operations ch 12 - 16
Aggregate planning for fast food restaurants is very similar to aggregate planning in manufacturing, but with much smaller units of time.
true
In aggregate planning, the amount of overtime and the size of the work force are both adjustable elements of capacity.
true
The demand for automobiles would be considered an independent demand.
true
The use of part-time workers as an aggregate planning option may be less costly than using fulltime workers, but may also reduce quality levels.
true
Disaggregation a. breaks the aggregate plan into greater detail b. transforms the master production schedule into an aggregate plan c. calculates the optimal price points for yield management d. converts product schedules and labor assignments to a facility-wide plan e. is an assumption required for the use of the transportation model in aggregate planning
a
Planning tasks associated with loading, sequencing, expediting, and dispatching typically fall under a. short-range plans b. intermediate-range plans c. long-range plans d. mission-related planning e. strategic planning
a
ABC analysis divides on-hand inventory into three classes, generally based upon a. item quality b. unit price c. the number of units on hand d. annual demand e. annual dollar volume
e
The fixed-period inventory model requires more safety stock than the fixed-quantity models because a. a stockout can occur during the review period as well as during the lead time b. this model is used for products that have large standard deviations of demand c. this model is used for products that require very high service levels d. replenishment is not instantaneous e. setup costs and holding costs are large
a
Which of the following aggregate planning strategies is a "demand option"? a. changing price b. subcontracting c. varying production levels d. changing inventory levels e. using part-time workers
a
ABC analysis is based upon the principle that a. all items in inventory must be monitored very closely b. there are usually a few critical items, and many items which are less critical c. an item is critical if its usage is high d. more time should be spent on class "C" items because there are more of them e. an item is critical if its unit price is high
b
Aggregate planning is capacity planning for a. the long range b. the intermediate range c. the short range d. typically one to three months e. typically three or more years
b
An advantage of the fixed-period inventory system is that a. the supplier will be more cooperative b. there is no physical count of inventory items when an item is withdrawn c. no inventory records are required d. orders usually are for smaller order quantities e. the average inventory level is reduced
b
Cycle counting a. is a process by which inventory records are verified once a year b. provides a measure of inventory accuracy c. provides a measure of inventory turnover d. assumes that all inventory records must be verified with the same frequency e. assumes that the most frequently used items must be counted more frequently
b
Dependence on an external source of supply is found in which of the following aggregate planning strategies? a. varying production rates through overtime or idle time b. subcontracting c. using part-time workers d. back ordering during high demand periods e. hiring and laying off
b
In aggregate planning, which one of the following is not a basic option for altering demand? a. promotion b. subcontracting c. back ordering d. pricing e. All are demand options.
b
The planning tasks associated with staffing, production, inventory, and sub-contracting levels typically fall under a. short-range plans b. intermediate-range plans c. long-range plans d. demand options e. strategic planning
b
Which choice below best describes the counterseasonal demand option? a. producing such products as lawnmowers and sunglasses during the winter b. developing a mix of products that smoothes out their demands c. lowering prices when demand is slack d. using subcontractors only when demand is excessive e. the breaking of the aggregate plan into finer levels of detail
b
Which of the following aggregate planning strategies might direct your client to a competitor? a. using part-time workers b. subcontracting c. changing inventory level d. varying production rates through overtime or idle time e. varying work force size by hiring or layoffs
b
Which of the following statements about aggregate planning is false? a. Hiring, layoffs, overtime, and subcontracting are methods of manipulating capacity. b. Aggregate planning produces a plan detailing which products are made and in what quantities. c. Yield management is a way of manipulating product or service demand. d. Aggregate planning uses the adjustable part of capacity to meet production requirements. e. The transportation method is an optimizing technique for aggregate planning
b
Which of the following statements regarding the production order quantity model is true? a. It applies only to items produced in the firm's own production departments. b. It relaxes the assumption that all the order quantity is received at one time. c. It relaxes the assumption that the demand rate is constant. d. It minimizes the total production costs. e. It minimizes inventory.
b
Which of these aggregate planning strategies adjusts capacity to match demand? a. back ordering b. using part-time workers c. counterseasonal product mixing d. changing price e. None of the above is a capacity option.
