Deck 22: Operational Decision-Making Tools: Simulation

Question 1

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

Answer 1

False

Question 2

Overtime and undertime are common strategies for adjusting demand.

Answer 2

False

Question 3

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

Answer 3

True

Question 4

Most companies use mixed strategies for managing demand.

Question 5

Aggregate planning involves the process of determining the timing and quantity of production for an individual item over an intermediate time frame.

Question 6

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

Question 7

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

Question 8

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

Question 9

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

Question 10

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

Question 11

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

Question 12

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

Question 13

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

Question 14

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

Question 15

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

Question 16

With a pure strategy for aggregate planning only one capacity variable is changed.

Question 17

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

Question 18

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

Question 19

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

Question 20

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

Question 21

Most companies use mixed strategies for production planning.

Question 22

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

Question 23

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 24

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

Question 25

Which of the following is an output of sales and operations planning?

A) company policies
B) demand forecasts
C) operations plans
D) capacity constraints

Question 26

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 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

The term aggregate planning reflects the fact that plans are developed for ___________, rather than _____________.

A) product families, individual products
B) product lines, product families
C) competitor products, product families
D) competitor products, individual products

Question 29

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 30

Which of the following is not a strategy for adjusting capacity?

A) level production
B) subcontracting
C) backordering
D) product substitution

Question 31

Shifting demand into other time periods can be accomplished through

A) Advertising
B) Sales promotions
C) Incentives
D) All of these answer choices are correct.

Question 32

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 33

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 at the start of quarter 4 is

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

Question 34

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

Question 35

Sales and operations planning is an aggregate planning process for a(n)______________ time horizon.

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

Question 36

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 37

Which of the following is not a strategy for managing demand?

A) Shifting demand into other time periods.
B) Create demand for idle resources.
C) Redirecting demand to a competitor.
D) Partnering with suppliers to minimize information distortion.

Question 38

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 these answer choices are correct.

Question 39

Which of the following is an objective to sales and operations planning?

A) Develop an economic strategy for meeting demand.
B) Develop a marketing strategy for meeting demand.
C) Develop an operations strategy for meeting demand.
D) None of these answer choices is correct.

Question 40

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 at the start of quarter 3 is

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

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 = 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 43

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 44

A company is developing a linear programming model for its aggregate production plan. If It = units in inventory at the end of period t, Pt = units produced in period t, and Dt = 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 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 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 46

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 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 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 48

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 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 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 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 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 51

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 52

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 53

A company is developing a linear programming model for its aggregate production plan. If Wt = workforce size for period t, Ht = number of workers hired for period t, and Ft = 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 54

A company is developing a linear programming model for its aggregate production plan. If It = units in inventory at the end of period t, Pt = units produced in period t, and Dt = 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 55

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 56

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

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 number of workers required for the plan is

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

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 number of workers fired at the start of quarter 3 is

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

Question 59

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 60

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 61

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 62

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 63

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

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

Question 64

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 65

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 66

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 67

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 68

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

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

Question 69

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 70

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 71

A company is developing a linear programming model for its aggregate production plan. If Wt = workforce size for period t, Ht = number of workers hired for period t, and Ft = 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 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

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 74

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

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

Question 75

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

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

Question 76

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

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

Question 77

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 78

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 79

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 80

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