Deck 13: Resource Management

Question 1

Determine the net requirement for E if the gross requirement for A is still 200 and current on-hand inventory balance for A is 60, D is 200, E is 100, and F is 600.

A) Less than or equal to 1,000 units
B) Greater than 1,000 but less than or equal to 1,500 units
C) Greater than 1,500 but less than or equal to 2,000 units
D) Greater than 2,000 but less than or equal to 2,500 units

Answer 1

A

Question 2

The Academic Company mixes and bottles a high-energy beverage in various container types and sizes for college students. The aggregate forecast for the next four quarters (1 year) in thousands of gallons is as follows:
Table 1
$$\begin{array} { | l | l | } \hline \text { QUARTER } & \begin{array} { l } \text { FORECAST DEMAND PER } \\1,000 \text { GALLONS }\end{array} \\\hline 1 & 400 \\\hline 2 & 700 \\\hline 3 & 850 \\\hline 4 & 650 \\\hline \text { TOTAL: } & 2,600 \\\hline\end{array}$$
Academic's management makes the following assumptions:
$\bullet$ Each employee works 550 standard hours of regular time each quarter.
$\bullet$ On average, it takes 27 hours to produce and package 1 unit (1,000 gallons).
$\bullet$ Regular-time labor costs $6.00/hour; overtime labor costs $9.00/hour.
$\bullet$ Inventory-holding cost is approximately $4.50/unit (1,000 gallons) per quarter based upon the ending inventory per quarter.
$\bullet$ Because of extremely hot weather, there is no beginning inventory available to start Quarter 1.
$\bullet$ Management wants a constant work force (no hiring or firing).
$\bullet$ Managers have also decided to always round up the number of employees needed to the next whole integer, i.e., 37.2 yields 38 employees.
______________________________________________________________________________

-Using the data in Table 1, if management will allow a maximum of 30 percent overtime, how many workers are needed for Quarter 3?

A) 29
B) 33
C) 35
D) 40

Answer 2

33

Question 3

The Academic Company mixes and bottles a high-energy beverage in various container types and sizes for college students. The aggregate forecast for the next four quarters (1 year) in thousands of gallons is as follows:
Table 1
$$\begin{array} { | l | l | } \hline \text { QUARTER } & \begin{array} { l } \text { FORECAST DEMAND PER } \\1,000 \text { GALLONS }\end{array} \\\hline 1 & 400 \\\hline 2 & 700 \\\hline 3 & 850 \\\hline 4 & 650 \\\hline \text { TOTAL: } & 2,600 \\\hline\end{array}$$
Academic's management makes the following assumptions:
$\bullet$ Each employee works 550 standard hours of regular time each quarter.
$\bullet$ On average, it takes 27 hours to produce and package 1 unit (1,000 gallons).
$\bullet$ Regular-time labor costs $6.00/hour; overtime labor costs $9.00/hour.
$\bullet$ Inventory-holding cost is approximately $4.50/unit (1,000 gallons) per quarter based upon the ending inventory per quarter.
$\bullet$ Because of extremely hot weather, there is no beginning inventory available to start Quarter 1.
$\bullet$ Management wants a constant work force (no hiring or firing).
$\bullet$ Managers have also decided to always round up the number of employees needed to the next whole integer, i.e., 37.2 yields 38 employees.
______________________________________________________________________________

-Using the information given in Table 1, determine how many employees would be needed to meet the peak demand in Quarter 3.

A) 32
B) 21
C) 50
D) 42

Answer 3

42

Question 4

If A has a gross requirement to build 250 units and an on-hand inventory for A of 40, determine the net requirement for D if its current on-hand inventory balance for D is 200 (all other components have no (zero) current inventory).

