practice test om2

The use of part-time workers as an aggregate planning option may be less costly than using full-time workers, but may also reduce quality levels.

TRUE

The Dine Corporation is both a producer and a user of brass couplings. The firm operates 220 days a year and uses the couplings at a steady rate of 50 per day. Couplings can be produced at a rate of 200 per day in the fabrication department. Annual storage cost is $ 2 per coupling, and machine set up cost is $ 70 per run. 21) Determine the economic production quantity. 22) Approximately how many setups (or runs) per year will be there? 23) Compute the maximum inventory level. 24) Determine the length of the pure consumption portion of the cycle (i.e. when no fabrication of the coupling is taking place). 25) If the production rate of couplings reduces to 40 per day due to machine breakdown, what will be the new maximum inventory level?

21. D = 50*220 = 11,000 units; S = $ 70, p = 200 units/day; d = 50 units/day Qp = 1,013 units obtained from formula (1 / ) * 2 H d p Q DS p 22. D/ Qp = 11,000/1013 = 10.86, or approximately 11 runs 23. Imax= Qp(p - d)/p = 1013 (200 - 50)/200 = 759.6 or 760 units 24. Length of cycle = Qp/d = 1013/50 = 20.26 days Length of run = Qp/p = 1013/200 = 5.065 days Length of pure consumption = Length of cycle - Length of run = 20.26 - 5.065 = 15.20 days 25. This model will only work if production rate (p) is greater than the rate of use (d). In this case since p is less than d, Dine Corp will never have any inventory on hand.

Given the following bill of material A->B(2),C(3),D(1) B->C(1),D(1) C->D(1),E(2) D->F(1),G(2) If the demand for product A is 50 units, what will be the gross requirement for component E? A) 4 B) 100 C) 200 D) 250 E) 300

500

A firm's demand in the next four quarters (its aggregate planning horizon) is forecast to be 80, 50, 40, and 90 units. Last quarter, the firm produced 60 units. If it uses level scheduling, the firm will. A) hire workers to permit production of 65 units per quarter for the next four quarters B) hire 20 workers C) have an increase in inventory of 20 units in the next quarter D) have a decrease in inventory of 5 units in the next quarter E) change its workforce each quarter so that inventory does not change

A

A product has 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) all 4000 units at one time B) 200 units per order C) every 20 days D) 10 times per year E) none of the above

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

A firm practices the pure chase strategy. Production last quarter was 1000. Demand over the next four quarters is estimated to be 900, 700, 1000, and 1000. Hiring cost is $20 per unit, and firing cost is $5 per unit. Over the next year, the sum of hiring and layoff costs will be A) $500 B) $2,500 C) $7,500 D) $7,000 E) $12,500

C

A master production schedule specifies A) the raw materials required to complete the product B) what component is to be made, and when C) what product is to be made, and when D) the labor hours required for production E) the financial resources required for production

C

A product-focused process is commonly used to produce A) high-volume, high-variety products B) low-volume, high-variety products C) high-volume, low-variety products D) low-variety products at either high- or low-volume E) high-volume products of either high- or low-variety

C

Given the following bill of material A->B(1),C(1),F(2) B->D(2),E(1) C->D(1),F(1) 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? A) 3 B) 40 C) 70 D) 90 E) 110

C

In the basic EOQ model, if D=6000 per year, S=$100, H=$5 per unit per month, the economic order quantity is approximately A) 24 B) 100 C) 141 D) 490 E) 600

C

The following table is an example of a(n) Week 1 Week 2 Week 3 Week 4 Week 5 Clothes Washer 200 100 Clothes Dryer 300 100 100 100 Upright Freezer 200 500 A) aggregate plan B) load report C) master production schedule D) capacity plan E) inventory record

C

Which is not a true assumption in the EOQ model? A. Production rate is constant B. Lead time doesn't vary C. No more than 3 items are involved D. Usage rate is constant E. No quantity discounts

C

A document calls for the production of 50 small garden tractors in week 1; 50 small garden tractors and 100 riding mowers in week 2; 100 riding mowers and 200 garden utility carts in week 3; and 100 riding mowers in week 4. This document is most likely a(n) A) net requirements document B) resource requirements profile C) aggregate plan D) master production schedule E) Wagner-Whitin finite capacity document

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 is not one of the assumptions of the basic EOQ model? A. Annual demand requirements are known and constant. B. Lead time does not vary. C. Each order is received in a single delivery D. Quantity discounts are available. E. All of the above are necessary assumptions.

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

An organization's process strategy A) will have long-run impact on efficiency and flexibility of production B) is the same as its transformation strategy C) must meet various constraints, including cost D) is concerned with how resources are transformed into goods and services E) All of the above are true.

E

Demand for dishwasher water pumps is 8 per day. The standard deviation of demand is 3 per day, and the order lead time is four days. The service level is 95%. What should the reorder point be? A) about 18 B) about 24 C) about 32 D) about 38 E) more than 40

E

Which is not included in order costs? A. processing vendor invoices for payment B. moving delivered goods to temporary storage C. inspecting incoming goods for quantity D. taking an inventory to determine how much is needed E. temporary storage of delivered goods

E

Mixed strategies in aggregate planning utilize inventory, work force, and production rate changes over the planning horizon.

TRUE