OSM3000 - Exam 3

What four things are needed to develop an aggregate plan?

(1) a logical overall unit for measuring sales and output; (2) a forecast of demand for a reasonable intermediate planning period in aggregate planning terms; (3) a method to determine the relevant costs; (4) a model that combines forecasts and costs so that scheduling decisions can be made for the planning period

Consider the following product structure.If the demand for product A is 50 units, how many units of component E will be needed?

300

Consider the following product structure.If the demand for product A is 30 units, and there are 10 units of B on hand and none of C, how many units of part D will be needed?

70

A firm uses the pure chase strategy of aggregate planning. It produced 1000 units in the last period. Demand in the next period is estimated at 800, and demand over the next six periods (its aggregate planning horizon) is estimated to average 900 units. Which of the following tactics would be most representative of following a chase strategy? A. lay off workers to match the 200-unit difference B. add 200 units to inventory in the next period C. hire workers to match the 100-unit difference D. implement a lower price point to increase demand E. add 100 units to inventory in the next period

A

Demand for a given item is said to be dependent if: A. there is a clearly identifiable parent. B. the item has several children. C. it originates from the external customer. D. there is a deep bill of material. E. the finished products are mostly services (rather than goods).

A

Forward scheduling: A. starts the schedule as soon as the job requirements are known. B. produces a schedule only if it meets the due date. C. begins with a delivery date, then offsets each operation one at a time, in reverse order. D. has the same meaning as "finite loading." E. is often used in service environments such as catering a banquet or scheduling surgery.

A

In MRP, the number of units projected to be available at the beginning of each time period refers to: A. projected on hand. B. the amount necessary to cover a shortage. C. net requirements. D. planned order releases. E. scheduled receipts.

A

The purpose of safety stock is to: A. control the likelihood of a stockout due to variable demand and/or lead time. B. protect the firm from a sudden decrease in demand. C. replace failed units with good ones. D. eliminate the likelihood of a stockout due to erroneous inventory tally. E. eliminate the possibility of a stockout.

A

The two most basic inventory questions answered by the typical inventory model are: A. timing of orders and order quantity. B. ordering cost and carrying cost. C. order quantity and cost of orders. D. timing of orders and cost of orders. E. order quantity and service level.

A

When quantity discounts are allowed, the cost-minimizing order quantity: A. minimizes the sum of holding, ordering, and product costs. B. is always an EOQ quantity. C. minimizes the sum of holding and ordering costs. D. minimizes the unit purchase price. E. may be a quantity below that at which one qualifies for that price.

A

Which of the following aggregate planning options attempts to manipulate product or service demand? A. price cuts B. part-time workers C. subcontracting D. inventories E. overtime/idle time

A

Which of the following is TRUE regarding services scheduling? A. The emphasis is on staffing levels, not materials. B. The critical ratio sequencing rule is widely used for fairness to customers. C. Labor use can be intensive, and labor demand is usually stable. D. Reservations and appointments are often used to manipulate the supply of services. E. All of the above are true.

A

Which of the following statements best compares modular bills and phantom bills? A. Modular bills represent subassemblies that actually exist and are inventoried, while phantom bills represent subassemblies that exist only temporarily and are not inventoried. B. There is no difference between the two. C. Both pertain to assemblies that are not inventoried. D. Modular bills are used for assemblies that are not inventoried, unlike phantom bills. E. Both pertain to assemblies that are inventoried

A

"An optimal plan for minimizing the cost of allocating capacity to meet demand over several planning periods" best describes which of the following? A. the linear decision rule B! the transportation method C. simulation D. graphical methods E. the management coefficients model

B

The assumptions of the production order quantity model are met in a situation where annual demand is 3650 units, setup cost is $50, holding cost is $12 per unit per year, the daily demand rate is 10 and the daily production rate is 100. What is the production order quantity for this problem? A. 365 B. 184 C.548 D. 174 E. 139

B

Under which of the following do planning tasks associated with production planning and budgeting, as well as setting employment, inventory, and subcontracting levels, typically fall? A. long-range plans B. intermediate-range plans C. strategic planning D. demand options E. short-range plans

B

What lot-sizing technique is generally preferred when inventory holding costs are extremely high? A. the Wagner-Whitin algorithm B. lot-for-lot C. EOQ D. POQ E. All of the above are appropriate for the situation.