A)Less than or equal to 1,000 units
B)Greater than 1,000 but less than or equal to 1,500 units
C)Greater than 1,500 but less than or equal to 2,000 units
D)Greater than 2,000 but less than or equal to 2,500 units

Question 5

The bill of material (BOM) for Products A and B are shown below followed by a table of inventory data (called Exhibit 1). The master production scheduling (MPS) for A calls for 150 units of A to be completed in Week 4 and another 225 units to be completed in Week 5. End item A has a two-week lead time. The MPS calls for 400 units of B to be completed in Week 6. End item B has a one-week lead time. Exhibit 1
$\begin{array}{|l|l|l|l|}\hline \text { DATA CATEGORY } & \text { C } & \text { D } & \text { E } \\\hline \text { Lot Sizing Rule } & \text { FOQ }=800 & \text { LFL } & \text { POQ =4 } \\\hline \text { Lead Time } & 1 \text { week } & 2 \text { weeks } & 1 \text { week } \\\hline \text { Scheduled Receipt } & 400 \text { (Week 1) } & 80 \text { (Week 1) } & \text { None } \\\hline \text { Beginning Inventory } & 80 & 60 & 100 \\\hline\end{array}$ ____________________________________________________________________

-Using the data given in Exhibit 1, determine the timing and amount of the planned order receipt for Item E.

A) Week 1; 1,800 units
B) Week 3; 1,900 units
C) Week 2; 2,250 units
D) Week 2; 3,850 units

Question 6

A paint company has the following aggregate demand requirements and cost data for the upcoming year by quarter.
Table 2
$$\begin{array} { | l | l | } \hline \text { QUARTER } & \begin{array} { l } \text { FORECAST DEMAND } \\\text { (UNITS) }\end{array} \\\hline 1 & 1,200 \\\hline 2 & 1,500 \\\hline 3 & 1,900 \\\hline 4 & 1,000 \\\hline \text { TOTAL: } & 5,600 \\\hline\end{array}$$ $\begin{array}{ll}\text { Previous quarter's production: } & 900 \text { units } \\\hline \text { Beginning inventory: } & 0 \\\hline \text { Backorder costs: } & \$ 60 / \text { unit } \\\hline\text { Inventory-holding cost }\\\text { (on ending inventory): } & \$ 12 / \text { unit/quarter } \\\hline \text { Hiring employees: } & \$ 30 / \text { unit increase } \\\hline \text { Firing employees: } & \$ 70 / \text { unit decrease } \\\hline\text { Unit cost: } & \$ 45 / \text { unit } \\\hline \text { Overtime cost: } & \$ 67.50 / \text { unit }\\\end{array}$ ____________________________________________________________________

-Using the data in Table 2, determine the inventory holding and backorder costs for the year if the paint company wants to use a pure level strategy, ending Quarter 4 with no inventory.

A) $8,400
B) $32,400
C) $28,500
D) $27,600

Question 7

The bill of material (BOM) for Products A and B are shown below followed by a table of inventory data (called Exhibit 1). The master production scheduling (MPS) for A calls for 150 units of A to be completed in Week 4 and another 225 units to be completed in Week 5. End item A has a two-week lead time. The MPS calls for 400 units of B to be completed in Week 6. End item B has a one-week lead time. Exhibit 1
$\begin{array}{|l|l|l|l|}\hline \text { DATA CATEGORY } & \text { C } & \text { D } & \text { E } \\\hline \text { Lot Sizing Rule } & \text { FOQ }=800 & \text { LFL } & \text { POQ =4 } \\\hline \text { Lead Time } & 1 \text { week } & 2 \text { weeks } & 1 \text { week } \\\hline \text { Scheduled Receipt } & 400 \text { (Week 1) } & 80 \text { (Week 1) } & \text { None } \\\hline \text { Beginning Inventory } & 80 & 60 & 100 \\\hline\end{array}$ ____________________________________________________________________

-Using the data given in Exhibit 1, determine the projected on-hand inventory for Item C, beginning in Week 8.

A) 800 units
B) 645 units
C) 155 units
D) 0 units

Question 8

Determine the net requirement for E if the gross requirement for A is still 250, and current on-hand inventory balance for A is 40, D is 200, E is 300, and F is 600.

