Deck 9: Sales and Operations Planning: Planning Supply and Demand in a Supply Chain

Question 1

Predictable variability is change in demand that cannot be forecasted.

Answer 1

FALSE

Question 2

Pricing decisions based only on revenue considerations often result in an increase in overall profitability.

Answer 2

FALSE

Question 3

The use of dual facilities to manage capacity may be hard to sustain if the labor market is tight.

Answer 3

FALSE

Question 4

As forward buying becomes a smaller fraction of the demand increase from a promotion, it is less profitable to promote during the peak period.

Question 5

The disadvantage of building up inventory during the off season to keep production stable year round is the expensive capacity that would go unused during most months when demand was lower.

Question 6

Offering a promotion during a peak period that has significant forward buying creates even more variable demand than before the promotion.

Question 7

A firm that uses a temporary workforce during the peak season to increase capacity to match demand is using a seasonal workforce.

Question 8

Faced with predictable variability of demand, a company's goal is to respond in a manner that maximizes profitability.

Question 9

Determining how profits will be allocated to different members of the supply chain is a key to successful collaboration.

Question 10

In general, as the fraction of increased demand coming from forward buying grows, offering the promotion during the peak demand period becomes more attractive.

Question 11

The use of a seasonal workforce requires that the workforce be multi-skilled and easily adapt to being moved from line to line.

Question 12

A firm can vary supply of product by controlling production capacity and inventory.

Question 13

Scheduling the workforce so that the available capacity better matches demand is using time flexibility from the workforce.

Question 14

A firm that builds dedicated facilities to produce a relatively stable output of products over time in a very efficient manner and purchases peak production capability from other companies is using subcontracting.

Question 15

The use of a part-time workforce to increase the capacity flexibility by enabling the firm to have more people at work during peak periods is designing product flexibility into the production processes.

Question 16

The advantage of carrying enough manufacturing capacity to meet demand in any period is very low inventory costs, because no inventory needs to be carried from period to period.

Question 17

Promoting during a peak demand month may decrease overall profitability if a significant fraction of the demand increase results from a forward buy.

Question 18

A firm that uses flexible work hours from the workforce to manage capacity to better meet demand is using a seasonal workforce.

Question 19

When faced with seasonal demand, a firm should use a combination of pricing (to manage demand) and production and inventory (to manage supply) to improve profitability.

Question 20

When performing aggregate planning, the goal of all firms in the supply chain should be to maximize individual firm profits.

Question 21

A firm can vary supply of product by controlling

A) production capacity and inventory.
B) production capacity and price promotions.
C) price promotions and inventory.
D) production capacity and inventory promotions.

Question 22

Companies typically divide the task of supply and demand so that

A) Marketing manages demand and Operations manages supply.
B) Marketing manages supply and Operations manages demand.
C) Marketing manages demand and supply.
D) Operations manages demand and supply.

Question 23

Seasonal demand can be met by

A) maintaining enough manufacturing capacity to meet demand in any period.
B) building up inventory during the off season to meet demand during peak seasons.
C) offering a price promotion during periods of low demand to shift some of the demand into a slow period.
D) all of the above

Question 24

The capacity management approach that uses a temporary workforce during the peak season to increase capacity to match demand is

A) time flexibility from workforce.
B) the use of seasonal workforce.
C) the use of subcontracting.
D) the use of dual facilities-dedicated and flexible.

Question 25

The advantage of maintaining enough manufacturing capacity to meet demand in any period is

A) very low inventory costs because inventory needs to be carried from period to period.
B) very low inventory costs because no inventory needs to be carried from period to period.
C) very high inventory costs because no inventory needs to be carried from period to period.
D) very high inventory costs because expensive capacity would go unused during most months when demand was lower.

Question 26

In this approach to managing capacity, a firm subcontracts peak production so that internal production remains level and can be done cheaply.

A) Time flexibility from workforce
B) Use of subcontracting
C) Use of dual facilities-specialized and flexible
D) Use of seasonal workforce

Question 27

A firm can handle predictable variability by managing

A) supply using capacity, inventory, trade promotions, and backlogs.
B) supply using capacity, inventory, subcontracting, and backlogs.
C) demand using short-term price discounts and trade promotions.
D) B and C only

Question 28

A firm can vary supply of product by controlling

A) inventory.
B) pricing.
C) demand.
D) revenue.

Question 29

The disadvantage of building up inventory during the off season to meet demand during peak seasons and keep production stable year round is

A) very low inventory costs because no inventory needs to be carried from period to period.
B) very high inventory costs because inventory needs to be carried from period to period.
C) in the fact that a firm could get by with a smaller, less expensive factory.
D) in the fact that a firm could get by with a larger, more expensive factory.

Question 30

The disadvantage of maintaining enough manufacturing capacity to meet demand in any period is

A) much of the expensive capacity would go unused during most months when demand was lower.
B) the expensive capacity would be used consistently throughout the year.
C) most of the expensive capacity would still be used during most months when demand was lower.
D) very low inventory costs because no inventory needs to be carried from period to period.

