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HW 2 with answers...

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HW 2 quiz (5 pts) 1. Converting quarterly and annual business plans into broad output and labor requirements for the intermediate term is known as: A. Aggregate planning. B. Master production scheduling. C. Rough-cut capacity planning. D. Materials requirements planning. E. Capacity requirements planning. A A: (5 pts) 2. Which of the following is NOT a method used in aggregate planning to cope with fluctuations in demand? A. Backordering demand in peak periods B. Building inventory in advance of peak periods C. Hiring additional workers in peak periods D. Construction of a new plant and/or finished goods warehouse E. All of the above are methods used to cope with fluctuating demand in A: D (5 pts) 3. Which aggregate planning strategy typically results in greater inventory carrying costs? A. Level strategy. B. Chase strategy. C. Subcontracting strategy. D. Material requirements production strategy E. It depends on other factors A A: (5 pts) 4. Suppose a company is using pure chase strategy for its aggregate production planning. Which of the following policies would a manager use to deal with (or hedge against) the fluctuation in demand? A. Hire additional workers when demand increases and outplace them when B. Stock up excessive inventory during the periods of low demand. C. Purchase the shortages from subcontractors. D. Allow the employees to work overtime when the demand is low. E. All of the above A: A (5 pts) 5. The Bloomington Bicycle Bearing company wishes to use a level output plan to plan for the rest of the year. Here is the forecasted demand for all bearing types: Month Demand May 800 Jun 650 July 720 August 690 Sept 530 Oct 610 Nov 630 Dec 610 If the beginning inventory is 300 units and the desired ending inventory at the end of December is 500 units, how many units will be in inventory at the end of August? Assume that backorders are allowed. A. 140 B. 150 C. 160 D. 170

E. 180 C A: Production amount found by summing demand for all periods + ending inv – BI / 8 Agg Plan BI

300

180

210

170

160

310

380

430

Demand

800

650

720

690

530

610

630

610

Prod

680

680

680

680

680

680

680

680

EI

180

210

170

160

310

380

430

500

(5 pts) 6. A pure level strategy for aggregate production planning: A. Maintains a stable workforce working at a constant output rate. B. Varies the output by changing the number of hours worked through C. Matches the production rate to monthly demand by hiring and laying off D. Uses a part-time workforce when the demand exceeds the production rate. E. Never uses inventory to buffer against the changes in demand.

A: A (5 pts) 7. Which of the following circumstances would provide an incentive for employing a level (vs. chase) plan? A. The product is perishable B. Warehouse space for finished goods is limited. C. Inventory carrying costs are very high. D. The production process requires highly trained labor. E. None of the above (i.e., all are incentives for a chase plan).

A: D (5 pts) 8. Centipede has asked you to develop a chase plan for the production of its earth moving equipment. Below is the beginning inventory, monthly demand, and relevant work force information. Determine the total hire/fire costs and the number of workers employed at the end of October. Note: The ending inventory for October should be 0. July Beginning Inventory 1200: Demand is July 3300; Aug 3000; Sept 2550; Oct 2400. Hiring costs $50 per worker; firing costs $100 per worker; production rate 15 units per month per worker; starting workforce 200 workers A. $6,000 and 160 workers B. $13,000 and 160 workers C. $6,000 and 170 workers D. $13,000 and 170 workers E. $19,000 and 170 workers A: B Agg Plan BI

1200

0

0

0

Demand

3300

3000

2550

2400

Prod

2100

3000

2550

2400

0

0

0

0

Workers

140

200

170

160

change

-60

60

-30

-10

EI

Cost

6000

3000

3000

1000

(5 pts) 9. The BBC Company is forecasting demand to fluctuate over the next four periods. If the beginning inventory level is 120 units and the company wants a pure level output plan, what level of production is required to avoid back orders during any period and to keep ending inventory for period 4 at a minimum? The forecast is: Period 1-1900; Period 21930; Period 3-2260; Period 4-910. A. 1720 B. 1855 C. 1990 D. 2030 E. None of the above answers are correct. A: C

Cumul Demand Beg Inv Net demand # of periods Prod

1 1900 120 1780 1 1780

2 3830 120 3710 2 1855

3 6090 120 5970 3 1990

4 7000 120 6880 4 1720

(5 pts) 10 Which of the following costs are NOT considered in developing an aggregate . production plan? A. Inventory holding costs. B. Basic production costs (fixed and variable). C. Hiring and training costs. D. Layoff and firing expenses E. Depreciation costs.

A: E...