A) Less than or equal to 1,000 units
B) Greater than 1,000 but less than or equal to 1,500 units
C) Greater than 1,500 but less than or equal to 2,000 units
D) Greater than 2,000 but less than or equal to 2,500 units

Question 9

A paint company has the following aggregate demand requirements and cost data for the upcoming year by quarter.
Table 2
$$\begin{array} { | l | l | } \hline \text { QUARTER } & \begin{array} { l } \text { FORECAST DEMAND } \\\text { (UNITS) }\end{array} \\\hline 1 & 1,200 \\\hline 2 & 1,500 \\\hline 3 & 1,900 \\\hline 4 & 1,000 \\\hline \text { TOTAL: } & 5,600 \\\hline\end{array}$$ $\begin{array}{ll}\text { Previous quarter's production: } & 900 \text { units } \\\hline \text { Beginning inventory: } & 0 \\\hline \text { Backorder costs: } & \$ 60 / \text { unit } \\\hline\text { Inventory-holding cost }\\\text { (on ending inventory): } & \$ 12 / \text { unit/quarter } \\\hline \text { Hiring employees: } & \$ 30 / \text { unit increase } \\\hline \text { Firing employees: } & \$ 70 / \text { unit decrease } \\\hline\text { Unit cost: } & \$ 45 / \text { unit } \\\hline \text { Overtime cost: } & \$ 67.50 / \text { unit }\\\end{array}$ ____________________________________________________________________

-Using the information in Table 2, determine the change in workforce costs (hiring and firing employees) if the paint company decides to use a chase strategy.

A) $93,000
B) $84,000
C) $280,000
D) $30,000

Question 10

The Academic Company mixes and bottles a high-energy beverage in various container types and sizes for college students. The aggregate forecast for the next four quarters (1 year) in thousands of gallons is as follows:
Table 1
$$\begin{array} { | l | l | } \hline \text { QUARTER } & \begin{array} { l } \text { FORECAST DEMAND PER } \\1,000 \text { GALLONS }\end{array} \\\hline 1 & 400 \\\hline 2 & 700 \\\hline 3 & 850 \\\hline 4 & 650 \\\hline \text { TOTAL: } & 2,600 \\\hline\end{array}$$
Academic's management makes the following assumptions:
$\bullet$ Each employee works 550 standard hours of regular time each quarter.
$\bullet$ On average, it takes 27 hours to produce and package 1 unit (1,000 gallons).
$\bullet$ Regular-time labor costs $6.00/hour; overtime labor costs $9.00/hour.
$\bullet$ Inventory-holding cost is approximately $4.50/unit (1,000 gallons) per quarter based upon the ending inventory per quarter.
$\bullet$ Because of extremely hot weather, there is no beginning inventory available to start Quarter 1.
$\bullet$ Management wants a constant work force (no hiring or firing).
$\bullet$ Managers have also decided to always round up the number of employees needed to the next whole integer, i.e., 37.2 yields 38 employees.
______________________________________________________________________________

-Using the data in Table 1 and a level schedule of 650 units per quarter, what will be the annual employee costs?

A) $105,600
B) $554,400
C) $421,200
D) $369,600

Question 11

A company currently has no items in inventory. The demand for the next four months is 200, 400, 250, and 350 units. Determine the level production rate if a level strategy is selected with the goal of ending Period 4 with 100 units in inventory.

A) 300
B) 325
C) 450
D) 350

Question 12

Aggregate planning:

A) is not driven by forecasts.
B) includes detailed staff schedules.
C) defines budget and associated resource requirements.
D) is used to develop detailed short-term plans and establish shop floor control.

Question 13

A paint company has the following aggregate demand requirements and cost data for the upcoming year by quarter.
Table 2
$$\begin{array} { | l | l | } \hline \text { QUARTER } & \begin{array} { l } \text { FORECAST DEMAND } \\\text { (UNITS) }\end{array} \\\hline 1 & 1,200 \\\hline 2 & 1,500 \\\hline 3 & 1,900 \\\hline 4 & 1,000 \\\hline \text { TOTAL: } & 5,600 \\\hline\end{array}$$ $\begin{array}{ll}\text { Previous quarter's production: } & 900 \text { units } \\\hline \text { Beginning inventory: } & 0 \\\hline \text { Backorder costs: } & \$ 60 / \text { unit } \\\hline\text { Inventory-holding cost }\\\text { (on ending inventory): } & \$ 12 / \text { unit/quarter } \\\hline \text { Hiring employees: } & \$ 30 / \text { unit increase } \\\hline \text { Firing employees: } & \$ 70 / \text { unit decrease } \\\hline\text { Unit cost: } & \$ 45 / \text { unit } \\\hline \text { Overtime cost: } & \$ 67.50 / \text { unit }\\\end{array}$ ____________________________________________________________________

-Using the data in Table 2 and assuming the level strategy, determine the change in production costs for the year.

