Question 1

If a make-to-stock manufacturing firm with highly seasonal demand follows a level production strategy,which of the following is likely to be true?

Accepted Answer

A level production strategy means producing at a constant rate regardless of demand fluctuations, leading to inventory build-up during low demand periods and depletion during high demand periods, causing significant inventory fluctuations.

Question 2

Zanda Corporation is preparing an aggregate production plan for its product for the next four months.The company's expected monthly demand is given in the following chart.The company will have 100 units in inventory at the beginning of the month and wishes to maintain at least 100 units at the end of each month.Following is other critical data: Production cost per unit = $125
Inventory carrying cost per month per unit = $10 (based on ending month inventory)
Hiring cost per worker = $50
Firing cost per worker = $100
Beginning number of workers = 25
Each worker can produce 25 units per month.
 What is the total cost of a CHASE plan (using hiring/firing)?

Accepted Answer

D

Question 3

Each month the sales and operations team at Johnson Company meets to develop plans for each of the next six months.This process is known as:

Accepted Answer

The process described is known as rolling planning horizons, which involves regularly updating plans for a set period of time into the future (in this case, six months). Options A, C, and D do not accurately describe this process.

Question 4

If a make-to-stock manufacturing firm with highly seasonal demand follows a chase demand strategy,which of the following is likely to be true?

Accepted Answer

The answer of If a make-to-stock manufacturing firm with highly...

Question 5

If a company strongly prefers that its aggregate output plan be closer to a level plan than a chase plan,this implies that it is concerned about minimizing:

Accepted Answer

A level production plan involves maintaining a constant production rate, while a chase production plan involves adjusting production rates to match demand. By preferring a level plan, the company aims to minimize fluctuations in workforce levels, thereby reducing hiring and layoff costs.

Question 6

Jones Corporation is preparing an aggregate production plan for washing machines for the next four quarters.The company's expected quarterly demand is given in the following chart.The company will have 1,000 washers in inventory at the beginning of the year and wishes to maintain at least that number at the end of each quarter.Following is other critical data: Production cost per unit = $250
Inventory carrying cost per quarter per unit = $10 (based on quarter-ending inventory)
Hiring cost per worker = $1,000
Firing cost per worker = $2,000
Beginning number of workers = 10
Each worker can produce 100 units per quarter.
Any worker on the staff at the end of the year will not be fired at that time.
 Given this data,what is the total cost of a LEVEL plan?

Accepted Answer

The answer of Jones Corporation is preparing an aggregate production...

Question 7

Zanda Corp.and Jones Corp.are identical in every way (products produced,costs,demand,etc.)except for one.Zanda uses a level production plan while Jones prefers a chase production plan.Which of the following is most likely to be true?

Accepted Answer

The answer of Zanda Corp.and Jones Corp.are identical in every...

Question 8

Zanda Corporation is preparing an aggregate production plan for its product for the next four months.The company's expected monthly demand is given in the following chart.The company will have 100 units in inventory at the beginning of the month and wishes to maintain at least 100 units at the end of each month.Following is other critical data: Production cost per unit = $125
Inventory carrying cost per month per unit = $10 (based on ending month inventory)
Hiring cost per worker = $50
Firing cost per worker = $100
Beginning number of workers = 25
Each worker can produce 25 units per month.
 The total inventory carrying cost of a chase plan is:

Accepted Answer

The answer of Zanda Corporation is preparing an aggregate production...

Question 9

Wiedmer Corporation is preparing an aggregate production plan for widgets for the next four months.The company's expected monthly demand is given in the following chart.The company will have 50 widgets in inventory at the beginning of the first month and wishes to maintain at least that number at the end of each month.Following is other critical data: Production cost per unit = $50
Inventory carrying cost per month per unit = $10 (based on ending month inventory)
Hiring cost per worker = $300
Firing cost per worker = $200
Beginning number of workers = 16
Each worker can produce 50 units per month.
 What is the total cost of the level plan?

Accepted Answer

The answer of Wiedmer Corporation is preparing an aggregate production...

