Question 1

From an operational perspective, yield management is least effective under which of the following circumstances?
A) Demand can be segmented by customer.
B) The product can be sold in advance.
C) The product can be kept to be sold when demand is stronger.
D) Fixed costs are high, and variable costs are low.
E) Demand is highly variable.

Accepted Answer

Yield management, also known as revenue management, is least effective when the product can be stored for sale at a later time when demand is stronger. This is because yield management strategies are most effective when dealing with perishable inventory, such as hotel rooms or airline seats, which cannot be stored and sold later.

Question 2

Matching the production rate to the order rate by hiring and laying off employees as the order rate varies is which of the following pure production planning strategies?
A) Stable workforce, variable work hours
B) Chase
C) Level
D) Meeting demand
E) Minimizing inventory

Accepted Answer

The strategy described matches the Chase production planning strategy where the production rate is adjusted to meet the order rate by hiring and laying off employees as needed. The other options do not match the described strategy.

Question 3

From an operational perspective, yield management is least effective under which of the following circumstances?
A) Demand can be segmented by customer.
B) The product can be sold in advance.
C) Demand is highly variable.
D) Fixed costs are high, and variable costs are low.
E) Demand is stable and close to capacity.

Accepted Answer

Yield management is designed to maximize revenue by adjusting prices based on demand, and it is most effective when demand is highly variable and can be segmented by customer. However, when demand is stable and close to capacity, there is little room for price adjustments and yield management becomes less effective. Fixed costs being high and variable costs being low can actually increase the effectiveness of yield management, as it allows for more pricing flexibility. The ability to sell the product in advance also supports yield management by providing more time to adjust prices based on demand.

Question 4

Using the cut-and-try method for aggregate operations planning, we can determine the production requirement in units of product. If the beginning inventory is 100 units, the demand forecast is 1,200, and the necessary safety stock is 20 percent of the demand forecast, which of the following is the production requirement?
A) 1,200
B) 1,300
C) 1,340
D) 1,500
E) 1,540

Accepted Answer

First, we need to calculate the safety stock:
Safety Stock = Demand Forecast x Necessary Safety Stock
Safety Stock = 1,200 x 0.2
Safety Stock = 240
Next, we calculate the total requirements:
Total Requirements = Demand Forecast + Safety Stock - Beginning Inventory
Total Requirements = 1,200 + 240 - 100
Total Requirements = 1,340
Therefore, the production requirement is 1,340 units.

Question 5

In conducting aggregate operations planning, there are a number of required inputs. Which of the following inputs are considered internal to the firm?
A) Inventory levels and economic conditions
B) Market demand and subcontractor capacity
C) Current physical capacity and current workforce
D) Competitor behavior and current workforce
E) Current physical capacity and raw material availability

Accepted Answer

Current physical capacity and current workforce are both internal inputs, as they are factors the firm has control over and are specific to the firm's operations. Inventory levels, market demand, subcontractor capacity, competitor behavior, and raw material availability are external inputs, as they are influenced by factors outside of the firm and are not fully within the firm's control.

Question 6

In an overview of the major operations planning activities in a typical service organization, which of the following activities follows sales and operations (aggregate) planning?
A) Process planning
B) Workforce scheduling
C) Master scheduling
D) Materials requirements planning
E) Order scheduling

Accepted Answer

The answer of In an overview of the major operations...

Question 7

Maintaining a stable workforce working at a constant output rate while shortages and surpluses are absorbed by fluctuating inventory levels, order backlogs, and allowing lost sales is which of the following production planning strategies?
A) Stable workforce, variable work hours
B) Chase
C) Level
D) Full employment
E) Skill maintenance

Accepted Answer

The strategy described in the question is known as the level production planning strategy. This strategy involves maintaining a stable workforce and producing at a constant output rate, while allowing inventory levels and backlogs to fluctuate in order to absorb any shortages or surpluses. This strategy is often used when demand is relatively stable and predictable.

