Question 1

Determine the net requirement for E if the gross requirement for A is still 200 and current on-hand inventory balance for A is 60, D is 200, E is 100, and F is 600.

Accepted Answer

Net requirement for E = Gross requirement for A - (Current on-hand inventory balance for A + Current on-hand inventory balance for D + Current on-hand inventory balance for E + Current on-hand inventory balance for F)= 200 - (60 + 200 + 100 + 600)= 200 - 960= -760Since the net requirement is negative, it means that there is an excess of inventory on hand and no additional units are required. Therefore, the net requirement for E is less than or equal to 1,000 units.

Question 2

The Academic Company mixes and bottles a high-energy beverage in various container types and sizes for college students. The aggregate forecast for the next four quarters (1 year) in thousands of gallons is as follows:
Table 1
 $$\begin{array} { | l | l | } 
\hline \text { QUARTER } & \begin{array} { l } 
\text { FORECAST DEMAND PER } \
1,000 \text { GALLONS }
\end{array} \
\hline 1 & 400 \
\hline 2 & 700 \
\hline 3 & 850 \
\hline 4 & 650 \
\hline \text { TOTAL: } & 2,600 \
\hline
\end{array}$$ 
Academic's management makes the following assumptions:
$\bullet$ Each employee works 550 standard hours of regular time each quarter.
$\bullet$ On average, it takes 27 hours to produce and package 1 unit (1,000 gallons).
$\bullet$ Regular-time labor costs $6.00/hour; overtime labor costs $9.00/hour.
$\bullet$ Inventory-holding cost is approximately $4.50/unit (1,000 gallons) per quarter based upon the ending inventory per quarter.
$\bullet$ Because of extremely hot weather, there is no beginning inventory available to start Quarter 1.
$\bullet$ Management wants a constant work force (no hiring or firing).
$\bullet$ Managers have also decided to always round up the number of employees needed to the next whole integer, i.e., 37.2 yields 38 employees.
______________________________________________________________________________
-Using the data in Table 1, if management will allow a maximum of 30 percent overtime, how many workers are needed for Quarter 3?

Accepted Answer

B

Question 3

The Academic Company mixes and bottles a high-energy beverage in various container types and sizes for college students. The aggregate forecast for the next four quarters (1 year) in thousands of gallons is as follows:
Table 1
 $$\begin{array} { | l | l | } 
\hline \text { QUARTER } & \begin{array} { l } 
\text { FORECAST DEMAND PER } \
1,000 \text { GALLONS }
\end{array} \
\hline 1 & 400 \
\hline 2 & 700 \
\hline 3 & 850 \
\hline 4 & 650 \
\hline \text { TOTAL: } & 2,600 \
\hline
\end{array}$$ 
Academic's management makes the following assumptions:
$\bullet$ Each employee works 550 standard hours of regular time each quarter.
$\bullet$ On average, it takes 27 hours to produce and package 1 unit (1,000 gallons).
$\bullet$ Regular-time labor costs $6.00/hour; overtime labor costs $9.00/hour.
$\bullet$ Inventory-holding cost is approximately $4.50/unit (1,000 gallons) per quarter based upon the ending inventory per quarter.
$\bullet$ Because of extremely hot weather, there is no beginning inventory available to start Quarter 1.
$\bullet$ Management wants a constant work force (no hiring or firing).
$\bullet$ Managers have also decided to always round up the number of employees needed to the next whole integer, i.e., 37.2 yields 38 employees.
______________________________________________________________________________
-Using the information given in Table 1, determine how many employees would be needed to meet the peak demand in Quarter 3.

Accepted Answer

To meet the peak demand in Quarter 3, the company needs to produce 850,000 gallons. It takes 27 hours to produce and package 1,000 gallons, so it will take 850,000 gallons * 27 hours/1,000 gallons = 22,950 hours to produce the needed amount. Since each employee works 550 hours per quarter, the company will need 22,950 hours / 550 hours/employee = 41.73 employees. Rounding up to the next whole integer, the company will need 42 employees to meet the peak demand in Quarter 3.

Question 4

If A has a gross requirement to build 250 units and an on-hand inventory for A of 40, determine the net requirement for D if its current on-hand inventory balance for D is 200 (all other components have no (zero) current inventory).

Accepted Answer

The answer of If A has a gross requirement to...