Question 10

Which of the following is NOT one of the costs considered in aggregate production planning?

Accepted Answer

Capital equipment cost is not typically considered in aggregate production planning. Aggregate production planning focuses on meeting demand and optimizing production efficiency in the short to medium term, dealing with costs related to production operations such as subcontracting, inventory, and labor adjustments (hiring and firing), rather than long-term capital investments.

Question 11

The focus of an aggregate production plan,in general,is on all of the following EXCEPT:

Accepted Answer

The focus of an aggregate production plan typically includes the intermediate-term future, product lines, and inventory levels, but not specifically on facilities and capital equipment, which are more related to long-term planning and strategic decisions.

Question 12

Which of the following is true concerning sales and operations planning?

Accepted Answer

Sales and operations planning helps firms to achieve high service levels without increasing the amount of inventory by aligning sales forecasts with operational capabilities. Option A is not true as the plan should be flexible enough to adapt to changing circumstances. Option B is also not entirely true, as the specific steps may differ depending on the industry or organization. Option D is not as relevant to sales and operations planning as it is to production scheduling.

Question 13

Which type of aggregate production plan is likely to have the LEAST negative impact on the local community and the workforce?

Accepted Answer

A level plan involves maintaining a consistent level of production, which means there are no significant changes in the workforce or production processes. This eliminates the need for hiring or firing employees or asking them to work overtime, which helps maintain morale and stability in the workforce. It also has the least negative impact on the local community, as there are no sudden shifts in demand for resources or services. Therefore, a level plan is likely to have the least negative impact on the local community and the workforce.

Question 14

Sales and Operations Planning focuses on what time frame?

Accepted Answer

Sales and Operations Planning typically focuses on intermediate range planning, which usually ranges from 3 to 18 months. While S&OP does take into account short-term and long-term plans, its main focus is on the intermediate term.

Question 15

Jones Corporation is preparing an aggregate production plan for washing machines for the next four quarters.The company's expected quarterly demand is given in the following chart.The company will have 1,000 washers in inventory at the beginning of the year and wishes to maintain at least that number at the end of each quarter.Following is other critical data: Production cost per unit = $250
Inventory carrying cost per quarter per unit = $10 (based on quarter-ending inventory)
Hiring cost per worker = $1,000
Firing cost per worker = $2,000
Beginning number of workers = 10
Each worker can produce 100 units per quarter.
Any worker on the staff at the end of the year will not be fired at that time.
 If Jones prefers a level plan,what will be the regular production rate per quarter?

Accepted Answer

The answer of Jones Corporation is preparing an aggregate production...

Question 16

Generally speaking,the sales function and operations function differ in objectives.Which of the following is NOT one of those differences?

Accepted Answer

This statement is incorrect as both sales and operations prefer aggregate forecasts for setting bonuses and production planning. The other options listed are correct differences between the two functions.

Question 17

Wiedmer Corporation is preparing an aggregate production plan for widgets for the next four months.The company's expected monthly demand is given in the following chart.The company will have 50 widgets in inventory at the beginning of the first month and wishes to maintain at least that number at the end of each month.Following is other critical data: Production cost per unit = $50
Inventory carrying cost per month per unit = $10 (based on ending month inventory)
Hiring cost per worker = $300
Firing cost per worker = $200
Beginning number of workers = 16
Each worker can produce 50 units per month.
 What is the regular monthly actual production for a level plan?

Accepted Answer

To determine the regular monthly actual production for a level plan, we need to calculate the total demand for the next four months and divide it by the total number of months (4).

Total demand = 2,000 + 2,200 + 2,500 + 2,700 = 9,400 widgets

Regular monthly actual production = Total demand / Total number of months 
= 9,400 / 4 
= 2,350 widgets

However, we need to keep 50 widgets in inventory at the end of each month, so the actual production should be adjusted.

Ending inventory = 50 widgets 
Beginning inventory = 50 widgets

Therefore, the required production = Regular monthly actual production + Ending inventory - Beginning inventory 
= 2,350 + 50 - 50 
= 2,350 widgets

Next, we need to calculate the cost of the level plan and compare it with other options.

