Ch. 14 - Material and Resource Planning (Quiz #8), SCM Chopra/Meindl E6 Ch08, op chapter 12 Demand Planning: Forecasting and Demand Management, OSCM 3001-CH. 10, Chapter 10 MCQ, OSCM Ch 10, SCM ch 15

Capacity requirements planning does all of the following EXCEPT

Recalculate the MRP plan

8) A poor aggregate plan may result in a large amount of excess inventory and capacity, thereby raising costs.

TRUE

9) The aggregate planner must make a trade-off between capacity, inventory, and backlog costs.

TRUE

For Platinum Nugget Hotel in Las Vegas, Saturday is the best day of the week for business. The gambling take for the hotel on Saturdays over the past four weeks was: 1. $250,000 2. $190,000 3. $300,000 4. $280,000 Using a moving average with n = 3 terms, what would be the forecast for week 5? $256,667 $232,124 $246,667 $255,000

$256,667 (190,000 + 300,000 + 280,000)/3 = 256,667

For Platinum Nugget Hotel in Las Vegas, Saturday is the best day of the week for business. The gambling take for the hotel on Saturdays over the past four weeks was: 1. $250,000 2. $190,000 3. $300,000 4. $280,000 Platinum Nugget uses a three-period weighted moving average to forecast demand, with at = 0.6, at-1 = 0.3, and at-2 = 0.1. What is the forecast for week 5? $295,000 $237,000 $232,000 → $277,000

$277,000 (.6(280,000) + .3(300,000) + .1(190,000))/3 = 277,000

Over a six-month period, the demand for a product has been: June = 200, July = 210, August = 240, September = 240, October = 260, and November = 280. The three-month moving average forecast for December is 260. 300. 280. 240.

(240 + 260 + 280)/3 = 260

Alpha Company sold 2,000 widgets yesterday. It had forecasted sales of 1,900 units. Using exponential smoothing with a smoothing constant of 0.6, what is the forecast for today's sales of widgets? 2,040 2,060 1,940 1,960

1,960 1,900 + 0.6(2,000 - 1,900) = 1,960

An office manager forecasts demand for office stationery by exponential smoothing, with alpha = 0.4. Actual demand two weeks ago (i.e., the week before last) was 12 boxes, but the forecast for that period was only 10. Actual demand last week was 7. What was the forecast for last week? 11.0 11.2 8.2 10.8 8.8

10.8 Forecast = 10 + .4(12 - 10) = 10.8

Jones Company had sales of $100,000 last week. The company had forecasted that sales would be $120,000. Using exponential smoothing with a smoothing constant of 0.2, what is the forecast for this week's sales? $104,000 $112,000 $124,000 $116,000

120,000 + .2(100,000 − 120,000) = 116,000

Jones Company uses widgets as component parts. In a particular week, it has gross requirements for 250 units of widgets, beginning inventory of 50 widgets and it scheduled receipts of 350 widgets. Available inventory for the next period is

150 (350 + 50) - 250

5) Much of aggregate planning has traditionally been focused

C) within an enterprise.

33) How many months does the regular time output exceed plant capacity in the optimal solution to Scenario 8.2?

A) 0

24) Use the information from Scenario 8.1 to determine the number of decision variables in this scenario. Scenario 8.1 - Gang Aft Agley Gang Aft Agley, a manufacturing company, faces the aggregate planning problem shown in the table below. Cost of regular production is $5 per unit, the cost of producing the same unit on overtime is $7.50, the cost of subcontracting is $9 per unit, and the cost of carrying a unit in inventory from one month to the next is $2. The labor contract at the plant prohibits both overtime and subcontracting output to exceed 300 units in any five month window. The plant capacity is 600 units per month produced using two shifts, regardless of the number of days in a month. By policy, management wants to avoid stockouts. Note: Excel Table Omitted

A) 10

25) Use the information from Scenario 8.1 to determine the number of constraints in this scenario. Scenario 8.1 - Gang Aft Agley Gang Aft Agley, a manufacturing company, faces the aggregate planning problem shown in the table below. Cost of regular production is $5 per unit, the cost of producing the same unit on overtime is $7.50, the cost of subcontracting is $9 per unit, and the cost of carrying a unit in inventory from one month to the next is $2. The labor contract at the plant prohibits both overtime and subcontracting output to exceed 300 units in any five month window. The plant capacity is 600 units per month produced using two shifts, regardless of the number of days in a month. By policy, management wants to avoid stockouts. Note: Excel Table Omitted

A) 12

21) Demand is forecast for the next five months as 200, 300, 500, 300, 200. The production planner decides to adopt a chase strategy, so over the next five months they should produce

A) 200, 300, 500, 300, 200.