b
Which of these is among the demand options of aggregate planning? a. subcontracting b. back-ordering during high-demand periods c. changing inventory levels d. varying workforce size e. All of the above are demand options
b
Most inventory models attempt to minimize a. the likelihood of a stockout b. the number of items ordered c. total inventory based costs d. the number of orders placed e. the safety stock
c
The two most basic inventory questions answered by the typical inventory model are a. timing and cost of orders b. quantity and cost of orders c. timing and quantity of orders d. order quantity and service level e. ordering cost and carrying cost
c
Which of the following is not associated with manipulation of product or service demand? a. price cuts or discounts b. promotion c. subcontracting d. counterseasonal products or services e. advertising
c
Which of the following is not one of the four things needed for aggregate planning? a. a logical overall unit for measuring sales and output b. a method for determining costs, such as hiring, firing, and inventory costs, associated with production schedules c. a mathematical model that will minimize costs over the intermediate planning period d. an aggregate demand forecast for an intermediate planning period e. All of these are needed for aggregate planning.
c
Which of the following statements about aggregate planning is true? a. The development of mathematical models has allowed aggregate planners to discontinue use of trial-and-error methods. b. In aggregate planning, back orders are a means of manipulating supply while part-time workers are a way of manipulating product or service demand. c. A pure chase strategy allows lower inventories when compared to pure level scheduling. d. Disaggregation turns the master production schedule into an intermediate term master plan. e. All of the above are true.
c
Which of the following statements regarding aggregate planning is true? a. In a pure level strategy, production rates or work force levels are adjusted to match demand requirements over the planning horizon. b. A pure level strategy allows lower inventories when compared to pure chase and hybrid strategies. c. In a mixed strategy, there are changes in both inventory and in work force and production rate over the planning horizon. d. Because service firms have no inventory, the pure chase strategy does not apply. e. All of the above are true.
c
Which of the following statements regarding control of service inventories is true? a. Service inventory is a fictional concept, because services are intangible. b. Service inventory needs no safety stock, because there's no such thing as a service stockout. c. Effective control of all goods leaving the facility is one applicable technique. d. Service inventory has carrying costs but not setup costs. e. All of the above are true.
c
A disadvantage of the fixed-period inventory system is that a. it involves higher ordering costs than the fixed quantity inventory system b. additional inventory records are required c. the average inventory level is decreased d. since there is no count of inventory during the review period, a stockout is possible e. orders usually are for larger quantities
d
All of the following statements about ABC analysis are true except a. inventory may be categorized by measures other than dollar volume b. it categorizes on-hand inventory into three groups based on annual dollar volume c. it is an application of the Pareto principle d. it states that all items require the same degree of control e. it states that there are the critical few and the trivial many inventory items
d
Among the advantages of cycle counting is that it a. makes the annual physical inventory more acceptable to management b. does not require the detailed records necessary when annual physical inventory is used c. does not require highly trained people d. allows more rapid identification of errors and consequent remedial action than is possible with annual physical inventory e. does not need to be performed for less expensive items
d
If demand is not uniform and constant, then stockout risks can be controlled by a. increasing the EOQ b. placing an extra order c. raising the selling price to reduce demand d. adding safety stock e. reducing the reorder point
d
The EOQ model with quantity discounts attempts to determine a. what is the lowest amount of inventory necessary to satisfy a certain service level b. what is the lowest purchasing price c. whether to use fixed-quantity or fixed-period order policy d. how many units should be ordered e. what is the shortest lead time
d
The proper quantity of safety stock is typically determined by a. minimizing an expected stockout cost b. carrying sufficient safety stock so as to eliminate all stockouts c. meeting 95% of all demands d. setting the level of safety stock so that a given stockout risk is not exceeded e. minimizing total costs
d
The purpose of safety stock is to a. replace failed units with good ones b. eliminate the possibility of a stockout c. eliminate the likelihood of a stockout due to erroneous inventory tally d. control the likelihood of a stockout due to the variability of demand during lead time e. protect the firm from a sudden decrease in demand
d
Which of the following aggregate planning strategies is a "capacity option"? a. influencing demand by changing price b. counterseasonal product mixing c. influencing demand by extending lead times d. changing inventory levels e. influencing demand by back ordering
d
Which of the following aggregate planning strategies is known to lower employee morale? a. yield management b. counterseasonal product and service mixing c. changing inventory levels d. varying work force size by hiring or layoffs e. back ordering during high demand periods
d
Which of the following is not one of the four main types of inventory? a. raw material inventory b. work-in-process inventory c. maintenance/repair/operating supply inventory d. safety stock inventory e. All of these are main types of inventory
d
Which of the following is the term used for medium range capacity planning with a time horizon of three to eighteen months? a. material requirements planning b. short-range planning c. strategic planning d. aggregate planning e. none of the above
d
Which of the following statements about ABC analysis is false? a. ABC analysis is based on the presumption that controlling the few most important items produces the vast majority of inventory savings. b. In ABC analysis, "A" Items are tightly controlled, have accurate records, and receive regular review by major decision makers. c. In ABC analysis, "C" Items have minimal records, periodic review, and simple controls. d. ABC analysis is based on the presumption that all items must be tightly controlled to produce important cost savings. e. All of the above statements are true.
