negative.
FALSE
Which of the following best describes aggregate planning?
an attempt to respond to predicted demand within the constraints set by product, process, and location decisions
Effectively using labor resources during periods of peak demand and low demand would be the goal of aggregate planners in:
financial services.
Aggregate planning is capacity planning for:
the intermediate range.
One area to which aggregate planning decisions relate is:
inventory levels
Which of the following is an input to aggregate planning?
demand forecasts for each period
Essentially, the output of aggregate planning is the:
production plan.
In doing aggregate planning for a firm producing paint, the aggregate planners would most likely deal with:
just gallons of paint, without concern for the different colors and sizes.
Aggregate planning requires which of the following information?

(I) a forecast of expected demand
(II) current levels of inventory
(III) policies regarding employment levels

I, II, and III
Aggregate planners attempt to balance:
capacity and demand.
Which of the following is not an input to the aggregate planning process?
master production schedules
Which one of the following would not be considered a decision option for purposes of aggregate planning?
production costs
Which of the following is not a basic option for altering the availability of capacity in a service environment?
inventory
Which one of the following is not a basic option for altering demand?
subcontracting
One option for altering the pattern of demand is:
back orders.
Which of the following would not be a strategy associated with adjusting aggregate capacity to meet expected demand?
Use back orders.
One option for altering the availability of manufacturing capacity is:
inventories.
One option for altering the availability of capacity is:
use of overtime or slack time.
In order to use the level capacity strategy, variations in demand are met by:
using combination of inventories, overtime, part time, and back orders.
In using the chase strategy, variations in demand could be met by:
varying output during regular time by changing employment levels.
Uncommitted inventory is called:
available-to-promise inventory.
Aggregate planners seek to match supply and demand:
at minimum overall cost.
In practice, the more commonly used techniques for aggregate planning are:
informal trial-and-error techniques.
The main disadvantage(s) of informal techniques used for aggregate planning is(are):
they may not result in the best plan.
Inventory information for firm ABC:

What is the expected inventory at the end of April 2008?

250
inventory information for firm ABC:

What was the inventory at the end of March 2008?

150
Linear programming to produce an aggregate plan:
will produce the best plan if accurate inputs are used.
Simulation to produce an aggregate plan:
will produce a plan that may not be the best plan.
Which of the following is most closely associated with disaggregation?
master schedule
The direct result of disaggregating the aggregate plan is the:
master schedule.
Moving from the aggregate plan to a master production schedule requires:
disaggregation.
That portion of projected inventory which enables marketing to make realistic commitments about delivery dates for new orders is:
available-to-promise inventory.
Proactive and reactive aggregate planning strategies are best associated with:
demand and capacity options.
Using dynamic pricing in response to capacity variability to ensure that perishable inventory is not wasted is known as:
yield management.
Which of the following are typically in play in a circumstance in which yield management is worthwhile?

I) Perishable capacity
(II) Ample finished goods storage
(III) Demand variability
(IV) Low holding costs

I and III only
Aggregate planning for services is more difficult than aggregate planning for manufacturing because __________ and __________ are more difficult to predict.
demand; capacity availability
One thing that makes aggregate planning in services easier than aggregate planning in manufacturing is:
labor is more flexible.
Aggregate planning in the case of a high-volume product output business such as a restaurant is directed toward:
smoothing the service rate.
A company’s product line consists of 40 percent Product A, 40 percent Product B, and 20 percent Product C. The aggregate plan calls for total production that averages 1,100 units per quarter. Quarter 1 production will be 800 units, quarter 2 production will be 1,400 units, and quarter 3 production will be 1,200 units. How many units of Product A will be produced in quarter 4?
400 units
A firm has 43 units of a certain product on hand. Forecasts for the first two planning periods are 20 units each. A production quantity of 80 units is planned to be available in period 3. Customer orders are 22 for period 1 and 17 for period 2. What is the projected on-hand inventory at the end of period 2?
1
What quantity is available for commitment to new customers in either of the first two periods?
4
A firm has 56 units of product X on hand. Forecasts of demand are for 20 units per week. An MPS quantity of 100 units is planned to arrive in period 3. Customer orders are 24 for period 1, 18 for period 2, and 15 for period 3.

What is the projected on-hand inventory at the end of period 2?

12
A firm has 56 units of product X on hand. Forecasts of demand are for 20 units per week. An MPS quantity of 100 units is planned to arrive in period 3. Customer orders are 24 for period 1, 18 for period 2, and 15 for period 3.

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

14
When the opportunity cost of lost revenue is relatively high, _________ become(s) relatively more attractive.
excess capacity
The more __________ demand is, the more the aggregate plan will tend to reflect the ____________ strategy.
stable; level
In a service setting, the aggregate plan results in a time-phased projection of __________ requirements.
staff
Which of the following differs between aggregate planning in services and aggregate planning in manufacturing?
the perishability of capacity
At XYZ Corp., the aggregate planning unit reflects the fact that 50 percent of its output is product version A, 30 percent is version B, and 20 percent is version C. Suppose that over the coming year forecasted total demand (in planning units) is for 10,400 units. Once the production plan is disaggregated, what will the weekly forecast for version A be (assume 52 weeks per year)?
100
A master production schedule quantity of 300 units will arrive in week 6. Weekly demand over weeks 3 through 10 is forecasted at 50 units. At present, orders have been booked in various quantities in weeks 1, 2, 3, and 4. What is available to promise for week 6?
300
Which of the following steps is necessary to ensure that a master schedule is valid?
rough-cut capacity planning

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