Question 8

Which of the following is considered a "pure" production planning strategy?
A) Variable workforce, stable work hours
B) Lag demand
C) Level playing field
D) Stable workforce, variable work hours
E) Product warehouse

Accepted Answer

A "pure" production planning strategy involves maintaining a stable workforce while varying work hours to meet demand, which is described in option D.

Question 9

In conducting aggregate operations planning, there are a number of required inputs. Which of the following inputs are considered external to the firm?
A) Inventory levels and market demand
B) Raw material availability and competitor's behavior
C) Current workforce and economic conditions
D) Current physical capacity and market demand
E) Subcontractor capacity and inventory levels

Accepted Answer

External inputs to aggregate operations planning include factors outside the firm's control, such as raw material availability and competitor's behavior.

Question 10

In an overview of the major operations planning activities in a typical logistics organization, which of the following activities most immediately follows sales and operations (aggregate) planning?
A) Process planning
B) Strategic capacity planning
C) Vehicle dispatching
D) Vehicle capacity planning
E) Warehouse receipt planning

Accepted Answer

Vehicle capacity planning is the next step that follows sales and operations planning as it involves determining the appropriate number and types of vehicles needed to meet the demand forecasted in the sales and operations plan.

Question 11

Using the cut-and-try method for aggregate operations planning, we can determine the production requirement in units of product. If the beginning inventory is 500 units, the demand forecast is 1,000, and the necessary safety stock is 10 percent of the demand forecast, which of the following is the production requirement?
A) 1,000
B) 600
C) 550
D) 450
E) 100

Accepted Answer

The production requirement can be calculated as follows: Demand forecast (1,000) + Safety stock (10% of 1,000 = 100) - Beginning inventory (500) = 600 units.

Question 12

The main purpose of aggregate operations planning is to specify the optimal combination of which of the following?
A) Workforce levels and inventory on hand
B) Inventory on hand and financing costs for that inventory
C) The strategic plan and the products available for sale
D) The workforce level and the degree of automation
E) Operational costs and the cash flow to support operations

Accepted Answer

Aggregate operations planning aims to determine the best combination of workforce levels and inventory on hand to meet the production goals while minimizing costs. While the other options may play a role in operations planning, workforce and inventory are the primary focus of aggregate planning.

Question 13

In conducting aggregate operations planning, there are a number of required inputs. Which of the following inputs are considered external to the firm?
A) Competitor behavior and economic conditions
B) Market demand and inventory levels
C) Subcontractor capacity and current workforce
D) Economic conditions and current physical capacity
E) Raw material availability and inventory levels

Accepted Answer

Competitor behavior and economic conditions are external factors that may affect the aggregate operations planning of a firm. The other answer choices are all internal factors, as they relate to the firm's inventory, workforce, physical capacity, and supply chain.

Question 14

Which of the following is a production planning strategy presented in the textbook?
A) Level
B) Strategic
C) Balanced
D) Synchronous
E) Optimal

Accepted Answer

The production planning strategy presented in the textbook is the "Level" strategy, which involves producing at a constant rate regardless of demand fluctuations.

Question 15

From an operational perspective, yield management is most effective under which of the following circumstances?
A) Demand cannot be segmented by customer.
B) Inventory is perishable.
C) Fixed costs are low, and variable costs are high.
D) The customer is a "captive" of the system.
E) The firm doing yield management is very profitable.

Accepted Answer

Yield management is most effective when there is perishable inventory, meaning that unsold units cannot be sold at a later time. This creates a sense of urgency for customers to book at the right time, allowing the company to maximize revenue. Other factors such as low fixed costs, high variable costs, or captive customers may also contribute to yield management effectiveness, but they are not the primary factors. The profitability of the firm is irrelevant to the effectiveness of yield management.

Question 16

What should have been the initial inventory in units of demand, if the production requirement in units of product is 900, demand forecast is 1,000, and the necessary safety stock is 20 percent of the demand forecast?
A) 300
B) 500
C) 100
D) 1,900
E) Cannot find it

Accepted Answer

The initial inventory in units of demand should be 500 units. This is because the demand forecast is 1,000 units, and the necessary safety stock is 20 percent of the demand forecast, or 200 units. Therefore, the initial inventory should be 1,000 units + 200 units = 1,200 units. However, the production requirement is only 900 units, so the initial inventory in units of demand should be 1,200 units - 900 units = 300 units.