39) Which of the following is an approach a company can use to create a buffer for forecast error using safety inventory?

A) Overtime

44) Which of these software vendors offer advanced planning systems?

A) SAP

28) Which of these statements about Scenario 8.1 is evident without even developing an aggregate plan? Scenario 8.1 - Gang Aft Agley Gang Aft Agley, a manufacturing company, faces the aggregate planning problem shown in the table below. Cost of regular production is $5 per unit, the cost of producing the same unit on overtime is $7.50, the cost of subcontracting is $9 per unit, and the cost of carrying a unit in inventory from one month to the next is $2. The labor contract at the plant prohibits both overtime and subcontracting output to exceed 300 units in any five month window. The plant capacity is 600 units per month produced using two shifts, regardless of the number of days in a month. By policy, management wants to avoid stockouts. Note: Excel Table Omitted

A) Some overtime will be needed.

42) The earliest IT supply chain products were

A) aggregate planning modules.

1) The process by which a company determines levels of capacity, production, subcontracting, inventory, stockouts, and even pricing over a specified time horizon is

A) aggregate planning.

18) The strategy where workforce (capacity) is kept stable but the number of hours worked is varied over time in an effort to synchronize production with demand is the

A) flexibility strategy.

15) Aggregate planning should consider information from

A) only the enterprise as its breadth of scope. B) downstream partners to produce forecasts. C) upstream partners to determine constraints. D) all of the above (ANSWER)

6) The operational parameter concerned with the number of units completed per unit time (such as per week or per month) is

A) production rate.

10) The planning horizon is

A) the time period over which the aggregate plan is to produce a solution.

If the cumulative lead time is 8 weeks, to be feasible, the MPS planning horizon must be

At least 8 weeks

29) What is the optimal total cost of the aggregate plan developed to address Scenario 8.1? Scenario 8.1 - Gang Aft Agley Gang Aft Agley, a manufacturing company, faces the aggregate planning problem shown in the table below. Cost of regular production is $5 per unit, the cost of producing the same unit on overtime is $7.50, the cost of subcontracting is $9 per unit, and the cost of carrying a unit in inventory from one month to the next is $2. The labor contract at the plant prohibits both overtime and subcontracting output to exceed 300 units in any five month window. The plant capacity is 600 units per month produced using two shifts, regardless of the number of days in a month. By policy, management wants to avoid stockouts. Note: Excel Table Omitted

B) $18,950

13) ________ is used to determine customer service levels.

B) Backlog/stockout quantity

40) What is the name of the plan that breaks apart the aggregate plan into distinct product families?

B) Rough cut capacity plan

17) The strategy where the production rate is synchronized with the demand rate by varying machine capacity or hiring and laying off employees as the demand rate varies is the

B) chase strategy.

46) The quality of the forecast can be improved by using information from

B) downstream partners.

35) When formulating aggregate plans,

B) forecast errors must be taken into account.

50) As capacity utilization increases,

B) it becomes more important to perform aggregate planning.

38) Capacity used to satisfy demand that is higher than forecasted is

B) safety capacity.

36) Forecasting errors are dealt with using

B) safety capacity. C) safety inventory. D) B and C only (ANSWER)

34) Without actually solving the aggregate planning problem, it is safe to conclude that in the optimal solution to Scenario 8.2,

B) the number of units made using subcontracting will exceed the number of units made using overtime.

11) The length of the planning horizon is usually between

B) three and eighteen months.

7) The operational parameter concerned with the number of workers/units of capacity needed for production is

B) workforce.

30) What is the optimal total cost of the aggregate plan developed to address Scenario 8.2? Scenario 8.2 - Willow A company faces the aggregate planning problem shown in the table below. Cost of regular production is $8 per unit, the cost of producing the same unit on overtime is $15, the cost of subcontracting is $12 per unit, and the cost of carrying a unit in inventory from one month to the next is $6. The labor contract at the plant prohibits both overtime and subcontracting output to exceed 400 units in any five month window. The plant capacity is 20 units per day produced using two shifts and the plant runs seven days a week. By policy, management wants to avoid stockouts. Note: Excel Table Omitted

C) $31,400

26) Use the information from Scenario 8.1 to determine the objective function for this scenario. Scenario 8.1 - Gang Aft Agley Gang Aft Agley, a manufacturing company, faces the aggregate planning problem shown in the table below. Cost of regular production is $5 per unit, the cost of producing the same unit on overtime is $7.50, the cost of subcontracting is $9 per unit, and the cost of carrying a unit in inventory from one month to the next is $2. The labor contract at the plant prohibits both overtime and subcontracting output to exceed 300 units in any five month window. The plant capacity is 600 units per month produced using two shifts, regardless of the number of days in a month. By policy, management wants to avoid stockouts. Note: Excel Table Omitted

C) Min Cost = $5(Sigma)Regular + $7.5(Sigma)Overtime + $9(Sigma)Subcontracting + $2(Sigma)Ending Inventory

41) What information does a master production schedule provide that an aggregate plan does not?