A) $0 (none)
B) $35,000
C) $15,000
D) $27,600

Question 14

A company currently has no items in inventory. The demand for the next four months is 200, 400, 250, and 350 units. Assuming a level production rate of 250 units per month, determine the months in which backorders or stockouts will materialize.

A) Only in month 1
B) In months 2 and 4
C) In months 2, 3, and 4
D) In months 2 and 3

Question 15

The Academic Company mixes and bottles a high-energy beverage in various container types and sizes for college students. The aggregate forecast for the next four quarters (1 year) in thousands of gallons is as follows:
Table 1
$$\begin{array} { | l | l | } \hline \text { QUARTER } & \begin{array} { l } \text { FORECAST DEMAND PER } \\1,000 \text { GALLONS }\end{array} \\\hline 1 & 400 \\\hline 2 & 700 \\\hline 3 & 850 \\\hline 4 & 650 \\\hline \text { TOTAL: } & 2,600 \\\hline\end{array}$$
Academic's management makes the following assumptions:
$\bullet$ Each employee works 550 standard hours of regular time each quarter.
$\bullet$ On average, it takes 27 hours to produce and package 1 unit (1,000 gallons).
$\bullet$ Regular-time labor costs $6.00/hour; overtime labor costs $9.00/hour.
$\bullet$ Inventory-holding cost is approximately $4.50/unit (1,000 gallons) per quarter based upon the ending inventory per quarter.
$\bullet$ Because of extremely hot weather, there is no beginning inventory available to start Quarter 1.
$\bullet$ Management wants a constant work force (no hiring or firing).
$\bullet$ Managers have also decided to always round up the number of employees needed to the next whole integer, i.e., 37.2 yields 38 employees.
______________________________________________________________________________

-Using the data in Table 1, if management decides on a chase strategy, with production in the last quarter of 600 units and a rate change cost of $3.00/1000 gallons, determine the yearly cost of rate change (hiring and firing).

A) $2,550
B) $1,950
C) $7,800
D) $3,900

Question 16

The Academic Company mixes and bottles a high-energy beverage in various container types and sizes for college students. The aggregate forecast for the next four quarters (1 year) in thousands of gallons is as follows:
Table 1
$$\begin{array} { | l | l | } \hline \text { QUARTER } & \begin{array} { l } \text { FORECAST DEMAND PER } \\1,000 \text { GALLONS }\end{array} \\\hline 1 & 400 \\\hline 2 & 700 \\\hline 3 & 850 \\\hline 4 & 650 \\\hline \text { TOTAL: } & 2,600 \\\hline\end{array}$$
Academic's management makes the following assumptions:
$\bullet$ Each employee works 550 standard hours of regular time each quarter.
$\bullet$ On average, it takes 27 hours to produce and package 1 unit (1,000 gallons).
$\bullet$ Regular-time labor costs $6.00/hour; overtime labor costs $9.00/hour.
$\bullet$ Inventory-holding cost is approximately $4.50/unit (1,000 gallons) per quarter based upon the ending inventory per quarter.
$\bullet$ Because of extremely hot weather, there is no beginning inventory available to start Quarter 1.
$\bullet$ Management wants a constant work force (no hiring or firing).
$\bullet$ Managers have also decided to always round up the number of employees needed to the next whole integer, i.e., 37.2 yields 38 employees.
______________________________________________________________________________

-Using the data in Table 1, determine the annual inventory-holding cost if Academic decides to use a level production rate of 650 units per quarter.

