Deck 18: The Sales and Operations Planning Process

Question 1

Financial constraints are one of the major inputs of the sales and operations planning process.

Answer 1

True

Question 2

Reconciliation of the sales plan and the operations plan may include adjusting capacity and/or managing demand.

Answer 2

True

Question 3

Overtime and undertime are common strategies for adjusting demand.

Answer 3

False

Question 4

Inventory holding costs are an important consideration for the level production strategy.

Question 5

Implementing a companywide game plan for allocating resources addresses the long-standing battle between operations and marketing.

Question 6

Disaggregation is the process of breaking a sales and operations plan into more detailed plans.

Question 7

Adjusting capacity and managing demand are two economic strategies for meeting demand.

Question 8

The level strategy for adjusting capacity is only appropriate when there is no variation in demand.

Question 9

An economic strategy for adjusting demand can include adjusting capacity or managing demand.

Question 10

Most companies use mixed strategies for managing demand.

Question 11

One objective of sales and operations planning is to develop a companywide game plan to satisfy production.

Question 12

Subcontracting is a feasible alternative for adjusting capacity provided the supplier can reliably meet quality and time requirements.

Question 13

A chase demand strategy is one of several alternatives available for managing demand.

Question 14

Sharing information and synchronizing production across the supply chain is known as disaggregation.

Question 15

One of several strategies for managing demand is to shift it into other time periods using incentives,sales promotions,and advertising.

Question 16

Sales and operations planning is an aggregate planning process that determines the capacity needed to meet immediate demand.

Question 17

A mixed strategy for adjusting capacity is simpler and easier to implement than any pure strategy.

Question 18

When demand fluctuations are extreme,using overtime and undertime is a feasible strategy for adjusting capacity.

Question 19

An operations plan is an input into the sales and operations planning process.

Question 20

An aggregate operations plan specifies the production quantities for an entire product family or product line.

Question 21

An optimizing technique originally developed for aggregate planning in the paint factory is the

A)linear decision rule.
B)search decision rule.
C)management coefficients model.
D)transportation technique.

Question 22

All of the following are inputs to the aggregate production planning process except

A)demand forecasts.
B)financial constraints.
C)sales plans.
D)capacity constraints.

Question 23

Given the information below,the number of available-to-promise units in period 1 is

A)700
B)500
C)250
D)0

Question 24

Adjusting available capacity by hiring and firing workers to match demand is an example of a(n)___ strategy.

A)level production
B)chase demand
C)mixed production
D)optimal production

Question 25

The difference between planned production and customer orders is known as

A)the master production schedule.
B)available-to-promise.
C)capable-to-promise.
D)the disaggregate plan.

Question 26

A chase strategy involves hiring and firing workers so that production matches demand.

Question 27

The primary cost associated with the level production strategy is the cost of

A)holding inventory.
B)hiring and firing workers.
C)overtime.
D)outsourcing (subcontracting).

Question 28

Problems associated with using a part-time workers strategy for adjusting capacity include all of the following except

A)high turnover.
B)accelerated training requirements.
C)scheduling difficulties.
D)high retirement costs.

Question 29

Yield management seeks to maximize profit from time-sensitive products and services.

Question 30

The process of breaking an aggregate plan into more detailed plans is referred to as

A)collaborative planning.
B)hierarchical planning.
C)disaggregation.
D)rough-cut planning.

Question 31

Given the information below,the number of available-to-promise units in period 4 is

A)400
B)150
C)50
D)0

Question 32

Given the information below,the number of available-to-promise units in period 4 is

A)500
B)100
C)200
D)350

Question 33

The following information relates to a company's aggregate production planning activities: Beginning Workforce = 35 workers
Production per Employee = 1,250 units per quarter
Hiring Cost = $500 per worker
Firing Cost = $1,000 per worker
Inventory Carrying Cost = $20 per unit per quarter
If a chase demand strategy is used then the number of workers hired at the start of quarter 2 is

A)10.
B)20.
C)35.
D)80.

Question 34

Given the information below,the number of available-to-promise units in period 2 is

A)400
B)150
C)50
D)0

Question 35

The transportation method is used for aggregate planning when the strategy for adjusting capacity is hiring and firing workers.

Question 36

The most effective aggregate planning strategy depends on

A)the demand distribution.
B)the competitive position.
C)the firm's cost structure.
D)all of the above.

Question 37

The search decision rule (SDR)is an algorithm that

A)solves a set of four quadratic equations.
B)finds the minimum cost for combinations of different workforce levels and production rates.
C)uses regression analysis to improve the consistency of production planning decisions.
D)requires that a linear cost function be used.