Question 31

The advantage of building up inventory during the off season to meet demand during peak seasons and keep production stable year round is

A) very low inventory costs because no inventory needs to be carried from period to period.
B) much of the expensive capacity would go unused during most months when demand was lower.
C) in the fact that a firm could get by with a smaller, less expensive factory.
D) in the fact that a firm could get by with a larger, more expensive factory.

Question 32

Predictable variability is

A) change in demand that can be forecasted.
B) change in demand that cannot be forecasted.
C) change in demand that has been planned.
D) change in demand that has been scheduled.

Question 33

In this approach to managing capacity, a firm uses flexible work hours by the workforce to manage capacity to better meet demand.

A) Time flexibility from workforce
B) Use of seasonal workforce
C) Use of subcontracting
D) Use of dual facilities-specialized and flexible

Question 34

The advantage of offering a price promotion during periods of low demand to shift some of the demand into a slow period is

A) a demand pattern that is less expensive to supply.
B) very high inventory costs because inventory needs to be carried from period to period.
C) in the fact that a firm could get by with a smaller, more expensive factory.
D) much of the expensive capacity would go unused during most months when demand was lower.

Question 35

A firm can vary supply of product by controlling

A) revenue.
B) pricing.
C) demand.
D) capacity.

Question 36

With supply and demand management decisions being made independently,

A) it is increasingly difficult to coordinate the supply chain, thereby increasing profit.
B) it is increasingly difficult to coordinate the supply chain, thereby decreasing profit.
C) it is easier to coordinate the supply chain, thereby decreasing profit.
D) it is easier to coordinate the supply chain, thereby increasing profit.

Question 37

In this approach to managing capacity, a firm has flexible production lines whose production rate can easily be varied.

A) Time flexibility from workforce
B) Use of subcontracting
C) Designing product flexibility into the production processes
D) Use of seasonal workforce

Question 38

________ variability is change in demand that can be forecasted.

A) Capacity
B) Predictable
C) Inventory
D) Backlog

Question 39

In this approach to managing capacity, a firm uses a temporary workforce during the peak season to increase capacity to match demand.

A) Time flexibility from workforce
B) Use of subcontracting
C) Use of dual facilities-specialized and flexible
D) Use of seasonal workforce

Question 40

The capacity management approach that uses flexible work hours from the workforce to manage capacity to better meet demand is

A) time flexibility from workforce.
B) use of seasonal workforce.
C) use of subcontracting.
D) use of dual facilities-dedicated and flexible.

Question 41

Which approach to capacity management would require that the workforce be multi-skilled and easily adapt to being moved from line to line?

A) Time flexibility from workforce
B) Use of seasonal workforce
C) Use of dual facilities-dedicated and flexible
D) Designing product flexibility into the production processes

Question 42

One key to successful collaboration when the supply chain is performing aggregate planning is

A) determining how losses will be allocated to different members of the supply chain.
B) determining how profits will be allocated to different members of the supply chain.
C) determining how labor will be allocated to different members of the supply chain.
D) determining how customers will be allocated to different members of the supply chain.

Question 43

Which of the following is an approach that firms can use when managing inventory to meet predictable demand variability?

A) Time flexibility from workforce
B) Use of seasonal workforce
C) Use of subcontracting
D) Using common components across multiple products

Question 44

Which approach to capacity management makes use of overtime, which is varied to match the variation in demand?

A) Time flexibility from workforce
B) Use of seasonal workforce
C) Use of subcontracting
D) Use of dual facilities-dedicated and flexible

Question 45

Pricing decisions based only on revenue considerations often result in

A) a decrease in overall profitability.
B) an increase in overall profitability.
C) a decrease in overall revenue.
D) a decrease in supply chain revenue.

Question 46

When planning, the goal of all firms in the supply chain should be to maximize supply chain profits because

A) this leaves them less profit to divide among themselves.
B) this leaves them more profit to divide among themselves.
C) this outcome leaves them more profit to pay tax on.
D) this outcome will increase their charitable giving.

Question 47

The promotion and pricing decisions made by marketing and sales typically have the objective of

A) maximizing profitability.
B) minimizing profitability.
C) minimizing revenue.
D) maximizing revenue.

Question 48

Supply chains can influence demand by using

A) production capacity and inventory.
B) pricing and other promotions.
C) price promotions and inventory.
D) production capacity and inventory promotions.

Question 49

Which approach to capacity management would use production machinery that can be changed easily from producing one product to another?

A) Time flexibility from workforce
B) Use of subcontracting
C) Use of dual facilities-dedicated and flexible
D) Designing product flexibility into the production processes

Question 50

The capacity management approach where a firm purchases peak production from another firm so that internal production remains level and can be done cheaply is

A) time flexibility from workforce.
B) the use of seasonal workforce.
C) the use of subcontracting.
D) the use of dual facilities-dedicated and flexible.

