T F 1. Aggregate planning or planning by groups of products seeks to find the combination of monthly work force, production, and inventory levels that minimizes total production- related costs over the planning period.
T F 2. The master production schedule disaggregates the aggregate production plan and specifies the amount on weekly basis for the manufacture of specific end products.
T F 3. In some firms, product demand can be affected through discount or advertising.
T F 4. The constraints on aggregate planning include union agreements, short-term physical
capacity levels, and the amount of money that can be tied up in inventories.
T F 5. Aggregate planning considers the costs of regular and overtime labor, hiring, layoffs,
inventory holding, backlogging, and subcontracting.
T F 6. The retailer's orders to the wholesaler display greater variability than the end customer sales; the wholesaler's orders to the manufacturer show even more variability (oscillations), and the manufacturer's orders to suppliers are the most volatile.
T F 7. Yield or revenue management is the process of allocating the right type of capacity
to the right type of customer at the right price and time to maximize revenue
or yield.
T F 8. Yield management is useful when the customers are not sensitive to price.
T F 9. Yield management is useful when inventory is perishable.
T F 10. Yield management is useful when the product can be sold in advance.
T F 11. Yield management is useful when the demand is flat and does not vary over time.
T F 12. Aggregate planning is the primary vehicle for coordinating multiplant operations.
T F 13. Aggregate planning drives the levels of accounts receivable and accounts payable and
also the short-term to medium-term requirements for cash to support operations and
inventory.
T F 14. Inventory holding or carrying costs include lateness penalties, lost profits, and the costs
of lost customers.
T F 15. A computerized material requirements planning (MRP) system provides a schedule that
specifies when each of the materials, parts, and components for final products should be
ordered or produced.
T F 16. With an MRP system, managers can see the planned schedule before the actual release of
orders, and therefore, they take actions such as expedite, de-expedite, delay, or cancel
orders; change order quantities; advance or delay order due dates; and make changes in
the master production schedule and capacity.
T F 17. The capabilities of MRP systems lead to benefits like reduction in inventory, idle time,
and set-up and tear-down costs; increases in sales; increased flexibility in specifying sales price, and better customer service and response to market demands.
T F 18. A large manufacturing facility that does everything (highly vertically integrated) can be
constructed and operated more economically than a specialized plant.
T F 19. The bullwhip effect can be mitigated by integration of supply chain in collaboration with upstream and downstream partners.
T F 20. The bullwhip effect can be mitigated by using of information technology (Internet, RFID, low earth orbiting satellites, and so forth) for sharing information across links in the chain on customer demand, orders placed by each player, and current status (backlog, inventory, good and orders in transit); reducing information delays; removing links from the chain (disintermediation); and facilitating centralization decisions about who makes what.
Part II.
1. Which of the following is not a viable strategy for aggregate planning?
A. Hiring and laying off.
B. Variable work weeks.
C. Changing the product mix.
D. Overtime.
Answer___________________
2. Which of the following is a viable strategy for aggregate planning?
A. Discount or advertising.
B. Varying backlogs.
C. Subcontracting.
D. All of the Above.
Answer___________________
Part III.
1. The following table gives the demand and production plan for an organization.
January February March
Demand 900 900 1,500
Production Plan 1,100 1,100 1,100
The initial inventory is zero. The inventory holding cost is $2 per unit per month. The total inventory holding cost for the plan is:
A. $400
B. $600
C. $800
D. $1,200
Answer___________________
2. The following table gives the demand and production plan for an organization.
March April May June July
Production plan 1,400 1,500 1,600 1,500 1,400
Demand 1,500 1,500 1,400 1,400 1,600
The initial inventory is zero. The inventory holding cost is $3 per unit per month and the back order (shortage) cost is $4 per unit per month. The total inventory related cost (inventory holding costs plus shortages costs) for the plan is:
A. $1,700
B. $2,100
C. $1,800
D. $1,900
E. None of the above
Answer___________________
3. A company has the following forecast demand for the next five months: 1,600; 3,200; 2,400; 3,200; and 1,600. The following information is also available.
current work force = 10
workdays/month = 20
labor hours/unit = 1
working time/day = 8
hiring cost/worker = $200
layoff cost/worker = $100
Inventory, stockouts, overtime, and undertime are not allowed. Only hiring and layoff are allowed. Only hiring and layoff are allowed to respond to fluctuations in demand. The total cost of hiring and layoff during the five-month period will be:
A. $4,500
B. $4,000
C. $3,500
D. $3,000
E. None of the above
Answer___________________
4. The annual demand for a product is nearly uniform at the rate of 20,000 units per year. The cost of processing an order is $64. The inventory holding cost is $4 per unit per year. The lead time demand for the product is 100 units and the safety stock is 250 units, then the economic order quantity (EOQ) and the reorder point (R) are:
A. EOQ = 400, R = 250
B. EOQ = 800, R = 350
C. EOQ = 1600, R = 250
D. EOQ = 200, R = 350
Answer___________________
5. The demand for an item is 200 units per week. The lead time is 4 weeks. The company's policy is to maintain a safety stock equal to four weeks' demand. The reorder point for the item is
A. 200 units.
B. 800 units.
C. 1,200 units.
D. 1,600 units.
E. None of the above
Answer___________________
6. Product A is made of two units of B and one unit of C. B is made of one unit of D and two units of E. A, B, D, and E have lead time of one week, and C has a lead time of two weeks. The demand for product A is 300 units in the fourth week and 200 units in the sixth week. The demand for assembly B is 100 units in the third week. There are 50 units of B on hand. Planned order release for assembly B in the second week is:
A. 500 units.
B. 550 units.
C. 600 units.
D. 650 units.
Answer___________________
7. Product A is made of two units of C and three units of D. Product B is made of three units of C and two units of D. The lead time for A and C are one week each and the lead time for B is two weeks. The Master Production Schedule for products A and B and the spare part C is given below:
Week
Item 1 2 3 4 5 6 7
A 200 100
B 400
C 200 350 100
On hand inventory for A, B and C is zero. Planned order release for Item C in the second week is:
A. 1,800 units
B. 1,950 units
C. 1,650 units
D. 1,900 units
Answer___________________
8. If the forecasts for three periods were 20, 30, and 40 while actual demands for respective periods were 25, 35, and 20 then the tracking signal is
A. - 1
B. 10
C. 1
D. -10
E. - 3.33
Answer___________________
9. The demand data for a firm are given below
Year Quarter Demand
1 1 110
2 400
3 350
4 200
2 5 220
6 420
7 380
8 240
3 9 260
10 470
11 430
12 270
The trend line has been calculated as Y = 250 + 10X where Y is demand and X refers to quarters. The forecast for the third quarter of the fourth year will be
A. 400
B. 456
C. 484
D. 496
E. 520
Answer___________________
10. The following table gives monthly demand for a product.
Month Demand
1 6
2 13
3 16
4 23
Using regression analysis, the forecast for the fifth month is
A. 26.0
B. 26.5
C. 28.0
D. 33.4
Answer___________________
11. The demand for a product during the last four months is given below
January 850
February 900
March 975
April 950
The forecast for January was 800. Using exponential smoothing with α = 0.3, the
forecast for May will be
A. 840.500
B. 901.595
C. 950.785
D. 990.400
Answer___________________