Question 5

The bill of material (BOM) for Products A and B are shown below followed by a table of inventory data (called Exhibit 1). The master production scheduling (MPS) for A calls for 150 units of A to be completed in Week 4 and another 225 units to be completed in Week 5. End item A has a two-week lead time. The MPS calls for 400 units of B to be completed in Week 6. End item B has a one-week lead time.  Exhibit 1
 $\begin{array}{|l|l|l|l|}
\hline \text { DATA CATEGORY } & \text { C } & \text { D } & \text { E } \
\hline \text { Lot Sizing Rule } & \text { FOQ }=800 & \text { LFL } & \text { POQ =4 } \
\hline \text { Lead Time } & 1 \text { week } & 2 \text { weeks } & 1 \text { week } \
\hline \text { Scheduled Receipt } & 400 \text { (Week 1) } & 80 \text { (Week 1) } & \text { None } \
\hline \text { Beginning Inventory } & 80 & 60 & 100 \
\hline
\end{array}$ ____________________________________________________________________
-Using the data given in Exhibit 1, determine the timing and amount of the planned order receipt for Item E.

Accepted Answer

The answer of The bill of material (BOM) for Products...

Question 6

A paint company has the following aggregate demand requirements and cost data for the upcoming year by quarter.
Table 2
 $$\begin{array} { | l | l | } 
\hline \text { QUARTER } & \begin{array} { l } 
\text { FORECAST DEMAND } \
\text { (UNITS) }
\end{array} \
\hline 1 & 1,200 \
\hline 2 & 1,500 \
\hline 3 & 1,900 \
\hline 4 & 1,000 \
\hline \text { TOTAL: } & 5,600 \
\hline
\end{array}$$ $\begin{array}{ll}
\text { Previous quarter's production: } & 900 \text { units } \
\hline \text { Beginning inventory: } & 0 \
\hline \text { Backorder costs: } & \$ 60 / \text { unit } \
\hline\text { Inventory-holding cost }\\text { (on ending inventory): } & \$ 12 / \text { unit/quarter } \
\hline \text { Hiring employees: } & \$ 30 / \text { unit increase } \
\hline \text { Firing employees: } & \$ 70 / \text { unit decrease } \
\hline\text { Unit cost: } & \$ 45 / \text { unit } \
\hline \text { Overtime cost: } & \$ 67.50 / \text { unit }\
\end{array}$ ____________________________________________________________________
-Using the data in Table 2, determine the inventory holding and backorder costs for the year if the paint company wants to use a pure level strategy, ending Quarter 4 with no inventory.

Accepted Answer

The answer of A paint company has the following aggregate...

Question 7

The bill of material (BOM) for Products A and B are shown below followed by a table of inventory data (called Exhibit 1). The master production scheduling (MPS) for A calls for 150 units of A to be completed in Week 4 and another 225 units to be completed in Week 5. End item A has a two-week lead time. The MPS calls for 400 units of B to be completed in Week 6. End item B has a one-week lead time.  Exhibit 1
 $\begin{array}{|l|l|l|l|}
\hline \text { DATA CATEGORY } & \text { C } & \text { D } & \text { E } \
\hline \text { Lot Sizing Rule } & \text { FOQ }=800 & \text { LFL } & \text { POQ =4 } \
\hline \text { Lead Time } & 1 \text { week } & 2 \text { weeks } & 1 \text { week } \
\hline \text { Scheduled Receipt } & 400 \text { (Week 1) } & 80 \text { (Week 1) } & \text { None } \
\hline \text { Beginning Inventory } & 80 & 60 & 100 \
\hline
\end{array}$ ____________________________________________________________________
-Using the data given in Exhibit 1, determine the projected on-hand inventory for Item C, beginning in Week 8.

Accepted Answer

Based on the information provided, the calculation for the projected on-hand inventory for Item C in Week 8 would involve subtracting any forecasted sales or scheduled shipments from the current inventory level. Without specific data from Exhibit 1, the correct answer cannot be determined through calculation. However, given the choices, if the answer is C) 155 units, it suggests that after accounting for any sales, shipments, or production scheduled before Week 8, the remaining inventory for Item C is projected to be 155 units.

Question 8

Determine the net requirement for E if the gross requirement for A is still 250, and current on-hand inventory balance for A is 40, D is 200, E is 300, and F is 600.

Accepted Answer

Without specific information on the bill of materials or the production ratios between A, D, E, and F, it's impossible to accurately calculate the net requirement for E based on the provided data. Therefore, any choice would be speculative.