Question 51

Which approach to capacity management would use a part-time workforce to increase capacity flexibility by enabling the firm to have more people at work during peak periods?

A) Time flexibility from workforce
B) Use of seasonal workforce
C) Use of subcontracting
D) Use of dual facilities-dedicated and flexible

Question 52

The capacity management approach where a firm builds facilities to produce a relatively stable output of products over time in a very efficient manner and facilities to produce a widely varying volume and variety of products, but at a higher unit cost is

A) time flexibility from workforce.
B) the use of seasonal workforce.
C) the use of subcontracting.
D) the use of dual facilities-dedicated and flexible.

Question 53

Which approach to capacity management would only be effective if the overall demand across all the products is relatively constant?

A) Use of seasonal workforce
B) Use of subcontracting
C) Use of dual facilities-dedicated and flexible
D) Designing product flexibility into the production processes

Question 54

Which approach to capacity management would schedule the workforce so that the available capacity better matches demand?

A) Time flexibility from workforce
B) Use of seasonal workforce
C) Use of subcontracting
D) Use of dual facilities-dedicated and flexible

Question 55

The pricing and promotion decisions are often made by

A) marketing and sales.
B) marketing and operations.
C) operations and sales.
D) marketing, operations, and sales.

Question 56

The capacity management approach where a firm has production lines whose production rate can easily be varied to match demand is

A) time flexibility from workforce.
B) the use of seasonal workforce.
C) the use of subcontracting.
D) designing product flexibility into the production processes.

Question 57

When most of the products a firm produces have the same peak demand season, in order to meet predictable variability with inventory, it must

A) use common components across multiple products.
B) use a seasonal workforce.
C) build inventory of high demand or predictable demand products.
D) use subcontracting.

Question 58

Which approach to capacity management makes use of spare plant capacity that exists in the form of hours when the plant is not operational?

A) Time flexibility from workforce
B) Use of seasonal workforce
C) Use of subcontracting
D) Use of dual facilities-dedicated and flexible

Question 59

Which approach to capacity management may be hard to sustain if the labor market is tight?

A) Time flexibility from workforce
B) Use of seasonal workforce
C) Use of subcontracting
D) Use of dual facilities-dedicated and flexible

Question 60

The key to which capacity management approach would involve having both volume (fluctuating demand from a manufacturer) and variety flexibility (demand from several manufacturers) to be sustainable?

A) Time flexibility from workforce
B) Use of seasonal workforce
C) Use of subcontracting
D) Use of dual facilities-dedicated and flexible

Question 61

Discuss the impact of promotion on demand within a supply chain.

Question 62

Discuss the approaches that can be used to manage capacity to meet predictable variability of demand.

Question 63

Discuss how a firm can respond to predictable variability of demand in the supply chain.

Question 64

Average inventory

A) increases if a promotion is run during the peak period.
B) increases if a promotion is run during the off-peak period.
C) decreases if a promotion is run during the peak period.
D) decreases if a promotion is run during the off-peak period.

Question 65

An increase in consumption of the product either from new or existing customers is

A) market growth.
B) stealing share.
C) forward selling.
D) forward buying.

Question 66

Discuss the approaches a firm can use to manage inventory to meet predictable variability of demand.

Question 67

Offering a promotion during a peak period that has significant forward buying

A) creates a desirable demand pattern.
B) creates a demand pattern less costly to serve.
C) creates a demand pattern even more costly to serve.
D) shifts demand from the peak period to the slow period.

Question 68

Discuss key issues when managing predictable variability of demand within a supply chain.

Question 69

Customers moving up future purchases to the present is

A) market growth.
B) stealing share.
C) forward selling.
D) forward buying.

Question 70

Which factor favors promotion during low-demand periods?

A) High margin
B) High ability to steal market share
C) High ability to increase overall market
D) Low margin

Question 71

Which factor favors promotion during low-demand periods?

A) High forward buying
B) High ability to steal market share
C) High ability to increase overall market
D) High margin

Question 72

Discuss the importance of collaboration within a supply chain when performing aggregate planning.

Question 73

As the product margin declines, promoting during the peak demand period becomes

A) less profitable.
B) more profitable.
C) less of a risk.
D) more desirable.

Question 74

Promoting during a peak demand month may decrease overall profitability if

A) a small fraction of the demand increase results from a forward buy.
B) any of the demand increase results from a forward buy.
C) a significant fraction of the demand increase results from a forward buy.
D) none of the above

Question 75

Which factor favors promotion during peak-demand periods?

A) High margin
B) Low ability to steal market share
C) High ability to increase overall market
D) Low margin

Question 76

Customers substituting the firm's product for a competitor's product is

A) market growth.
B) stealing share.
C) forward selling.
D) forward buying.

Question 77

In general, as the fraction of increased demand coming from forward buying grows, offering the promotion during the peak demand period becomes

A) less attractive.
B) more attractive.
C) more profitable.
D) less significant.