Deck 14: The Sales and Operations Planning Process

Question 1

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

Answer 1

True

Question 2

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

Answer 2

False

Question 3

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

Answer 3

False

Question 4

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

Question 5

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

Question 6

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

Question 7

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

Question 8

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

Question 9

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

Question 10

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

Question 11

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

Question 12

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

Question 13

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

Question 14

Overtime and undertime are common strategies for adjusting demand.

Question 15

Most companies use mixed strategies for managing demand.

Question 16

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

Question 17

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

Question 18

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

Question 19

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

Question 20

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

Question 21

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 22

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 23

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 24

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 25

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 26

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 27

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 28

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 29

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

A)labor 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 30

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 31

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

Question 32

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 33

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 34

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 35

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 36

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 37

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

Question 38

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 39

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

Question 40

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
B)12,500
C)25,650
D)31,250 units

Question 41

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 42

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

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

Question 43

A company is developing a linear programming model for its aggregate production plan.Each worker can produce 500 units per quarter.If Wt = workforce size in period t and Pt = 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 44

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 45

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 46

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

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

Question 47

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 48

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 49

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

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

Question 50

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 51

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

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

Question 52

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 53

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 54

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 55

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

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

Question 56

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 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 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 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 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 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 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 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 4 is

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

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

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 63

What are the outputs of aggregate planning?

Question 64

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 65

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 66

Briefly discuss the two primary objectives of aggregate planning.

Question 67

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 68

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 69

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

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 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

Question 72

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 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 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 74

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 75

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 76

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