Deck 14: Sales and Operations Planning

Question 1

The area that contains the values that satisfies all the constraints in a linear programming problem is known as the ___ space.

A) optimal solution
B) non-optimal solution
C) feasible solution
D) infeasible solution

Answer 1

feasible solution

Question 2

The constraint 3x₁ + 6x₂ ≥ 48 is converted to an equality by

A) adding a slack variable.
B) subtracting a surplus variable.
C) adding both a slack variable and a surplus variable.
D) subtracting both a slack variable and a surplus variable.

Answer 2

subtracting a surplus variable.

Question 3

Linear programming problems with two decision variables can be solved graphically.

Answer 3

True

Question 4

Linear programming is a mathematical modelling technique based on linear relationships.

Question 5

A linear programming model's constraints are nonlinear relationships that describe the restrictions placed on the decision variables.

Question 6

___ represent a restriction on decision variable values for a linear programming problem.

A) Surpluses
B) Constraints
C) Extreme points
D) Optimal points

Question 7

Because linear programming provides an optimal solution, sensitivity analysis is never an important consideration.

Question 8

The formulation for a linear programming problem cannot include more than one decision variable.

Question 9

While all linear programming problems have a single objective function, very few, if any, have constraints.

Question 10

The simplex method used for solving linear programming problems uses matrix algebra to solve simultaneous equations.

Question 11

The optimal solution for a linear programming problem will always occur at an extreme point.

Question 12

The feasible solution space contains the values for the decision variables that satisfy the majority of the linear programming model's constraints.

Question 13

The constraints in a linear programming formulation define the feasible solution space.

Question 14

A formulation for a linear programming model consists of a decision variable, a constraint, and several objective functions.

Question 15

Operations managers find very few types of linear program models applicable today because finding an optimal solution is no longer a concern.

Question 16

The optimal solution for a linear programming problem will always occur

A) when the slack price equals the surplus price.
B) when the surplus price equals the slack price.
C) at an extreme point.
D) at a non-extreme point.

Question 17

The objective function is a linear relationship that either minimizes or maximizes some value.

Question 18

In general, the objective function for linear programming problems in operations is one of minimizing costs.

Question 19

Most real-world linear programming problems are solved graphically.

Question 20

The simplex method is a solution method used for linear programming problems that have

A) no constraints.
B) at least one constraint.
C) at least two constraints.
D) at least three constraints.

Question 21

What is meant by the term "shadow price" in linear programming?

Question 22

Provide an overview of the sales and operations planning (S&OP) process.

Question 23

Discuss the purpose of, and the difference between, a slack variable and a surplus variable.

Question 24

Briefly define the components that comprise a linear programming model.

Question 25

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

Question 26

A company produces product A and product B. Each product must go through two processes. Each A produced requires two hours in process 1 and five hours in process 2. Each B produced requires six hours in process 1 and three hours in process 2. There are 80 hours of capacity available each week in each process. Each A produced generates $6.00 in profit for the company. Each B produced generates $9.00 in profit for the company. If the company produces 6 units of A and 9 units of B the value of the objective function is equal to

A) $36.
B) $81.
C) $108.
D) $117.

Question 27

Use quantitative techniques to evaluate a demand scenario and select an appropriate S&OP strategy.

Question 28

Describe the issues related to revenue management in services and c alculate single order quantities.

Question 29

How is linear programming useful to an operations manager?

Question 30

Describe strategies companies can use to adjust capacity to satisfy fluctuating demand.

Question 31

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

Question 32

Describe strategies companies can use to manage demand.

Question 33

A company produces product A and product B. Each product must go through two processes. Each A produced requires two hours in process 1 and five hours in process 2. Each B produced requires six hours in process 1 and three hours in process 2. There are 80 hours of capacity available each week in each process. Each A produced generates $6.00 in profit for the company. Each B produced generates $9.00 in profit for the company. If the company produces 6 units of A and 9 units of B the constraint for process 1 is represented by

A) 2A + 5B ≤ 80.
B) 2A + 6B ≥ 80.
C) 2A + 6B < 80.
D) 2A + 6B ≤ 80.