B

Which of the following statements about the basic EOQ model is FALSE? A. If annual demand were to double, the number of orders per year would increase. B. If annual demand were to double, the EOQ would also double. C. If the setup cost were to decrease, the EOQ would fall. D. If the ordering cost were to increase, the EOQ would rise. E. All of the above statements are true.

B

Which of these is among the demand options of aggregate planning? A. varying production rates through overtime or idle time B. back-ordering during high-demand periods C. varying workforce size D. changing inventory levels E. subcontracting

B

A bakery wants to determine how many trays of doughnuts it should prepare each day. Demand is normal with a mean of 5 trays and standard deviation of 1 tray. If the owner wants a service level of at least 95%, how many trays should he prepare (rounded to the nearest whole tray)? Assume doughnuts have no salvage value after the day is complete. A. 4 B. 5 C. 7 D. 6 E. unable to determine with the above information

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)since there is no count of inventory during the review period, a stockout is possible. D)the average inventory level is decreased. E)orders usually are for larger quantities.

C

A recent advance in short-term scheduling that makes use of expert systems and simulation in solving dynamic scheduling problems is: A. infinite scheduling. B. forward scheduling. C. finite capacity scheduling. D. progressive scheduling. E. backward scheduling.

C

Aggregate planning for service firms that provide intangible output deals mainly with: A. centralized production. B. smoothing the production rate and finding the optimal size of the workforce. C. planning for human resource requirements and managing demand. D. capital investment decisions. E. centralized purchasing.

C

Distribution resource planning (DRP) is: A. a transportation plan to ship materials to warehouses. B. a shipping plan from a central warehouse to retail warehouses. C. a time-phased stock replenishment plan for all levels of a distribution network. D. a material requirements planning package used exclusively by warehouses. E. material requirements planning with a feedback loop from distribution centers.

C

If a load report (resource requirements profile) shows a work center scheduled beyond capacity: A. the Wagner-Whitin algorithm should be used to rebalance the load. B. the company must add capacity by enlarging the facility. C. the work center's load may be smoothed by such tactics as operations splitting or lot splitting. D. the aggregate plan must be revised. E. the company must add capacity by such tactics as overtime and subcontracting.

C

Revenue (or yield) management is best described as: A. management's selection of a product mix yielding maximum profits. B. a process designed to increase the rate of output. C. allocation of scarce resources to customers at prices that will maximize revenue. D. a situation where management yields to labor demands. E. a situation where the labor union yields to management demands.

C

What is the objective of scheduling? A. maximize quality B. minimize response time C. prioritize and allocate demand to available facilities D. minimize lead time E. minimize cost

C

What is the objective of scheduling? A. maximize quality C. minimize response time C. prioritize and allocate demand to available facilities D. minimize lead time E. minimize cost

C

What is the process of tracing upward in the bill of material from the component to the parent item in order to determine the cause for the component requirement? A. backtracking B. time fencing C! pegging D. net requirements planning E. leveling

C

What is the typical time horizon for aggregate planning? A. over one year B. up to 3 months C. 3 to 18 months D. less than a month E. over 5 years

C

Which lot-sizing technique orders the quantity needed during a predetermined time between orders? A. economic order quantity B. time fencing C. periodic order quantity D. part-period balancing E. lot-for-lot

C

Which of the following dispatching rules ordinarily gives the best results when the criterion is lowest time for completion of the full sequence of jobs? A. first in, first out (FIFO) B. longest processing time (LPT) C. shortest processing time (SPT) D. first come, first served (FCFS) E. critical ratio (CR)

C

Which of the following is NOT a key benefit of MRP? A. improved utilization of facilities and labor B. reduced inventory levels C. increased quality D. faster response to market changes E. better response to customer orders

C

A product has a demand of 4000 units per year. Ordering cost is $20, and holding cost is $4 per unit per year. The cost-minimizing solution for this product is to order: A. every 20 days. B. all 4000 units at one time. C. 200 units per order. D. 10 times per year. E. none of the above

C. USING Q*=SQRT((2*D*S)/H)

ABC analysis divides on-hand inventory into three classes, generally based upon which of the following? A. unit price B. item quality C. the number of units on hand D. annual dollar volume E. annual demand

D

ABC analysis is based upon the principle that: A as with grade distributions in many MBA courses, there should be more medium-level "B" items than either "A" or "C" items. B all items in inventory must be monitored very closely. C an item is critical if its usage is high. D there are usually a few critical items, and many items that are less critical. E more time should be spent on class "C" items because there are many more of them.