Question 9

A paint company has the following aggregate demand requirements and cost data for the upcoming year by quarter.
Table 2
 $$\begin{array} { | l | l | } 
\hline \text { QUARTER } & \begin{array} { l } 
\text { FORECAST DEMAND } \
\text { (UNITS) }
\end{array} \
\hline 1 & 1,200 \
\hline 2 & 1,500 \
\hline 3 & 1,900 \
\hline 4 & 1,000 \
\hline \text { TOTAL: } & 5,600 \
\hline
\end{array}$$ $\begin{array}{ll}
\text { Previous quarter's production: } & 900 \text { units } \
\hline \text { Beginning inventory: } & 0 \
\hline \text { Backorder costs: } & \$ 60 / \text { unit } \
\hline\text { Inventory-holding cost }\\text { (on ending inventory): } & \$ 12 / \text { unit/quarter } \
\hline \text { Hiring employees: } & \$ 30 / \text { unit increase } \
\hline \text { Firing employees: } & \$ 70 / \text { unit decrease } \
\hline\text { Unit cost: } & \$ 45 / \text { unit } \
\hline \text { Overtime cost: } & \$ 67.50 / \text { unit }\
\end{array}$ ____________________________________________________________________
-Using the information in Table 2, determine the change in workforce costs (hiring and firing employees) if the paint company decides to use a chase strategy.

Accepted Answer

The correct answer is A.The chase strategy produces the same number of units as the demand in each period. Therefore, the workforce will need to be increased by 300 units in period 2, 400 units in period 3, and decreased by 900 units in period 4. The total change in workforce costs is:(300 * $30) + (400 * $30) + (900 * $70) = $93,000

Question 10

The Academic Company mixes and bottles a high-energy beverage in various container types and sizes for college students. The aggregate forecast for the next four quarters (1 year) in thousands of gallons is as follows:
Table 1
 $$\begin{array} { | l | l | } 
\hline \text { QUARTER } & \begin{array} { l } 
\text { FORECAST DEMAND PER } \
1,000 \text { GALLONS }
\end{array} \
\hline 1 & 400 \
\hline 2 & 700 \
\hline 3 & 850 \
\hline 4 & 650 \
\hline \text { TOTAL: } & 2,600 \
\hline
\end{array}$$ 
Academic's management makes the following assumptions:
$\bullet$ Each employee works 550 standard hours of regular time each quarter.
$\bullet$ On average, it takes 27 hours to produce and package 1 unit (1,000 gallons).
$\bullet$ Regular-time labor costs $6.00/hour; overtime labor costs $9.00/hour.
$\bullet$ Inventory-holding cost is approximately $4.50/unit (1,000 gallons) per quarter based upon the ending inventory per quarter.
$\bullet$ Because of extremely hot weather, there is no beginning inventory available to start Quarter 1.
$\bullet$ Management wants a constant work force (no hiring or firing).
$\bullet$ Managers have also decided to always round up the number of employees needed to the next whole integer, i.e., 37.2 yields 38 employees.
______________________________________________________________________________
-Using the data in Table 1 and a level schedule of 650 units per quarter, what will be the annual employee costs?

Accepted Answer

The annual employee costs are calculated by determining the number of employees needed to produce 650 units per quarter. Each unit requires 27 hours, so 650 units require 17,550 hours per quarter. Dividing by 550 hours per employee gives 31.91, rounded up to 32 employees. The cost per employee per quarter is 550 hours * $6/hour = $3,300. For 32 employees over 4 quarters, the total cost is 32 * $3,300 * 4 = $421,200.

Question 11

A company currently has no items in inventory. The demand for the next four months is 200, 400, 250, and 350 units. Determine the level production rate if a level strategy is selected with the goal of ending Period 4 with 100 units in inventory.

Accepted Answer

To calculate the level production rate, we can use the formula:

Level production rate = (Total demand for the period – Desired ending inventory) / Number of periods

Total demand for the period = 200 + 400 + 250 + 350 = 1200

Desired ending inventory = 100 units

Number of periods = 4

Level production rate = (1200 – 100) / 4 = 275

Therefore, the best choice is B, as it is closest to the calculated level production rate of 275.

Question 12

Aggregate planning:

Accepted Answer

Aggregate planning is used to determine the overall budget and necessary resources required for a business to meet its forecasted production demands. It does not involve detailed staff scheduling or shop floor control, but rather focuses on high-level decisions about the allocation of resources over a longer term.