Question 38

Given the information below,the number of available-to-promise units in period 6 is

A)400
B)150
C)50
D)0

Question 39

Strategies for proactive demand management would not include

A)shifting demand into other time periods.
B)offering products or services with countercyclical demand patterns.
C)partnering with suppliers to reduce information distortion along the supply chain.
D)using subcontracting to meet unexpected high demand levels.

Question 40

In capacity planning,the feasibility of the sales and operations production plan is verified by a

A)resource requirements plan.
B)rough-cut capacity plan.
C)capacity requirements plan.
D)master production schedule.

Question 41

The following information relates to a company's aggregate production planning activities: Beginning Workforce = 50 workers
Production per Employee = 250 units per quarter
Hiring Cost = $1000 per worker
Firing Cost = $1,500 per worker
Inventory Carrying Cost = $15 per unit per quarter
If a level production strategy is used then the number of workers required is

A)125.
B)170.
C)250.
D)325.

Question 42

The following information relates to a company's aggregate production planning activities: Beginning Workforce = 50 workers
Production per Employee = 250 units per quarter
Hiring Cost = $1000 per worker
Firing Cost = $1,500 per worker
Inventory Carrying Cost = $15 per unit per quarter
If a chase demand strategy is used then the number of workers hired at the start of quarter 2 is

A)0.
B)50.
C)100.
D)200.

Question 43

The following information relates to a company's aggregate production planning activities: Beginning Workforce = 35 workers
Production per Employee = 1,250 units per quarter
Hiring Cost = $500 per worker
Firing Cost = $1,000 per worker
Inventory Carrying Cost = $20 per unit per quarter
If a level production strategy is used then the required quarterly output is

A)75,000.
B)87,350.
C)93,750.
D)125,000.

Question 44

A company is developing a linear programming model for its aggregate production plan.Each worker can produce 500 units per quarter.If W_t = workforce size in period t and P_t = number of units produced in period t,then the production constraint for period 3 is

A)W₃ = 500P₃.
B)P₃ = W₃ - 500.
C)P₃ = 500W₃.
D)P₃ = W₃/500.

Question 45

The following information relates to a company's aggregate production planning activities: Beginning Workforce = 35 workers
Production per Employee = 1,250 units per quarter
Hiring Cost = $500 per worker
Firing Cost = $1,000 per worker
Inventory Carrying Cost = $20 per unit per quarter
If a level production strategy is used then the number of workers required for the plan is

A)35.
B)75.
C)100.
D)125.

Question 46

A company is developing a linear programming model for its aggregate production plan.If W_t = workforce size for period t,H_t = number of workers hired for period t,and F_t = number of workers fired for period t,then the company's workforce constraint for period 4 is

A)W₄ = W₃ - H₄ + F₄.
B)W₄ = W₃ + H₄ - F₄.
C)W₄ = W₃ + H₃ - F₃.
D)W₄ = W₃ + H₄.

Question 47

The following information relates to a company's aggregate production planning activities: Beginning Workforce = 125 workers
Production per Employee = 500 units per quarter
Hiring Cost = $750 per worker
Firing Cost = $1,500 per worker
Inventory Carrying Cost = $10 per unit per quarter
If a chase demand strategy is used the total hiring and firing costs for the production plan is

A)$67,500.
B)$135,000.
C)$202,500.
D)$337,500.

Question 48

The following information relates to a company's aggregate production planning activities: Beginning Workforce = 50 workers
Production per Employee = 250 units per quarter
Hiring Cost = $1000 per worker
Firing Cost = $1,500 per worker
Inventory Carrying Cost = $15 per unit per quarter
If a chase demand strategy is used then the number of workers fired at the start of quarter 3 is

A)0.
B)50.
C)60.
D)100.

Question 49

The following information relates to a company's aggregate production planning activities: Beginning Workforce = 35 workers
Production per Employee = 1,250 units per quarter
Hiring Cost = $500 per worker
Firing Cost = $1,000 per worker
Inventory Carrying Cost = $20 per unit per quarter
If a chase demand strategy is used then the total firing cost for the plan is

A)$10,000.
B)$15,000.
C)$20,000.
D)$25,000.

Question 50

The following information relates to a company's aggregate production planning activities: Beginning Workforce = 125 workers
Production per Employee = 500 units per quarter
Hiring Cost = $750 per worker
Firing Cost = $1,500 per worker
Inventory Carrying Cost = $10 per unit per quarter
If a chase demand strategy is used the number of workers fired in quarter 3 is

A)0.
B)40.
C)50.
D)75.

Question 51

A company is developing a linear programming model for its aggregate production plan.If I_t = units in inventory at the end of period t,P_t = units produced in period t,and D_t = demand in period t,then the company's demand constraint to ensure that demand is met in quarter 3 is

A)D₃ = I₂ - I₃ + P₃.
B)D₃ = I₃ + P₃.
C)D₃ = I₃ - I₂ + P₃.
D)D₃ = I₂ - I₃ + P₂.