A) $2,925.00
B) $1,012.50
C) $2,025.00
D) $4,500.00

Question 17

The bill of material (BOM) for Products A and B are shown below followed by a table of inventory data (called Exhibit 1). The master production scheduling (MPS) for A calls for 150 units of A to be completed in Week 4 and another 225 units to be completed in Week 5. End item A has a two-week lead time. The MPS calls for 400 units of B to be completed in Week 6. End item B has a one-week lead time. Exhibit 1
$\begin{array}{|l|l|l|l|}\hline \text { DATA CATEGORY } & \text { C } & \text { D } & \text { E } \\\hline \text { Lot Sizing Rule } & \text { FOQ }=800 & \text { LFL } & \text { POQ =4 } \\\hline \text { Lead Time } & 1 \text { week } & 2 \text { weeks } & 1 \text { week } \\\hline \text { Scheduled Receipt } & 400 \text { (Week 1) } & 80 \text { (Week 1) } & \text { None } \\\hline \text { Beginning Inventory } & 80 & 60 & 100 \\\hline\end{array}$ ____________________________________________________________________

-Using the data in Exhibit 1, determine the timing and amount of the first planned order receipt for Item C.

A) Week 3; 800 units
B) Week 3; 645 units
C) Week 3; 1,600 units
D) Week 2; 800 units

Question 18

The bill of material (BOM) for Products A and B are shown below followed by a table of inventory data (called Exhibit 1). The master production scheduling (MPS) for A calls for 150 units of A to be completed in Week 4 and another 225 units to be completed in Week 5. End item A has a two-week lead time. The MPS calls for 400 units of B to be completed in Week 6. End item B has a one-week lead time. Exhibit 1
$\begin{array}{|l|l|l|l|}\hline \text { DATA CATEGORY } & \text { C } & \text { D } & \text { E } \\\hline \text { Lot Sizing Rule } & \text { FOQ }=800 & \text { LFL } & \text { POQ =4 } \\\hline \text { Lead Time } & 1 \text { week } & 2 \text { weeks } & 1 \text { week } \\\hline \text { Scheduled Receipt } & 400 \text { (Week 1) } & 80 \text { (Week 1) } & \text { None } \\\hline \text { Beginning Inventory } & 80 & 60 & 100 \\\hline\end{array}$ ____________________________________________________________________

-Using the data given in Exhibit 1, determine the gross requirements for Item E in Week 2.

A) 450
B) 300
C) 1,600
D) 1,900

Question 19

If A has a gross requirement to build 200 units and an on-hand inventory for A of 60, determine the net requirement for D if its current on-hand inventory balance for D is 200 (all other components have no (zero) current inventory).

A)Less than or equal to 1,000 units
B)Greater than 1,000 but less than or equal to 1,500 units
C)Greater than 1,500 but less than or equal to 2,000 units
D)Greater than 2,000 but less than or equal to 2,500 units

Question 20

Which of the following is least likely to be found in service organizations?

A) Intermediate levels in aggregate planning
B) Bills of labor (BOL)
C) Bills of resources and forecasting
D) Dependent demand

Question 21

Which of the following is an aggregate planning decision option?

A) Staff schedules
B) Disaggregation
C) Shop floor control
D) Market forecasts

Question 22

_____ are the total demand for an item derived from all of its parents.

A) Explosions
B) Gross requirements
C) Scheduled receipts
D) Planned order receipts

Question 23

All of the following statements are true regarding dependent demand EXCEPT:

A) it is one of the underlying concepts of materials requirements planning (MRP).
B) its concept can be understood by examining the bill of materials.
C) it can be calculated only by forecasting.
D) it is directly related to the demands of other stock-keeping units (SKUs).

Question 24

The primary output of a materials requirements planning (MRP) system is a time-phased report that gives all of the following EXCEPT:

A) the facilities managers a detailed schedule for acquiring additional factory space.
B) the accounting and financial functions production information that drives cash flow, budgets, and financial needs.
C) the production managers a detailed schedule for manufacturing the product and controlling manufacturing inventories.
D) the purchasing department a schedule for obtaining raw material and purchased items.

Question 25

Which aggregate planning strategy generally would result in the least amount of inventory?

A) Level production strategy
B) Chase demand strategy
C) Fixed-order-quantity rule
D) Lot-for-lot (LFL) rule

Question 26

Which lot sizing rule bases the order quantity on a standard-size container or pallet load?

A) Lot-for-lot (LFL) rule
B) Fixed-order quantity (FOQ) rule
C) Periodic-order quantity (POQ) rule
D) Gross requirements (GR) rule

Question 27

If forecast demand exceeds the total factory or supply capacity, managers might simply decide not to meet forecast demand. This decision would most likely be made at which planning level?