C) Specific product family production information

3) Aggregate planning solves problems involving

C) aggregate decisions rather than stock keeping unit (SKU) level decisions.

16) The fundamental trade-offs available to an aggregate planner are between

C) capacity, inventory, and backlog costs.

48) The aggregate plan needs to

C) have some flexibility built into it because forecasts are always wrong.

19) The strategy where a stable machine capacity and workforce are maintained with a constant output rate, with inventory levels fluctuating over time, is the

C) level strategy.

37) Inventory held to satisfy demand that is higher than forecasted is

C) safety inventory.

2) The goal of aggregate planning is to

C) satisfy demand in a way that maximizes profit.

9) Aggregate planning is concerned with determining

C) the production level, inventory level, and capacity for each period.

Significant changes in an MPS quantity several weeks into the planning horizon can

Cause inconsistencies in the MRP

The longest lead time path in the BOM (Bill of Materials) is the

Cumulative lead time

27) Which of these is a constraint that is appropriate for Scenario 8.1? Scenario 8.1 - Gang Aft Agley Gang Aft Agley, a manufacturing company, faces the aggregate planning problem shown in the table below. Cost of regular production is $5 per unit, the cost of producing the same unit on overtime is $7.50, the cost of subcontracting is $9 per unit, and the cost of carrying a unit in inventory from one month to the next is $2. The labor contract at the plant prohibits both overtime and subcontracting output to exceed 300 units in any five month window. The plant capacity is 600 units per month produced using two shifts, regardless of the number of days in a month. By policy, management wants to avoid stockouts. Note: Excel Table Omitted

D) (Sigma)Subcontracting ≤ 300

31) How many units are produced using overtime in the optimal aggregate plan developed to address Scenario 8.2? Scenario 8.2 - Willow A company faces the aggregate planning problem shown in the table below. Cost of regular production is $8 per unit, the cost of producing the same unit on overtime is $15, the cost of subcontracting is $12 per unit, and the cost of carrying a unit in inventory from one month to the next is $6. The labor contract at the plant prohibits both overtime and subcontracting output to exceed 400 units in any five month window. The plant capacity is 20 units per day produced using two shifts and the plant runs seven days a week. By policy, management wants to avoid stockouts. Note: Excel Table Omitted

D) 280

32) How many units are produced using overtime in the optimal aggregate plan developed to address Scenario 8.2?

D) 280

20) Demand is forecast for the next five months as 200, 300, 500, 300, 200. The production planner decides to adopt a level strategy, so over the next five months they should produce

D) 300, 300, 300, 300, 300.

49) How frequently should the aggregate plan be rerun?

D) As inputs to the aggregate plan change

12) An aggregate planner requires information on constraints. Which of the following is one of the typical constraints for an aggregate planner?

D) Limits on overtime

45) The quality of the aggregate plan can be improved by using information from

D) all parts of the supply chain.

47) The aggregate plan should be communicated to

D) all supply chain partners who will be affected by it.

43) Advanced planning systems for aggregate planning rely heavily on ________ to deliver their full potential.

D) data accuracy

8) The operational parameter concerned with the planned inventory carried over the various periods in the planning horizon is

D) inventory on hand.

23) A highly effective tool for a company to use when it tries to maximize profits while being subjected to a series of constraints is

D) linear programming.

14) A poor aggregate plan can result in

D) lost sales and lost profits.

22) Most strategies that an aggregate planner actually uses are in combination and are referred to as the

D) mixed strategy.

4) Aggregate planning, to be effective, requires inputs from

D) throughout the supply chain.

The positioning and replenishment of finished goods inventories at the retail level can be determined using

DRP (Distribution Requirements Planning)

Zanda Company is looking for a requirements planning system to help plan replenishment of its finished goods throughout its network of distribution centers. The type of system Zanda should consider is known as

DRP (Distribution Requirements Planning)

The primary difference between demand management and demand forecasting is Forecasting is only possible when quantitative data are available. A firm cannot execute both approaches simultaneously. Demand management is proactive, while forecasting attempts to predict. One approach deals with uncertainty, while the other deals with known demand.

Demand management is proactive, while forecasting attempts to predict. Demand management proactively attempts to influence demand, while forecasting simply tries to predict demand.