Question 52

The following information relates to a company's aggregate production planning activities: Beginning Workforce = 125 workers
Production per Employee = 500 units per quarter
Hiring Cost = $750 per worker
Firing Cost = $1,500 per worker
Inventory Carrying Cost = $10 per unit per quarter
If a chase demand strategy is used then the number of workers hired in quarter 4 is

A)0.
B)15.
C)75.
D)125.

Question 53

A company is developing a linear programming model for its aggregate production plan.If I_t = units in inventory at the end of period t,P_t = units produced in period t,and D_t = demand in period t,then the company's demand constraint to ensure that demand is met in quarter 2 is

A)D₂ = I₂ - I₁ + P₂.
B)D₂ = I₁ + P₂.
C)D₂ = I₂ + I₁ + P₂.
D)D₂ = I₁ + P₂ - I₂.

Question 54

The following information relates to a company's aggregate production planning activities: Beginning Workforce = 50 workers
Production per Employee = 250 units per quarter
Hiring Cost = $1000 per worker
Firing Cost = $1,500 per worker
Inventory Carrying Cost = $15 per unit per quarter
If a level production strategy is used then the inventory at the end of quarter 3 is

A)0.
B)5,000.
C)10,000.
D)17,500.

Question 55

The following information relates to a company's aggregate production planning activities: Beginning Workforce = 35 workers
Production per Employee = 1,250 units per quarter
Hiring Cost = $500 per worker
Firing Cost = $1,000 per worker
Inventory Carrying Cost = $20 per unit per quarter
If a level production strategy is used then the cost of the level production plan (inventory costs plus hiring and firing costs)is

A)$20,000.
B)$645,000.
C)$1,250,000.
D)$1,270,000.

Question 56

The following information relates to a company's aggregate production planning activities: Beginning Workforce = 50 workers
Production per Employee = 250 units per quarter
Hiring Cost = $1000 per worker
Firing Cost = $1,500 per worker
Inventory Carrying Cost = $15 per unit per quarter
If a level production strategy is used then the required output per quarter is

A)60,000 units.
B)42,500 units.
C)35,000 units.
D)25,000 units.

Question 57

The following information relates to a company's aggregate production planning activities: Beginning Workforce = 35 workers
Production per Employee = 1,250 units per quarter
Hiring Cost = $500 per worker
Firing Cost = $1,000 per worker
Inventory Carrying Cost = $20 per unit per quarter
If a level production strategy is used then the inventory at the end of quarter 3 is

A)18,750 units.
B)12,500 units.
C)25,650 units.
D)31,250 units.

Question 58

The following information relates to a company's aggregate production planning activities: Beginning Workforce = 50 workers
Production per Employee = 250 units per quarter
Hiring Cost = $1000 per worker
Firing Cost = $1,500 per worker
Inventory Carrying Cost = $15 per unit per quarter
If a level production strategy is used then the total cost of the plan (hiring cost,firing cost and inventory carrying cost)is

A)$120,000.
B)$377,500.
C)$675,000.
D)$795,000.

Question 59

The following information relates to a company's aggregate production planning activities: Beginning Workforce = 50 workers
Production per Employee = 250 units per quarter
Hiring Cost = $1000 per worker
Firing Cost = $1,500 per worker
Inventory Carrying Cost = $15 per unit per quarter
If a chase demand strategy is used then the total hiring and firing cost of the plan is

A)$340,000.
B)$250,000.
C)$125,000.
D)$90,000.

Question 60

A company is developing a linear programming model for its aggregate production plan.If W_t = workforce size for period t,H_t = number of workers hired for period t,and F_t = number of workers fired for period t,then the company's workforce constraint for period 2 is

A)W₂ = W₁ + F₂ - H₂.
B)W₂ = H₂ - F₂.
C)W₂ = W₁ + H₂ - F₂.
D)W₂ = H₂ - F₂ - W₁.

Question 61

A hot dog vendor must decide on Monday how many hot dogs to have available for the coming Saturday's football game.Each hot dog costs the vendor $3.00 and is sold for $5.00.After the game any unsold hot dogs are discounted and sold to the university cafeteria for $1.75.The vendor believes that the demand for hot dogs follows the probability distribution shown below: The vendor's cost of overestimating demand,C_o,is

A)$5.00.
B)$3.00.
C)$1.75.
D)$1.25.

Question 62

A hotel manager must decide how many rooms to overbook.Room rates are $125 per night and each room costs $45 to maintain.A bumped customer is sent to another hotel at a cost of $75.Given the distribution of no-shows below,how many rooms should the manager overbook?

A)Overbook 9 rooms.
B)Overbook 10 rooms.
C)Overbook 11 rooms.
D)Overbook 12 rooms.

