Question 1

An aggregate planning horizon is usually between three and five years.

Accepted Answer

Aggregate planning typically covers a time frame of 3 to 18 months, focusing on meeting forecasted demand with a combination of production, inventory, and other capacity variables.

Question 2

A linear programming formulation of an aggregate plan would typically use a constraint to limit the number of units produced using overtime or subcontracting labor.

Accepted Answer

Linear programming models for aggregate planning often include constraints that limit the use of overtime or subcontracting labor to ensure a feasible and cost-effective plan.

Question 3

Short-term production serves as a broad blueprint for operations and establishes the parameters within which aggregate planning decisions are made.

Accepted Answer

Short-term production focuses on the immediate future, typically up to one year, and involves detailed planning of actual production activities, rather than serving as a broad blueprint for operations. Aggregate planning, on the other hand, is what establishes the broad parameters for operations over a medium-term horizon, balancing demand and capacity to optimize costs and resources.

Question 4

To create an aggregate plan,a company must specify the planning horizon for the plan and the duration of each period within the planning horizon.

Accepted Answer

The statement is true. The planning horizon is the length of time for which the plan is made, and the duration of each period specifies the length of time that is covered by each planning period. Together, these two factors determine the total number of planning periods in the aggregate plan.

Question 5

The aggregate planning problem is concerned with determining the production level,inventory level,and capacity level (internal and outsourced)for each period that maximizes the firm's profit over the planning horizon.

Accepted Answer

The statement accurately describes the objective of the aggregate planning problem.

Question 6

As capacity utilization increases,it becomes less important to perform aggregate planning.

Accepted Answer

As capacity utilization increases, it becomes more important to perform aggregate planning to ensure that resources are being used effectively and efficiently. Without proper planning, there could be issues such as overproduction, stockouts, and increased costs due to inefficient use of resources.

Question 7

An aggregate plan can be used to determine whether a company needs to hire or lay off workers.

Accepted Answer

An aggregate plan involves forecasting demand and production levels over a medium-term timeframe (usually 3-18 months) and making decisions about workforce and production capacity accordingly. If demand is expected to increase, the company may need to hire more workers to meet production needs. If demand is expected to decrease, the company may need to lay off workers to avoid overproduction and excess inventory. Therefore, an aggregate plan can inform decisions about hiring or layoffs.

Question 8

A chase strategy for aggregate planning synchronizes production rate with the demand rate.

Accepted Answer

A chase strategy is a production planning approach where the production rate is synchronized with the demand rate to meet the customer demand in a timely manner. The main objective of this strategy is to maintain the lowest level of inventory while keeping the production cost as low as possible. Therefore, the statement "a chase strategy for aggregate planning synchronizes production rate with the demand rate" is true.

Question 9

Linear programming finds the solution for an aggregate plan that creates the highest profit while satisfying the constraints that a company faces.

Accepted Answer

Linear programming is a mathematical technique used to optimize a given objective function subject to constraints. In operations management, linear programming is often used to develop an aggregate plan that maximizes profit while meeting constraints related to demand, capacity, and other factors.

Question 10

Traditionally,much of aggregate planning is focused within an enterprise and may not always be seen as a part of supply chain management.

Accepted Answer

Aggregate planning is the process of developing a strategic plan to satisfy the demand for a specific product or service, while taking into account the organization's capacity, resources, and constraints. This planning process is mainly focused within the enterprise and may not always be seen as a part of supply chain management, which deals with coordinating and managing the flow of goods and services from suppliers to customers. However, aggregate planning does have an impact on the overall supply chain, as it affects the production and distribution of products and services that are part of the supply chain network.

Question 11

The goal of aggregate planning is to satisfy demand in a way that minimizes profit.

Accepted Answer

The goal of aggregate planning is to satisfy demand in a way that maximizes profit while also taking into account constraints such as capacity, labor, and inventory levels.

Question 12

Aggregate planning is a process by which a company determines levels of capacity,production,subcontracting,inventory,stockouts,and even pricing over a specified time horizon.

Accepted Answer

This statement accurately describes the process of aggregate planning.

Question 13

Most strategies that an aggregate planner actually uses are in combination,and are referred to as hybrid strategies.

Accepted Answer

Hybrid strategies involve a combination of different approaches and techniques that an aggregate planner may use to achieve their goals.

Question 14

The goal of aggregate planning is to build a plan that satisfies demand while minimizing downtime.

Accepted Answer

The goal of aggregate planning is to build a plan that satisfies demand while minimizing costs, including inventory holding costs and labor costs. Downtime is a factor to consider, but it is not the primary goal of the plan.

Question 15

To improve the quality of aggregate plans,forecast errors must be taken into account when formulating aggregate plans.

Accepted Answer

Forecast errors can affect the accuracy of aggregate plans. Taking these errors into account can help improve the quality of the plans and enable companies to better respond to changes in demand. By incorporating forecast error margins into aggregate planning, companies can reduce the risk of stockouts, overproduction, and other costly mistakes. Therefore, the statement is true.

Question 16

The aggregate planner must make a trade-off between capacity,inventory,and backlog costs.

Accepted Answer

The aggregate planner must consider the costs associated with capacity utilization, holding inventory, and carrying backlog orders, and must make trade-offs between these costs.

Question 17

A linear programming formulation of an aggregate plan would typically have a different decision variable for per unit material cost and labor's hourly wage.

Accepted Answer

In a linear programming formulation of an aggregate plan, the decision variables are typically related to production levels rather than specific costs such as per unit material cost or labor's hourly wage. These costs are typically included in the objective function to be minimized or maximized.

Question 18

A poor aggregate plan may result in a large amount of excess inventory and capacity,thereby raising costs.

Accepted Answer

A poor aggregate plan can lead to overproduction, which can result in excess inventory and capacity. This can lead to increased storage and handling costs, as well as potential stock obsolescence. Additionally, excess capacity can result in underutilized resources, driving up costs per unit produced.

Question 19

Breaking an aggregate plan into separate plans for each product creates a master production schedule.

Accepted Answer

Breaking down an aggregate plan into separate plans for each product results in a more detailed production schedule known as a master production schedule (MPS). This schedule specifies the exact quantity and timing of each product to be produced.

Question 20

As inputs into the aggregate plan change,managers do not need to make changes to the aggregate plan.

Accepted Answer

As inputs into the aggregate plan change, managers may need to make changes to the aggregate plan in order to ensure that the plan remains feasible and effective. Changes in demand, capacity, inventory levels, and other factors can all impact the aggregate plan and require adjustments to be made.

Quiz 8: Aggregate Planning in a Supply Chain