Question 17

Which of the following is not one of the "number of interesting issues that arise in yield management"?
A) Pricing structures that must appear logical to the customer and justify different prices
B) Designing yield management programs that cannot be imitated by a competitor
C) How to handle variability in customer arrivals, duration, and interval
D) Managing the service process
E) Training workers and managers to work in a yield management environment

Accepted Answer

The other options are all examples of issues that arise in yield management, such as designing pricing structures that make sense to customers, dealing with variability in customer behavior, managing the service process, and training employees to work in a yield management system. However, designing yield management programs that cannot be imitated by a competitor is not necessarily an issue that always arises, as some businesses may not be concerned about competitors copying their yield management strategies.

Question 18

Which of the following methods discussed in the text requires generating several alternative aggregate plans?
A) Trial and error
B) Production smoothing
C) Graphing and charting
D) Aggregate plan simulation
E) Cut and try

Accepted Answer

The answer of Which of the following methods discussed in...

Question 19

Which of the following costs are relevant to aggregate operations planning?
A) Sunk costs
B) Transaction costs
C) Backordering costs
D) Legal costs
E) Fixed costs

Accepted Answer

Backordering costs are relevant to aggregate operations planning as they directly impact inventory management and customer satisfaction.

Question 20

Using the cut-and-try method for aggregate operations planning, we can calculate the ending inventory and then calculate the safety stock as a percent of forecast demand. Suppose that the beginning inventory is 300, the production requirement in units of product is 1,350, and demand forecast is 1,500. What is the ending inventory and percent safety stock?
A) 200 and 10%
B) 150 and 10%
C) 300 and 20%
D) 450 and 30%
E) 150 and 20%

Accepted Answer

Using the cut-and-try method, we start with the production requirement and add the beginning inventory:

1,350 + 300 = 1,650 (This is the total available supply)

We subtract the forecast demand to get the ending inventory:

1,650 - 1,500 = 150

To calculate the safety stock as a percentage of forecast demand, we use the ending inventory and the forecast demand:

Safety Stock = (Ending Inventory / Forecast Demand) x 100%

Safety Stock = (150 / 1,500) x 100%

Safety Stock = 10%

Therefore, the ending inventory is 150 and the percent safety stock is 10%. The best choice is B.

Quiz 19: Sales and Operations Planning

From an operational perspective, yield management is least effective under which of the following circumstances?

Matching the production rate to the order rate by hiring and laying off employees as the order rate varies is which of the following pure production planning strategies?

From an operational perspective, yield management is least effective under which of the following circumstances?

In conducting aggregate operations planning, there are a number of required inputs. Which of the following inputs are considered internal to the firm?

In an overview of the major operations planning activities in a typical service organization, which of the following activities follows sales and operations (aggregate) planning?

Maintaining a stable workforce working at a constant output rate while shortages and surpluses are absorbed by fluctuating inventory levels, order backlogs, and allowing lost sales is which of the following production planning strategies?

Which of the following is considered a "pure" production planning strategy?

In conducting aggregate operations planning, there are a number of required inputs. Which of the following inputs are considered external to the firm?

In an overview of the major operations planning activities in a typical logistics organization, which of the following activities most immediately follows sales and operations (aggregate) planning?

The main purpose of aggregate operations planning is to specify the optimal combination of which of the following?

In conducting aggregate operations planning, there are a number of required inputs. Which of the following inputs are considered external to the firm?

Which of the following is a production planning strategy presented in the textbook?

From an operational perspective, yield management is most effective under which of the following circumstances?

What should have been the initial inventory in units of demand, if the production requirement in units of product is 900, demand forecast is 1,000, and the necessary safety stock is 20 percent of the demand forecast?

Which of the following is not one of the "number of interesting issues that arise in yield management"?

Which of the following methods discussed in the text requires generating several alternative aggregate plans?

Which of the following costs are relevant to aggregate operations planning?