D

The fixed-period inventory system requires more safety stock than a fixed-quantity system because: A. replenishment is not instantaneous. 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. a stockout can occur during the review period as well as during the lead time. E. setup costs and holding costs are large.

D

The two most basic inventory questions answered by the typical inventory model are: A. order quantity and cost of orders. B. ordering cost and carrying cost. C. timing of orders and cost of orders. D. timing of orders and order quantity. E. order quantity and service level.

D

To use revenue management strategies, a business should have which combination of costs? A. high variable and low fixed B. low variable and low fixed C. high variable and high fixed D. low variable and high fixed E. either A or B

D

Under which of the following do planning tasks associated with job assignments, ordering, job scheduling, and dispatching typically fall? A. strategic planning B. intermediate-range plans C. long-range plans D. short-range plans E. mission-related planning

D

What is one of the tools that is particularly useful in reducing system nervousness in an MRP system? A. modular bills B. lot sizing C. closed loop system D. time fences E. time phasing

D

Explain what "decoupling" means in the context of inventory management.

Decoupling means to separate various parts of the production process. Each of the parts can then function at its own best pace

A work center is interested in limiting work-in-process by not allowing production to start again until the current batch is finished. The best solution most likely involves: A. Johnson's rule. B. MRP. C. Gantt charts. D. the assignment method. E. ConWIP cards.

E

Disaggregation: A. calculates the optimal price points for yield management. B. transforms the master production schedule into an aggregate plan. C. is an assumption required for the use of the transportation model in aggregate planning. D. converts product schedules and labor assignments to a facility-wide plan. E. breaks the aggregate plan into greater detail.

E

If safety stock is desired, it should be built into which portion of MRP? A. any C. none C. raw materials E. finished goods E. either C or D

E

In the service sector, which of the following aggregate planning strategies might direct your client to a competitor? A. using part-time workers B. varying work force size by hiring or layoffs C. changing inventory level D. varying production rates through overtime or idle time E. subcontracting

E

The assignment method is: A. a computerized method of determining appropriate tasks for an operation. B. a method to highlight overloads in a given work center. C. the same thing as the Gantt schedule chart. D. a method for achieving a balance between forward and backward scheduling. E. a form of linear programming for optimally assigning tasks or jobs to resources.

E

Which choice below best describes the counterseasonal product demand option? A. using subcontractors only when demand is excessive B. lowering prices when demand is slack C. the breaking of the aggregate plan into finer levels of detail D. producing such products as lawnmowers and sunglasses during the winter E. developing a mix of products that smoothes out their demands

E

Which of the following is NOT one of the successful techniques for controlling the cost of labor in services? A. an on-call labor resource that can be added or deleted to meet unexpected demand B. flexibility in rate of output or hours of work to meet changing demand C. accurate scheduling of labor-hours to assure quick response to customer demand D. flexibility of individual worker skills that permits reallocation of available labor E. little flexibility in worker hours to decrease the burden on management

E

Which of the following is an aid used to monitor jobs in progress? A. Johnson's rule B. a Gantt progress chart C. the assignment method D. a Gantt load chart E. a Gantt schedule chart

E

If daily demand is constant at 10 units per day, and lead time averages 12 days with a standard deviation of 3 days, 95 percent service requires how much safety stock? A. 28 units B. 114 units C. 30 units D. 59 units E. 49 units

E.

What does enterprise resource planning (ERP) allow an organization to do?

It allows the organization to automate and integrate the majority of its business processes, to share common data and practices across the entire enterprise, and to produce information in a real-time environment.

Demand for ice cream at the Ouachita Dairy can be approximated by a normal distribution with a mean of 47 gallons per day and a standard deviation of 8 gallons per day. The new management desires a service level of 95%. Lead time is four days; the dairy is open seven days a week. What reorder point would be consistent with the desired service level?

ROP=dL+SS