Software that consolidates all of the business planning systems and data throughout an organization is

ERP (Enterprise Resource Planning)

Benefits of ERP systems include all of the following EXCEPT

Easy implementation

Suppose your firm is about to launch a radically new product. The type of demand forecasting system you would most likely use is: Exponential smoothing. Time-series. Executive judgment. Moving average. Regression.

Executive judgment. Radically new products do not have any data to support quantitative forecasting. Only executive judgment is a qualitative technique.

1) The goal of aggregate planning is to satisfy demand in a way that minimizes profit.

FALSE

12) Forecasting errors are dealt with in aggregate plans using either safety backlog or safety capacity.

FALSE

13) Safety inventory is defined as inventory held to satisfy demand that is higher than forecasted.

FALSE

14) Safety capacity is defined as capacity used to satisfy demand that is lower than forecasted.

FALSE

17) As inputs into the aggregate plan change, managers do not need to make changes to the aggregate plan.

FALSE

18) As capacity utilization increases, it becomes less important to perform aggregate planning.

FALSE

19) The goal of aggregate planning is to build a plan that satisfies demand while minimizing downtime.

FALSE

4) Short-term production serves as a broad blueprint for operations and establishes the parameters within which aggregate planning decisions are made.

FALSE

7) A planning horizon is usually between three and five years.

FALSE

End item A is made by assembling 2 of part B and 3 of part C. Part C is made from 2 of component D and 2 of component E. Component D is considered to be a

Level 2 input

A bill of materials file contains

Lists of materials required to produce end item products

The quantities of end items to be completed in each time period into the future is shown in an

MPS (Master Production Schedule)

Which of the following is NOT included in the information about the inventory records file for an item?

Net requirements

Materials requirement planning (MRP) systems are primarily used to

Plan orders

Which of the following is NOT an input into the MRP?

Planned order release

MRP is a process that would be most applicable in which situation?

Planning requirements for bicycle seats in a bicycle production plant

The demand for housing is characterized by a regular pattern of increasing to a peak, then falling. When the demand reaches a low point, it then repeats the pattern. This pattern usually takes place over a three- to five-year period. This is an example of which type of demand pattern? Autocorrelation Step change Trend Seasonality and cycles

Seasonality and cycles Seasonality and cycles are regular patterns of repeating highs and lows, as described in this example

Planning for which of the following products would see the LEAST benefit from the use of an MRP

Shampoo

Constant changing of the master schedule and the resulting changes in the requirements for components is referred to as

System nervousness

10) Most strategies that an aggregate planner actually uses are in combination, and are referred to as hybrid strategies.

TRUE

11) To improve the quality of aggregate plans, forecast errors must be taken into account when formulating aggregate plans.

TRUE

15) Companies should work with downstream partners to produce forecasts and with upstream partners to determine constraints when doing aggregate planning.

TRUE

16) Given that forecasts are always wrong to some degree, the aggregate plan needs to have some flexibility built into it if it is to be useful.

TRUE

2) Aggregate planning is a process by which a company determines levels of capacity, production, subcontracting, inventory, stockouts, and even pricing over a specified time horizon.

TRUE

20) Linear programming finds the solution that creates the highest profit while satisfying the constraints that a company faces.

TRUE

3) Traditionally, much of aggregate planning is focused within an enterprise and may not always be seen as a part of supply chain management.

TRUE

5) The aggregate planning problem is concerned with determining the production level, inventory level, and capacity level (internal and outsourced) for each period that maximizes the firm's profit over the planning horizon.

TRUE

6) To create an aggregate plan, a company must specify the planning horizon for the plan and the duration of each period within the planning horizon.

TRUE

strategic demand planning would best be utilized: All of these. To determine plans for hiring or laying off employees. To determine plans for employee overtime. To decide whether or not to close a manufacturing plant. To direct day-to-day operations in a manufacturing plant.

To decide whether or not to close a manufacturing plant. Strategic demand planning is necessary for long-term decisions such as building or closing a plant. The others described are shorter-term decisions.

Convex Computer Company makes many different forecasts. Which of the following forecasts is probably the least accurate? Total number of desktops to be sold next year. Total number of laptops to be sold next month. Total number of computers (laptops and desktops) to be sold next month. Total number of laptops with 2 gigabyte RAM, 80 gigabyte hard drive, and 16 x DVD drive to be sold next year.

Total number of laptops with 2 gigabyte RAM, 80 gigabyte hard drive, and 16 x DVD drive to be sold next year. The more detailed the forecast, the less accurate it is likely to be. D is the most detailed.

Advanced planning and scheduling systems (APS)

Use a simpler logic than the logic used in MRP