A) Aggregate planning-Level 1
B) Disaggregation-Level 2
C) Execution-Level 3
D) Shop floor controlling-Level 4

Question 28

Which aggregate planning strategy sets production rate equal to the demand?

A) Level production strategy
B) Chase demand strategy
C) Lot-for-lot (LFL) rule
D) Periodic-order-quantity (POQ) rule

Question 29

An inventory item can be:

A) only a parent.
B) only a component.
C) both a parent and a component.
D) either a parent or a component, but not both.

Question 30

Time buckets:

A) are the same as planning horizons.
B) can be set at a day for longer-term planning.
C) are usually one week in length.
D) are computed based on gross requirements.

Question 31

Setting order sizes and schedules for individual subassemblies and resources by week or day fits best with which level of the generic framework for resource planning?

A) Aggregate planning-Level 1
B) Disaggregation-Level 2
C) Execution-Level 3
D) Shop floor controlling-Level 4

Question 32

Which of the following is NOT an aggregate planning decision option?

A) Promotion and advertising
B) Subcontracting
C) Layoffs
D) Staff schedules

Question 33

Lot-for-lot (LFL):

A) minimizes purchase or setup costs.
B) maximizes the amount of inventory that need to be carried.
C) ignores the cost associated with purchase orders.
D) masks the true nature of dependent demand.

Question 34

A _____ is a statement of how many finished items are to be produced and when they are to be produced.

A) capacity requirements plan (CRP)
B) master production schedule (MPS)
C) material requirements plan (MRP)
D) shop floor control

Question 35

The words "product family," "budget allocation," and "long-term" fit best with which level of the generic framework for resource planning?

A) Aggregate planning-Level 1
B) Disaggregation-Level 2
C) Execution-Level 3
D) Shop floor controlling-Level 4

Question 36

In the disaggregation framework, the direct inputs to material requirements planning (MRP) include all of the following EXCEPT:

A) master production schedule (MPS).
B) transaction files.
C) bills of materials (BOM).
D) capacity requirements plan (CRP).

Question 37

Which of the following is NOT TRUE regarding aggregate planning?

A) Large number of alternatives can be developed.
B) Good solutions using spreadsheets can be found by trial-and-error method.
C) Seasonal fluctuations in demand can be accommodated.
D) Costs are sunk and irrelevant.

Question 38

Which lot sizing rule is best when inventory carrying costs are high and setup/order costs are low?

A) Lot-for-lot (LFL)
B) Fixed-order quantity (FOQ)
C) Periodic-order quantity (POQ)
D) Gross requirements (GR)

Question 39

Promotion of weekly discount airfares by an airline would be an example of _____.

A) demand management
B) production-rate changes
C) inventory changes
D) facility, equipment, and transportation changes

Question 40

Assigning people to tasks, setting priorities for jobs, and scheduling equipment fits best with which level of the generic framework for resource planning?

A) Aggregate planning-Level 1
B) Disaggregation-Level 2
C) Execution-Level 3
D) Market forecasting-Level 4

Question 41

Short-term changes in facilities and equipment are seldom used in traditional aggregate planning methods because of the capital costs involved.

Question 42

A chase demand aggregate planning strategy may result in substantial overtime, undertime, and rate-change costs.

Question 43

Service firms frequently take their aggregate plans and disaggregate them down to the execution level as detailed frontline staff and resource schedules, job sequences, and service-encounter execution.

Question 44

If a work center load report indicates insufficient capacity, options for correcting the problem include all of the following EXCEPT:

A) revising the bill of materials.
B) changing the master product schedule.
C) subcontracting.
D) transferring personnel between work centers.

Question 45

The purpose of the master schedule is to translate the aggregate plan into a separate plan for individual finished goods.

Question 46

Aggregate planning and disaggregation methods in goods-producing industries involve fewer levels of planning than service-providing organizations, because service organizations deal with more than just materials.

Question 47

Increasing the output rate without changing existing resources is an example of demand management.

Question 48

A(n) _____ is a process of determining the amount of labor and machines required to accomplish the tasks of production on a more detailed level.