Question 34

Which of the following provides managers with a convenient means for analyzing resource usage?

A) sensitivity range
B) marginal value
C) objective function
D) constraints

Question 35

For a less than or equal to (≤) constraint, the shadow price represents the

A) amount you would be willing to pay for one additional unit of a resource.
B) amount you at which you would be willing to sell one additional unit of a resource.
C) difference between the slack price and the surplus price.
D) difference between the surplus price and the slack price.

Question 36

A company produces product A and product B. Each product must go through two processes. Each A produced requires two hours in process 1 and five hours in process 2. Each B produced requires six hours in process 1 and three hours in process 2. There are 80 hours of capacity available each week in each process. Each A produced generates $6.00 in profit for the company. Each B produced generates $9.00 in profit for the company. If the company produces 6 units of A and 9 units of B the company's objective function is

A) $6.00A + $9.00B.
B) $9.00A + $6.00B.
C) $6.00A - $9.00B.
D) $6.00A*$9.00B.

Question 37

A company produces product A and product B. Each product must go through two processes. Each A produced requires two hours in process 1 and five hours in process 2. Each B produced requires six hours in process 1 and three hours in process 2. There are 80 hours of capacity available each week in each process. Each A produced generates $6.00 in profit for the company. Each B produced generates $9.00 in profit for the company. If the company produces 6 units of A and 9 units of B the capacity constraint for Process 2 is

A) 5A + 3B ≥ 80.
B) 6A + 3 B ≤ 80.
C) 5A + 3B ≤ 80.
D) 5A + 3B < 80.

Question 38

A company produces product A and product B. Each product must go through two processes. Each A produced requires two hours in process 1 and five hours in process 2. Each B produced requires six hours in process 1 and three hours in process 2. There are 80 hours of capacity available each week in each process. Each A produced generates $6.00 in profit for the company. Each B produced generates $9.00 in profit for the company. If the company produces 6 units of A and 9 units of B the amount of slack (in hours) for process 1 is

A) 0 hours.
B) 14 hours.
C) 66 hours.
D) 80 hours.

Question 39

Explain hierarchical production and capacity planning. And calculate available-to-promise quantities.

Question 40

A variable subtracted from a model constraint in a ≥ linear programming model to make it an equality is known as a/an:

A) slack variable
B) surplus variable
C) constraint variable
D) solution variable

Question 41

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

Question 42

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

Question 43

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

Question 44

Most companies use mixed strategies for managing demand.

Question 45

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

Question 46

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

Question 47

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

Question 48

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

Question 49

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

Question 50

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

Question 51

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

Question 52

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

Question 53

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

Question 54

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

Question 55

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

Question 56

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

Question 57

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

Question 58

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

Question 59

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

Question 60

Overtime and undertime are common strategies for adjusting demand.

Question 61

Examining the idles of resources and creating a demand for those resources is part of which of the following demand management strategies?

A) demand shifting
B) countercyclical product offerings
C) information sharing
D) resource allocation

Question 62

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 63

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 64

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 65

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 66

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 67

Sales and operations planning is used primarily for which of the following planning horizons?

A) short-term
B) intermediate
C) long-term
D) indefinite

Question 68

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 69

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 70

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

Question 71

Which of the following is not a step in the monthly S&OP Planning Process?

A) mid-month reports
B) demand planning
C) supply planning
D) pre-S&OP meeting

Question 72

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 73

Maintaining resources for high levels of customer service is consistent with which of the following capacity strategies?

A) chase demand
B) level production
C) peak demand
D) subcontracting

Question 74

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 75

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 76

Retailers encouraging earlier holiday gift buying is an example of which of the following demand management strategies?

A) demand shifting
B) countercyclical product offerings
C) information sharing
D) resource allocation

Question 77

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 78

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 79

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

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

Question 80

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.