Question 63

The following information relates to a company's aggregate production planning activities: Beginning Workforce = 125 workers
Production per Employee = 500 units per quarter
Hiring Cost = $750 per worker
Firing Cost = $1,500 per worker
Inventory Carrying Cost = $10 per unit per quarter
If a level production strategy is used the total cost of the production plan (hiring cost,firing cost,and inventory cost)is

A)$60,000.
B)$275,000.
C)$335,000.
D)$610,000.

Question 64

A hot dog vendor must decide on Monday how many hot dogs to have available for the coming Saturday's football game.Each hot dog costs the vendor $3.00 and is sold for $5.00.After the game any unsold hot dogs are discounted and sold to the university cafeteria for $1.75.The vendor believes that the demand for hot dogs follows the probability distribution shown below: The vendor's cost of underestimating demand,C_u,is

A)$3.00.
B)$1.75.
C)$2.00.
D)$3.25.

Question 65

What is aggregate planning and what alternatives are generally feasible when developing the aggregate production plans?

Question 66

What are the outputs of aggregate planning?

Question 67

A bagel company bakes a specialty bagel that it sells by the dozen every day.These specialty bagels can only be baked early in the morning before the store opens for business.The company estimates that the daily demand (in dozens)for its specialty bagel is distributed as follows: Specialty bagels are sold by the dozen only at a cost of $9.00 per dozen.The cost to make one bagel is $0.50.Leftover specialty bagels are sold by the dozen the next day for a 50% discount.The optimal number of specialty bagels that should be baked tomorrow (in dozens)is

A)5 dozen.
B)4 dozen.
C)3 dozen.
D)2 dozen.

Question 68

Briefly discuss the two primary objectives of aggregate planning.

Question 69

A bagel company bakes a specialty bagel that it sells by the dozen every day.These specialty bagels can only be baked early in the morning before the store opens for business.The company estimates that the daily demand (in dozens)for its specialty bagel is distributed as follows: Specialty bagels are sold by the dozen only at a cost of $9.00 per dozen.The cost to bake each bagel is $0.50.Leftover specialty bagels are sold by the dozen the next day for a 50% discount.The bagel company's cost of underestimating demand,C_u,is

A)$9.00.
B)$6.00.
C)$4.50.
D)$3.00.

Question 70

The following information relates to a company's aggregate production planning activities: Beginning Workforce = 125 workers
Production per Employee = 500 units per quarter
Hiring Cost = $750 per worker
Firing Cost = $1,500 per worker
Inventory Carrying Cost = $10 per unit per quarter
If a level production strategy is used the number of units in inventory at the end of quarter 3 is

A)0.
B)2,500.
C)5,000.
D)20,000.

Question 71

A bagel company bakes a specialty bagel that it sells by the dozen every day.These specialty bagels can only be baked early in the morning before the store opens for business.The company estimates that the daily demand (in dozens)for its specialty bagel is distributed as follows: Specialty bagels are sold by the dozen only at a cost of $9.00 per dozen.The cost to make one bagel is $0.50.Leftover specialty bagels are sold by the dozen the next day for a 50% discount.The bagel company's cost of overestimating demand,Co,is

A)$1.50.
B)$3.00.
C)$4.50.
D)$6.00.

Question 72

The following information relates to a company's aggregate production planning activities: Beginning Workforce = 125 workers
Production per Employee = 500 units per quarter
Hiring Cost = $750 per worker
Firing Cost = $1,500 per worker
Inventory Carrying Cost = $10 per unit per quarter
If a level production strategy is used the number of workers required each quarter is

A)50.
B)75.
C)85.
D)125.

Question 73

The following information relates to a company's aggregate production planning activities: Beginning Workforce = 125 workers
Production per Employee = 500 units per quarter
Hiring Cost = $750 per worker
Firing Cost = $1,500 per worker
Inventory Carrying Cost = $10 per unit per quarter
If a level production strategy is used the number of units to produce each quarter is

A)42,500.
B)85,000.
C)62,500.
D)37,500.

Question 74

Yield management can be used to address all of the following problems except

A)overbooking.
B)portioning demand into fare classes.
C)single order quantities.
D)backorders.

Question 75

Which of the following is not a characteristic of aggregate planning for services?

A)Labour is usually the most constraining resource for services.
B)Service capacity must be provided at the appropriate place and time.
C)Demand for services is easy to predict.
D)Capacity for services is difficult to predict.

Question 76

A hot dog vendor must decide on Monday how many hot dogs to have available for the coming Saturday's football game.Each hot dog costs the vendor $3.00 and is sold for $5.00.After the game any unsold hot dogs are discounted and sold to the university cafeteria for $1.75.The vendor believes that the demand for hot dogs follows the probability distribution shown below: The optimal number of hot dogs the vendor should order for next Saturday's game is

A)1000.
B)1500.
C)2000.
D)3000.