A) action schedule (AS)
B) master production schedule (MPS)
C) material requirements plan (MRP)
D) capacity requirements plan (CRP)

Question 49

Good solutions to aggregate planning situations using spreadsheets can be found by trial-and-error approaches.

Question 50

Capacity requirements are computed by multiplying the number of units scheduled for production at a work center by:

A) the setup time and then subtracting the unit resource requirements.
B) the setup time and then adding the unit resource requirements.
C) the unit resource requirements and then adding in the setup time.
D) the unit resource requirements and then subtracting the setup time.

Question 51

A level production strategy maintains constant inventory levels over the planning horizon.

Question 52

Resources include materials, equipment, facilities, information, technical knowledge and skills, and people.

Question 53

When demand is seasonal, inventory cannot be used to stabilize production and employment rates.

Question 54

An example of aggregation would be an ice cream manufacturer developing targets to produce a number of gallons of each flavor along with the purchasing requirements for specific ingredients for a one-week period.

Question 55

The lower the skill requirements of the workforce, the more feasible it is to change workforce levels as an aggregate planning option.

Question 56

Level 3 planning, i.e. detailed planning and execution, represents aggregate planning at higher management levels of an organization.

Question 57

Which lot sizing rule uses the economic order quantity (EOQ) calculation?

A) Both lot-for-lot (LFL) and periodic-order quantity (POQ) rules
B) Only fixed-order quantity (FOQ) rule
C) Only periodic-order quantity (POQ) rule
D) Both fixed-order quantity (FOQ) and periodic-order quantity (POQ) rules

Question 58

Which is the most comprehensive solution for a firm if a load report shows not enough capacity is available?

A) Revise the bill of materials (BOM) and increase capacity.
B) Change the action bucket.
C) Change the master production schedule (MPS) and add capacity.
D) Rerun materials requirements planning (MRP).

Question 59

Resource management deals primarily with managing inventories in a value chain.

Question 60

The master production schedule (MPS) is developed in the same manner, no matter the type of industry (make-to-stock vs. make-to-order) and the number of items produced (few or many).

Question 61

Define material requirements planning (MRP) and how it can benefit an organization.

Question 62

Describe the options that managers have for developing aggregate plans to respond to fluctuating demand.

Question 63

A bill of materials (BOM) characterizes the structure of dependent demand among all items that comprise a finished good.

Question 64

A service facility like a hospital cannot use material requirements planning concepts and methods such as bills of labor (BOL) and the concept of dependent demand.

Question 65

Explain how a bill of materials (BOM), bill of labor (BOL), and bill of resources (BOR) relate.

Question 66

Lot sizing is the process of translating aggregate plans into short-term operational plans that provide the basis for weekly and daily schedules.

Question 67

Which one of the following statements is TRUE regarding the Greyhound Frequent Flyer Call Center case?

A) In the four step analysis procedure described in the case, Step 1 uses equation "Utilization = Demand Rate/[(Service Rate)*(Number of Servers)]."
B) The "travel advice" category of calls was the lowest priority relative to the other three categories of calls.
C) True demand in the case included the number of calls rerouted to different customer service representative (CSR) specialists.
D) The analysis of the case data revealed no scheduling problem with the current customer service representative (CSR) staff schedule.

Question 68

In materials requirements planning (MRP), it is essential that all dependent demand requirements be ordered at the beginning of the planning period.

Question 69

Define resource management and list its key objectives.

Question 70

After a master production schedule (MPS) is created for finished goods, the demand for all materials and components necessary can be calculated, not forecasted.

Question 71

A scheduled receipt for an outside vendor is called a purchase order.

Question 72

Explain the three levels of resource planning.

Question 73

In a bill of materials (BOM), each component is comprised of one or more parent items.

Question 74

Differentiate between a level production strategy and a chase demand strategy.

Question 75

Define a master production schedule (MPS) and explain how it differs from a final assembly schedule.

Question 76

End items in a master production schedule (MPS) or final assembly schedule must be forecast.

Question 77

A periodic-order quantity (POQ) for a one-week time period is equivalent to lot-for-lot (LFL) sizing.

Question 78

Dependent demand does not occur in the service business.

Question 79

Lot sizing rules on a parent item do not affect the gross requirements of all lower level component items.

Question 80

Work center load reports are used in capacity requirements planning (CRP).