d
Which of the following statements about aggregate planning is true? a. Advertising/promotion is a way of manipulating product or service supply. b. Work station loading and job assignments are examples of aggregate planning. c. Overtime/idle time is a way of manipulating product or service demand. d. Aggregate planning uses the adjustable part of capacity to meet production requirements. e. All of the above are true.
d
Which of the following statements about quantity discounts is false? a. The cost-minimizing solution may or may not be where annual holding costs equal annual ordering costs. b. In inventory management, item cost becomes relevant to inventory decisions only when a quantity discount is available. c. If carrying costs are expressed as a percentage of value, EOQ is larger at each lower price in the discount schedule. d. The larger annual demand, the less attractive a discount schedule will be. e. The smaller the ordering cost, the less attractive a discount schedule will be.
d
Which of the following statements about the basic EOQ model is false? a. If the setup cost were to decrease, the EOQ would fall. b. If annual demand were to increase, the EOQ would increase. c. If the ordering cost were to increase, the EOQ would rise. d. If annual demand were to double, the EOQ would also double. e. All of the above statements are true.
d
Which of the following would not generally be a motive for a firm to hold inventories? a. to decouple or separate parts of the production process b. to provide a stock of goods that will provide a selection for customers c. to take advantage of quantity discounts d. to minimize holding costs e. all of the above are functions of inventory.
d
Which of these statements about the production order quantity model is false? a. The production order quantity model is appropriate when the assumptions of the basic EOQ model are met, except that receipt is noninstantaneous. b. Because receipt is noninstantaneous, some units are used immediately, not stored in inventory. c. Average inventory is less than one-half of the production order quantity. d. All else equal, the smaller the ratio of demand rate to production rate, the larger is the production order quantity. e. None of the above is false.
d
When quantity discounts are allowed, the cost-minimizing order quantity a. is always an EOQ quantity b. minimizes the sum of holding and ordering costs c. minimizes the unit purchase price d. may be a quantity below that at which one qualifies for that price e. minimizes the sum of holding, ordering, and product costs
e
Which category of inventory holding costs is much higher than average for rapid-change industries such as PCs and cell phones? a. housing costs b. material handling costs c. labor cost d. parts cost e. pilferage, scrap, and obsolescence
e
Which of the following are elements of inventory holding costs? a. housing costs b. material handling costs c. investment costs d. pilferage, scrap, and obsolescence e. All of the above are elements of inventory holding cost.
e
Which of the following attempts to manipulate product or service demand? a. inventories b. part-time workers c. subcontracting d. overtime/idle time e. price cuts
e
Which of the following is a function of inventory? a. to decouple or separate parts of the production process b. to decouple the firm from fluctuations in demand and provide a stock of goods that will provide a selection for customers c. to take advantage of quantity discounts d. to hedge against inflation e. All of the above are functions of inventory.
e
Which of the following is consistent with a pure chase strategy? a. vary production levels to meet demand requirements b. vary work force to meet demand requirements c. vary production levels and work force to meet demand requirements d. little or no use of inventory to meet demand requirements e. All of the above are consistent with a pure chase strategy.
e
Which of the following is not consistent with a pure level strategy? a. varying the use of subcontracting b. variable work force levels c. little or no use of inventory to meet demand requirements d. varying production levels and/or work force to meet demand requirements e. All of the above are inconsistent with the pure level strategy.
e
Which of the following statements about the basic EOQ model is true? a. If the ordering cost were to double, the EOQ would rise. b. If annual demand were to double, the EOQ would increase. c. If the carrying cost were to increase, the EOQ would fall. d. If annual demand were to double, the number of orders per year would increase. e. All of the above statements are true.
