MGT 227 EXAM 3 QUESTIONS AND ANSWERS
aggregate operations plan - Answers - Translates annual and quarterly business plans
into broad labor and output plans for the intermediate term. A plan for labor and
production for the intermediate term with the objective to minimize the cost of resources
needed to meet demand.
sales and operation planning - Answers - Is a process that helps firms provide better
customer service, lower inventory, shorten customer lead times, stabilize production
rates, and give top management a handle on the business (balance supply and
demand)
long-range planning - Answers - Annually, more than a year with tasks too (in video)
short-range planning - Answers - 1 day to 6 months (more in video too with tasks)
production rate - Answers - units completed per unit of time (production = production
rate x workforce level)
workforce level - Answers - number of workers needed in a period
backorder costs - Answers - - Costs of expediting, loss of customer goodwill, and loss of
sales revenues resulting from backordering
- Hard to measure
level strategy - Answers - Demand changes are absorbed by fluctuating inventory
levels, order backlogs, and lost sales. A strategy that uses inventory and backorders as
part of the strategy to meet demand.
chase strategy - Answers - Match the production rate by hiring and laying off employees
and must have a pool of easily trained applications to draw on. A strategy where the
production rate is set to match expected demand.
yield management - Answers - Given limited capacity, the process of allocating it to
customers at the right price and time to maximize profit. (can be powerful approach to
making demand more predictable which is important to aggregate planning). The
practice of allocating capacity and manipulating demand to make it more predictable.
inventory - Answers - Inventory can be visualized as visualized as stacks of money
sitting on forklifts, on shelves, and in tricks, and planes while in transit. For many
businesses inventory is the largest asset on the balance sheet at any given time. (so
can be hard to convert back to cash)
, Q-system - Answers - CHAPTER 20 (diagram) Quantity system. An inventory control
model where the amount requisitioned is fixed and the actual ordering is triggered by
inventory dropping to a specified level of inventory.
P-system - Answers - CHAPTER 20 (diagram) Period system. An inventory control
model that specifies inventory is ordered at the end of a predetermined time period. The
interval of time between orders is fixed and the order quantity varies.
Newsvendor model - Answers - The problem is how many to order and then is it to
many or too few. (in ppt but don't think we went over it)
ordering cost - Answers - Costs of placing an order
holding (carrying) costs - Answers - Costs for storage, handling, insurance, taxes,
spoilage, + obsolescence. Major component is the cost of capital tied up in inventory.
set-up (product change) costs - Answers - Costs for arranging specific equipment
setups, and so on
shortage costs - Answers - costs of running out of inventory/stock ***check with ppt
safety stock - Answers - Extra inventory that a company holds to protect itself against
uncertainties in either demand or replenishment time. (found something in chapter 20
with fixed time period with that generally require high level of safety stock)
decoupling point - Answers - Point at which inventory is stored, which allows SC to
operate independently. (stage in a health care process where waiting takes place)
What is independent demand and example - Answers - The demands for various items
are unrelated to each other. Example is at a workstation may produce many parts that
are unrelated but meet some external demand requirement
What is dependent demand and example - Answers - the need for any one item is a
direct result of the need for some other item. this is usually a higher-level item of which
it is a part. Example is if an automobile company plans on producing 500 cars per day,
then obviously it will need 2,000 wheels and tires
EOQ (Economic Order Quantity) **** - Answers - A type of fixed order quantity model
that determines the amount of an item to be purchased or manufactured at one time.
The intent is to minimize the combined costs of acquiring and carrying inventory. The
basic formula is: [please see the print version of APICS Dictionary for full definition]
where A = annual usage in units, S = ordering costs in dollars, i = annual inventory
carrying cost rate as a decimal, and C = unit cost.
Synonym: economic lot size, minimum cost order quantity.
aggregate operations plan - Answers - Translates annual and quarterly business plans
into broad labor and output plans for the intermediate term. A plan for labor and
production for the intermediate term with the objective to minimize the cost of resources
needed to meet demand.
sales and operation planning - Answers - Is a process that helps firms provide better
customer service, lower inventory, shorten customer lead times, stabilize production
rates, and give top management a handle on the business (balance supply and
demand)
long-range planning - Answers - Annually, more than a year with tasks too (in video)
short-range planning - Answers - 1 day to 6 months (more in video too with tasks)
production rate - Answers - units completed per unit of time (production = production
rate x workforce level)
workforce level - Answers - number of workers needed in a period
backorder costs - Answers - - Costs of expediting, loss of customer goodwill, and loss of
sales revenues resulting from backordering
- Hard to measure
level strategy - Answers - Demand changes are absorbed by fluctuating inventory
levels, order backlogs, and lost sales. A strategy that uses inventory and backorders as
part of the strategy to meet demand.
chase strategy - Answers - Match the production rate by hiring and laying off employees
and must have a pool of easily trained applications to draw on. A strategy where the
production rate is set to match expected demand.
yield management - Answers - Given limited capacity, the process of allocating it to
customers at the right price and time to maximize profit. (can be powerful approach to
making demand more predictable which is important to aggregate planning). The
practice of allocating capacity and manipulating demand to make it more predictable.
inventory - Answers - Inventory can be visualized as visualized as stacks of money
sitting on forklifts, on shelves, and in tricks, and planes while in transit. For many
businesses inventory is the largest asset on the balance sheet at any given time. (so
can be hard to convert back to cash)
, Q-system - Answers - CHAPTER 20 (diagram) Quantity system. An inventory control
model where the amount requisitioned is fixed and the actual ordering is triggered by
inventory dropping to a specified level of inventory.
P-system - Answers - CHAPTER 20 (diagram) Period system. An inventory control
model that specifies inventory is ordered at the end of a predetermined time period. The
interval of time between orders is fixed and the order quantity varies.
Newsvendor model - Answers - The problem is how many to order and then is it to
many or too few. (in ppt but don't think we went over it)
ordering cost - Answers - Costs of placing an order
holding (carrying) costs - Answers - Costs for storage, handling, insurance, taxes,
spoilage, + obsolescence. Major component is the cost of capital tied up in inventory.
set-up (product change) costs - Answers - Costs for arranging specific equipment
setups, and so on
shortage costs - Answers - costs of running out of inventory/stock ***check with ppt
safety stock - Answers - Extra inventory that a company holds to protect itself against
uncertainties in either demand or replenishment time. (found something in chapter 20
with fixed time period with that generally require high level of safety stock)
decoupling point - Answers - Point at which inventory is stored, which allows SC to
operate independently. (stage in a health care process where waiting takes place)
What is independent demand and example - Answers - The demands for various items
are unrelated to each other. Example is at a workstation may produce many parts that
are unrelated but meet some external demand requirement
What is dependent demand and example - Answers - the need for any one item is a
direct result of the need for some other item. this is usually a higher-level item of which
it is a part. Example is if an automobile company plans on producing 500 cars per day,
then obviously it will need 2,000 wheels and tires
EOQ (Economic Order Quantity) **** - Answers - A type of fixed order quantity model
that determines the amount of an item to be purchased or manufactured at one time.
The intent is to minimize the combined costs of acquiring and carrying inventory. The
basic formula is: [please see the print version of APICS Dictionary for full definition]
where A = annual usage in units, S = ordering costs in dollars, i = annual inventory
carrying cost rate as a decimal, and C = unit cost.
Synonym: economic lot size, minimum cost order quantity.