Question 13

A paint company has the following aggregate demand requirements and cost data for the upcoming year by quarter.
Table 2
 $$\begin{array} { | l | l | } 
\hline \text { QUARTER } & \begin{array} { l } 
\text { FORECAST DEMAND } \
\text { (UNITS) }
\end{array} \
\hline 1 & 1,200 \
\hline 2 & 1,500 \
\hline 3 & 1,900 \
\hline 4 & 1,000 \
\hline \text { TOTAL: } & 5,600 \
\hline
\end{array}$$ $\begin{array}{ll}
\text { Previous quarter's production: } & 900 \text { units } \
\hline \text { Beginning inventory: } & 0 \
\hline \text { Backorder costs: } & \$ 60 / \text { unit } \
\hline\text { Inventory-holding cost }\\text { (on ending inventory): } & \$ 12 / \text { unit/quarter } \
\hline \text { Hiring employees: } & \$ 30 / \text { unit increase } \
\hline \text { Firing employees: } & \$ 70 / \text { unit decrease } \
\hline\text { Unit cost: } & \$ 45 / \text { unit } \
\hline \text { Overtime cost: } & \$ 67.50 / \text { unit }\
\end{array}$ ____________________________________________________________________
-Using the data in Table 2 and assuming the level strategy, determine the change in production costs for the year.

Accepted Answer

In a level strategy, production remains constant, so there is no change in production costs due to hiring or firing.

Question 14

A company currently has no items in inventory. The demand for the next four months is 200, 400, 250, and 350 units. Assuming a level production rate of 250 units per month, determine the months in which backorders or stockouts will materialize.

Accepted Answer

The company has no inventory at the beginning. Hence, it starts producing 250 units in month 1, and it can only fulfill 200 units of demand. Therefore, it will face a backorder of 50 units in month 1.
In month 2, there are 450 units of cumulative demand (200+400-250), and the company can only produce 250 units, resulting in a backorder of 200 units.
In month 3, there are 450 units of cumulative demand (200+400-250), and the company can only produce 250 units, resulting in a backorder of 200 units.
In month 4, there are 550 units of cumulative demand (200+400+250-350), and the company can only produce 250 units, resulting in a backorder of 300 units.
Therefore, the backorders will materialize in months 1, 2, 3, and 4, leading to a stockout in months 2, 3, and 4.

Question 15

The Academic Company mixes and bottles a high-energy beverage in various container types and sizes for college students. The aggregate forecast for the next four quarters (1 year) in thousands of gallons is as follows:
Table 1
 $$\begin{array} { | l | l | } 
\hline \text { QUARTER } & \begin{array} { l } 
\text { FORECAST DEMAND PER } \
1,000 \text { GALLONS }
\end{array} \
\hline 1 & 400 \
\hline 2 & 700 \
\hline 3 & 850 \
\hline 4 & 650 \
\hline \text { TOTAL: } & 2,600 \
\hline
\end{array}$$ 
Academic's management makes the following assumptions:
$\bullet$ Each employee works 550 standard hours of regular time each quarter.
$\bullet$ On average, it takes 27 hours to produce and package 1 unit (1,000 gallons).
$\bullet$ Regular-time labor costs $6.00/hour; overtime labor costs $9.00/hour.
$\bullet$ Inventory-holding cost is approximately $4.50/unit (1,000 gallons) per quarter based upon the ending inventory per quarter.
$\bullet$ Because of extremely hot weather, there is no beginning inventory available to start Quarter 1.
$\bullet$ Management wants a constant work force (no hiring or firing).
$\bullet$ Managers have also decided to always round up the number of employees needed to the next whole integer, i.e., 37.2 yields 38 employees.
______________________________________________________________________________
-Using the data in Table 1, if management decides on a chase strategy, with production in the last quarter of 600 units and a rate change cost of $3.00/1000 gallons, determine the yearly cost of rate change (hiring and firing).

Accepted Answer

The correct answer is A because the yearly cost of rate change (hiring and firing) is $2,550.

Question 16

The Academic Company mixes and bottles a high-energy beverage in various container types and sizes for college students. The aggregate forecast for the next four quarters (1 year) in thousands of gallons is as follows:
Table 1
 $$\begin{array} { | l | l | } 
\hline \text { QUARTER } & \begin{array} { l } 
\text { FORECAST DEMAND PER } \
1,000 \text { GALLONS }
\end{array} \
\hline 1 & 400 \
\hline 2 & 700 \
\hline 3 & 850 \
\hline 4 & 650 \
\hline \text { TOTAL: } & 2,600 \
\hline
\end{array}$$ 
Academic's management makes the following assumptions:
$\bullet$ Each employee works 550 standard hours of regular time each quarter.
$\bullet$ On average, it takes 27 hours to produce and package 1 unit (1,000 gallons).
$\bullet$ Regular-time labor costs $6.00/hour; overtime labor costs $9.00/hour.
$\bullet$ Inventory-holding cost is approximately $4.50/unit (1,000 gallons) per quarter based upon the ending inventory per quarter.
$\bullet$ Because of extremely hot weather, there is no beginning inventory available to start Quarter 1.
$\bullet$ Management wants a constant work force (no hiring or firing).
$\bullet$ Managers have also decided to always round up the number of employees needed to the next whole integer, i.e., 37.2 yields 38 employees.
______________________________________________________________________________
-Using the data in Table 1, determine the annual inventory-holding cost if Academic decides to use a level production rate of 650 units per quarter.