e
Which of the following statements regarding the reorder point is true? a. The reorder point is that quantity that triggers an action to restock an item. b. There is a reorder point even if lead time and demand during lead time are constant. c. The reorder point is larger than d x L if safety stock is present. d. The fixed-period model has no reorder point. e. All of the above are true.
e
ABC analysis is based on the presumption that carefully controlling all items is necessary to produce important inventory savings.
false
Advertising and promotion are methods of manipulating product or service supply in aggregate planning.
false
At the economic order quantity, holding costs are equal to purchasing costs.
false
Because service firms do not inventory their output, pure chase strategy is not appropriate
false
Cycle counting is an inventory control technique exclusively used for cyclical items.
false
In the quantity discount model, the cost of acquiring goods (product cost) is not a factor in determining lot size.
false
In the simple EOQ model, if annual demand were to increase, the EOQ would increase proportionately
false
In the simple EOQ model, if the carrying cost were to double, the EOQ would also double.
false
Insurance and taxes on inventory are part of the costs known as setup or ordering costs.
false
One of the demand options of aggregate planning is to vary the workforce by hiring or firing.
false
Plans for new product development generally fall within the scope of aggregate planning.
false
Safety stock in inventory systems depends only on the average demand during the lead time
false
The EOQ model is best suited for items whose demand is dependent on other products.
false
The aggregate planning process usually includes expediting and dispatching of individual products.
false
The only objective of aggregate planning is to minimize the cost of matching capacity to demand over the planning period
false
Which item to order and with which supplier the order should be placed are the two fundamental issues in inventory management.
false
Work-in-process inventory is devoted to maintenance, repair, and operations.
false
A hotel room that goes unrented and an airline seat that goes unsold are both examples of perishability of services inventory.
true
A major challenge in inventory management is to maintain a balance between inventory investment and customer service.
true
Aggregate planning in manufacturing ties organizational strategic goals to a production plan.
true
Controlling the cost of labor in services involves quick response to consumer demand, on-call labor for unexpected demand, flexibility of labor for reallocation, and flexibility of hours or rate of output of individual workers.
true
Disaggregation is the process of breaking the aggregate plan into greater detail; one example of this detail is the Master Production Schedule
true
Finding an ideal mixed strategy is complicated by the huge number of possible strategies.
true
Graphical techniques are easy to understand and use, but are not well-suited for generating optimal strategies.
true
High levels of efficiency at Anheuser-Busch are the result of excellence in aggregate planning and in high facility utilization.
true
If setup costs are reduced by substantial reductions in setup time, the production order quantity is also reduced
true
In ABC analysis, "A" Items are the most tightly controlled.
true
In aggregate planning, one of the adjustable elements of capacity is the extent of subcontracting.
true
In cycle counting, the frequency of item counting and stock verification usually varies from item to item depending upon the item's classification.
true
In the production order quantity (POQ) model, inventory does not arrive in a single moment but flows in at a steady rate, resulting in a larger lot size than in an otherwise identical EOQ problem.
true
In the quantity discount model, it is possible to have a cost-minimizing solution where annual ordering costs do not equal annual carrying cost
true
Mixed strategies in aggregate planning utilize inventory, work force, and production rate changes over the planning horizon.
true
One advantage of cycle counting is that it maintains accurate inventory records
true
One function of inventory is to take advantage of quantity discounts.
true
One motive for using demand-influencing aggregate planning options is to create uses for excess capacity within an organization.
true
One of the four things needed for aggregate planning is a logical overall unit for measuring sales and output.
true
One question that operations managers must ask when generating an aggregate plan is what factors are likely to influence demand and by how much.
true
Retail inventory that is unaccounted for between receipt and time of sale is known as shrinkage
true
Service level is the complement of the probability of a stockout
true
The fixed-period inventory model can have a stockout during the review period as well as during the reorder period, which is why fixed-period models require more safety stock than fixed-quantity models.
true
The management coefficients model is a formal planning model built around a manager's experience and performance.
true
The reorder point is the inventory level at which action is taken to replenish the stocked item
true
The strategies of aggregate planning are broadly divided into demand options and capacity options.
true
The transportation method of linear programming is an optimizing approach to aggregate planning.
true
Units of safety stock are additions to the reorder point that allow for variability in the rate of demand, the length of lead time, or both.
true