Ch.2 Quiz: Production Planning

If the old backlog was 200 units, the forecast for the next period is 500 units, and production for the next period is 600 units, what will be the backlog at the end of the next period? A) 100 units B) 200 units C) 300 units D) 700 units E) 800 units

A) 100 units **Projected Backlog = old BL + forecast - production. = 200 + 500 - 600 = 700 - 600 = 100 units.

Over a 10-week period the cumulative sales are forecast at 10,000 units, the opening inventory is 200 units and the closing inventory is to be 100 units. What should be the weekly planned production for level production? A) 990 B) 1000 C) 1010 D) 1030 E) none of the above

A) 990 **Total Production Required = forecast + ending inventory (desired) - opening inventory. Production Each Period = (Total production required / # periods) Total = 10,000 + 100 - 200 = 10,100 - 200 = 9,900 units Per Period = 9,900 / 10 = 990 units

Determining the need for labor, machines, physical resources to meet the production objectives of the firm is called: A) production control B) production planning C) capacity planning D) all of the above E) none of the above

C) capacity planning **Capability of manufacturing to produce goods & services. Eventually it depends on the resources of the company- the machinery, labor & financial resources**

Which basic production planning strategy avoids hiring and layoff costs and the costs of excess capacity? A) demand matching B) operation smoothing C) subcontracting D) all of the above E) none of the above

C) subcontracting **Buying the extra amounts demanded from external sources, or purposely turn away extra demand. The latter can be done by increasing prices when demand is high or by extending lead times.

If the opening inventory is 100 units, the sales are 500 units and the ending inventory is 200 units, then manufacturing must produce: A) 300 units B) 400 units C) 500 units D) 600 units E) none of the above

D) 600 units **Production Required = sales (forecast) - opening inventory + ending inventory. = 500 - 100 + 200 = 400 + 200 = 600 units.

A statement of a schedule of requirements for individual end items is called: A) a master production schedule B) a material requirements plan C) production plan D) a capacity plan E) none of the above

A) a master production schedule (MPS) **Breaks down the production plan to show, for each period, the quantity of each end item to be made**

Which of the following is the most true about Sales and Operations Planning? A) It usually is produced only once a year B) It usually includes only sales and manufacturing people C) It is typically done in financial terms D) It usually includes all functions at the executive level

D) It usually includes all functions at the executive level **Although the strategic plan & business plan are usually updated annually, S&OP is a dynamic process in which the company plans are updated on a regular basis, usually at least monthly. **Involves sales & marketing, product development, operations, and senior management. **Executive level planning process that involves the potential to make significant trade-offs between the various functions/departments.

Firms will usually make-to-order when: A) products are produced to customer specification B) there are many product options C) product is expensive to make and store D) all of the above E) none of the above

D) all of the above **Manufacturers wait until an order is received from a customer before starting to make the goods. Very expensive items are usually made to order i.e., custom-tailored clothing**

Which of the following is a characteristic of a production plan? A) time horizons are five years B) the production plan is for individual items C) the only objective is to have an efficient plan D) all of the above are characteristics of a production plan E) none of the above are characteristics of a production plan

E) none of the above are characteristics of a production plan **A time horizon of 12 months or more is used. **Production demand consists of one or a few product families or common units. **Demand is fluctuating or seasonal. **Objectives include low inventories, efficient plant operation, good customer service, & good labor relations.

The function of setting the limits or levels of manufacturing operations based on the market plan and resource availability is called: A) production planning B) prodcution activity level C) capacity planning D) all of the above E) none of the above

A) production planning **Quantities of each product group that must be produced in each period **Desired inventory levels **Resources of equipment, labor, and material need in each period **Availability of the resources needed

Which of the following plans has the longest planning horizon and the least level of detail? A) strategic business plan B) production plan C) master production schedule D) all of the above have the same level of detail E) none of the above

A) strategic business plan **Level of detail is not high. It is concerned with general market & production requirements- total market for major product groups or families, perhaps- and not sales of individual items. Usually stated in dollars rather than units.**

Which of the following information is needed to develop a make-to-stock production plan? I. Forecast by time period for the production plan. II. Opening inventory. III. Opening backlog of customer orders. IV. Desired ending inventory. A) I, II and III B) I, II and IV C) I, III and IV D) II, III and IV

B) I, II and IV **Forecast by period for the planning horizon **Opening inventory **Desired ending inventory **Any past-due customer orders. These are orders that are late for delivery (Backorders). NOT Backlogs: these are customer orders received but not yet shipped.

When a company establishes a program to recycle or reuse products discarded or returned from customers it is typically called which of the following? A) Product return contract B) Reverse supply chain C) Customer Servicing D) Resupply planning

B) Reverse supply chain or Reverse logistics **Formal supply chain used to retrieve a used product in order to dispose of it, reclaim materials, or reuse it in some fashion.

Which of the following represents the major reason for developing the production plan as part of the sales and operation planning? A) To decide how to best produce exactly what is in the sales plan B) To plan for resources required to produce to the agreed plan C) To plan a schedule for the production of individual products D) To plan the acquisition of new manufacturing facilities

B) To plan for resources required to produce to the agreed plan **Does not actually schedule production, but instead focuses on producing a high-level plan for the use of company resources. Includes production resources, human resources, sales resources, financial resources.**

Which basic production planning strategy will build inventory and avoid the costs of excess capacity? A) demand matching (chase) B) production leveling C) subcontracting D) all of the above E) none of the above

B) production leveling **Continually producing an amount equal to the average demand. Sometimes demand is less and an inventory builds up, and other times demand is greater and inventory is used up.

For the purposes of production planning, product groups should be established on the basis of: A) market segments B) similarity manufacturing process C) the availability of materials D) the availability of machinery E) all of the above

B) similarity manufacturing process **Marketing naturally looks at the products from the customers' point of view of functionality & application. Thus, firms need to establish product groups based on the similarity of manufacturing processes and resources used**

Which of the following is true? I. the strategic plan is stated in production terms II. The strategic business plan is stated in financial terms III. The strategic business plan is developed from the strategic plan A) I and II only B) I and III only C) II and III only D) I, II and III E) none are correct

C) II and III only **Strategic Plan is a statement of the major goals & objectives the company expects to achieve over the next 2 to 10 years or more. Based on long-range forecasts & includes marketing, finance, production, engineering & all other major functions. **Strategic Business Plan is the strategic plan restated in financial terms, including projected revenues, balance sheet, and a project income statement.

Which of the following statements is best about sales and operations planning? A) it provides a means of updating the material requirements plan B) It includes only the marketing and productions plan C) it is usually updated on a monthly basis D) it has no effect on inventory levels

C) it is usually updated on a monthly basis **Dynamic process in which the company plans are updated on a regular basis, usually at least monthly. -sales & marketing -product development -operations -senior management

Which of the following is a basic strategy in developing a production plan? A) hybrid strategy B) production leveling C) chase strategy D) a and b above E) b and c above

E) b and c above **Objective is to minimize the cost of: a) carrying inventory b) changing prod. levels c) stocking out accomplish this by leveling production or using chase strategy**

Firms will generally make-to-stock when: A) demand is unpredictable B) there are many product options C) delivery lead times are long D) all of the above E) none of the above

E) none of the above **Demand is fairly constant & predictable **There are few product options **Delivery times demanded by marketplace are much shorter than the time needed to make the product