Accepted Answer

To calculate the annual inventory-holding cost with a level production rate of 650 units per quarter, we first determine the ending inventory for each quarter. The production is constant at 650 units, while demand varies. The ending inventory for each quarter is the cumulative difference between production and demand. - Q1: Production = 650, Demand = 400, Ending Inventory = 250 units- Q2: Production = 650, Demand = 700, Ending Inventory = 200 units (previous ending inventory of 250 - 50 units sold beyond production)- Q3: Production = 650, Demand = 850, Ending Inventory = 0 units (previous ending inventory of 200 - 200 units sold beyond production)- Q4: Production = 650, Demand = 650, Ending Inventory = 0 units (demand equals production)The inventory-holding cost is $4.50/unit/quarter. The total annual inventory-holding cost is calculated as follows:- Q1: 250 units * $4.50 = $1,125- Q2: 200 units * $4.50 = $900- Q3: 0 units * $4.50 = $0- Q4: 0 units * $4.50 = $0Total annual inventory-holding cost = $1,125 + $900 + $0 + $0 = $2,025.

Question 17

The bill of material (BOM) for Products A and B are shown below followed by a table of inventory data (called Exhibit 1). The master production scheduling (MPS) for A calls for 150 units of A to be completed in Week 4 and another 225 units to be completed in Week 5. End item A has a two-week lead time. The MPS calls for 400 units of B to be completed in Week 6. End item B has a one-week lead time.  Exhibit 1
 $\begin{array}{|l|l|l|l|}
\hline \text { DATA CATEGORY } & \text { C } & \text { D } & \text { E } \
\hline \text { Lot Sizing Rule } & \text { FOQ }=800 & \text { LFL } & \text { POQ =4 } \
\hline \text { Lead Time } & 1 \text { week } & 2 \text { weeks } & 1 \text { week } \
\hline \text { Scheduled Receipt } & 400 \text { (Week 1) } & 80 \text { (Week 1) } & \text { None } \
\hline \text { Beginning Inventory } & 80 & 60 & 100 \
\hline
\end{array}$ ____________________________________________________________________
-Using the data in Exhibit 1, determine the timing and amount of the first planned order receipt for Item C.

Accepted Answer

The first planned order receipt for Item C is in Week 3 for 800 units, as this would align with the need to replenish inventory to meet future demand while considering lead times and existing inventory levels.

Question 18

The bill of material (BOM) for Products A and B are shown below followed by a table of inventory data (called Exhibit 1). The master production scheduling (MPS) for A calls for 150 units of A to be completed in Week 4 and another 225 units to be completed in Week 5. End item A has a two-week lead time. The MPS calls for 400 units of B to be completed in Week 6. End item B has a one-week lead time.  Exhibit 1
 $\begin{array}{|l|l|l|l|}
\hline \text { DATA CATEGORY } & \text { C } & \text { D } & \text { E } \
\hline \text { Lot Sizing Rule } & \text { FOQ }=800 & \text { LFL } & \text { POQ =4 } \
\hline \text { Lead Time } & 1 \text { week } & 2 \text { weeks } & 1 \text { week } \
\hline \text { Scheduled Receipt } & 400 \text { (Week 1) } & 80 \text { (Week 1) } & \text { None } \
\hline \text { Beginning Inventory } & 80 & 60 & 100 \
\hline
\end{array}$ ____________________________________________________________________
-Using the data given in Exhibit 1, determine the gross requirements for Item E in Week 2.

Accepted Answer

The answer of The bill of material (BOM) for Products...

Question 19

If A has a gross requirement to build 200 units and an on-hand inventory for A of 60, determine the net requirement for D if its current on-hand inventory balance for D is 200 (all other components have no (zero) current inventory).

Accepted Answer

The answer of If A has a gross requirement to...

Question 20

Which of the following is least likely to be found in service organizations?

Accepted Answer

Intermediate levels in aggregate planning are typically found in manufacturing organizations, not service organizations.

Quiz 13: Resource Management