Production cost = 2,350 x $50 = $117,500 
Inventory carrying cost = 50 x 4 x $10 = $2,000 
Total cost = Production cost + Inventory carrying cost 
= $117,500 + $2,000 
= $119,500

Option A: Hiring 4 workers 
Total cost = $13,700 (hiring cost) + $102,500 (production cost) + $2,000 (inventory carrying cost) = $118,200

Option B: Firing 4 workers 
Total cost = $8,800 (firing cost) + $109,000 (production cost) + $2,000 (inventory carrying cost) = $119,800

Option C: Level plan 
Total cost = $119,500

Option D: Vary the production 
To determine the lowest cost option for varying the production, we need to use the trial and error method.

If we produce 2,000 widgets in the first month, we will have 50 widgets in inventory at the end of the month. 
If we produce 2,350 widgets in the second month, we will have 400 widgets in inventory at the end of the month. 
If we produce 2,350 widgets in the third month, we will have 1,150 widgets in inventory at the end of the month. 
If we produce 2,700 widgets in the fourth month, we will have 1,400 widgets in inventory at the end of the month.

Production cost = 2,000 x $50 + 2,350 x $50 + 2,350 x $50 + 2,700 x $50 = $302,500 
Inventory carrying cost = 50 x 4 x $10 + 400 x 3 x $10 + 1,150 x 2 x $10 + 1,400 x 1 x $10 = $9,500 
Total cost = Production cost + Inventory carrying cost = $312,000

Therefore, the best choice is the level plan (Option C) as it has the lowest total cost of $119,500.

Question 18

Wiedmer Corporation is preparing an aggregate production plan for widgets for the next four months.The company's expected monthly demand is given in the following chart.The company will have 50 widgets in inventory at the beginning of the first month and wishes to maintain at least that number at the end of each month.Following is other critical data: Production cost per unit = $50
Inventory carrying cost per month per unit = $10 (based on ending month inventory)
Hiring cost per worker = $300
Firing cost per worker = $200
Beginning number of workers = 16
Each worker can produce 50 units per month.
 What is the total inventory carrying cost for the level plan?

Accepted Answer

The answer of Wiedmer Corporation is preparing an aggregate production...

Question 19

Jones Corporation is preparing an aggregate production plan for washing machines for the next four quarters.The company's expected quarterly demand is given in the following chart.The company will have 1,000 washers in inventory at the beginning of the year and wishes to maintain at least that number at the end of each quarter.Following is other critical data: Production cost per unit = $250
Inventory carrying cost per quarter per unit = $10 (based on quarter-ending inventory)
Hiring cost per worker = $1,000
Firing cost per worker = $2,000
Beginning number of workers = 10
Each worker can produce 100 units per quarter.
Any worker on the staff at the end of the year will not be fired at that time.
 Given this data,what is the inventory carrying cost of a LEVEL plan?

Accepted Answer

To calculate the inventory carrying cost of a level plan, we need to calculate the average inventory level for the year.

Starting Inventory = 1,000

Quarter 1: Production = 1,000 + X – 2,500 = 1,000
Ending Inventory = 1,000
Average Inventory = (1,000 + 1,000) / 2 = 1,000

Quarter 2: Production = 1,000 + X – 1,000 = 2,000
Ending Inventory = 1,000
Average Inventory = (1,000 + 1,000 + 2,000) / 3 = 1,333.33

Quarter 3: Production = 1,000 + X – 1,000 = 2,333.33
Ending Inventory = 1,000
Average Inventory = (1,000 + 1,000 + 2,000 + 2,333.33) / 4 = 1,583.33

Quarter 4: Production = 1,000 + X – 1,000 = 2,583.33
Ending Inventory = 1,000
Average Inventory = (1,000 + 1,000 + 2,000 + 2,333.33 + 2,583.33) / 5 = 1,783.33

Total inventory carrying cost = Average inventory * carrying cost per unit per quarter
= 1,783.33 * 10 = $17,833.33 ≈ $70,000 (rounded to the nearest thousand)

Question 20