P370 FINAL EXAM!!
Converting quarterly and annual business plans into broad output and labor requirements for the
intermediate term is known as:
Master production scheduling.
Aggregate planning
Master production scheduling.
Rough-cut capacity planning.
Materials requirements planning.
Capacity requirements planning.
Aggregate planning
Which of the following is NOT a method used in aggregate planning to cope with fluctuations in
demand?
Backordering demand in peak periods
Building inventory in advance of peak periods
Hiring additional workers in peak periods
Construction of a new plant and/or finished goods warehouse
All of the above are methods used to cope with fluctuating demand in
Construction of a new plant and/or finished goods warehouse
Which aggregate planning strategy typically results in greater inventory carrying costs?
Level strategy.
Chase strategy.
Subcontracting strategy.
Material requirements production strategy
It depends on other factors
Level strategy.
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?
Hire additional workers when demand increases and outplace them when demand decreases
Stock up excessive inventory during the periods of low demand.
Purchase the shortages from subcontractors.
Allow the employees to work overtime when the demand is low.
All of the above
Hire additional workers when demand increases and outplace them when demand decreases
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.
160
A pure level strategy for aggregate production planning:
Maintains a stable workforce working at a constant output rate.
Varies the output by changing the number of hours worked through flexible work schedules or
overtime
Matches the production rate to monthly demand by hiring and laying off
Uses a part-time workforce when the demand exceeds the production rate.
Never uses inventory to buffer against the changes in demand.
, Maintains a stable workforce working at a constant output rate.
Which of the following circumstances would provide an incentive for employing a level (vs. chase)
plan?
The product is perishable
Warehouse space for finished goods is limited.
Inventory carrying costs are very high.
The production process requires highly trained labor.
None of the above (i.e., all are incentives for a chase plan).
The production process requires highly trained labor.
Mole Mfg. 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
$13,000 and 160 workers
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 2-1930; Period 3-2260; Period 4-910.
1990
Which of the following costs are NOT considered in developing an aggregate production plan?
Inventory holding costs.
Basic production costs (fixed and variable).
Hiring and training costs.
Layoff and firing expenses
Depreciation costs.
Depreciation costs.
Central Hydraulic Supply
The Central Hydraulic Supply Company is a distributor of hydraulic supplies in the Midwest. Central
handles standard fittings, tubing, and similar items. Generally Central carries an entire product line for
each manufacturer it represents providing local stock for rapid delivery to customers. The parts that
Central stocks are mainly used in the maintenance of large construction equipment. The company
operates 52 weeks per year.
The company reviewed the cost of preparing and processing a requisition, preparing a purchase
order, and making necessary record changes. This was estimated to be $50 per order.
One part that Central stocks is a small hydraulic fitting. Central sells about 20,500 of these fittings per
year (the fitting is purchases for $14 and sells for $19). The manufacturer from whom Central buys the
fitting does not offer any quantity discount. The manufacturer is located about 1,500 miles away and
the fittings are shipped to Central by truck. They all arrive at once.
The annual per unit inventory holding cost is 20% of the item's value.
What is the order quantity that minimizes total annual cost of inventory?
855.7
Central Hydraulic Supply
Converting quarterly and annual business plans into broad output and labor requirements for the
intermediate term is known as:
Master production scheduling.
Aggregate planning
Master production scheduling.
Rough-cut capacity planning.
Materials requirements planning.
Capacity requirements planning.
Aggregate planning
Which of the following is NOT a method used in aggregate planning to cope with fluctuations in
demand?
Backordering demand in peak periods
Building inventory in advance of peak periods
Hiring additional workers in peak periods
Construction of a new plant and/or finished goods warehouse
All of the above are methods used to cope with fluctuating demand in
Construction of a new plant and/or finished goods warehouse
Which aggregate planning strategy typically results in greater inventory carrying costs?
Level strategy.
Chase strategy.
Subcontracting strategy.
Material requirements production strategy
It depends on other factors
Level strategy.
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?
Hire additional workers when demand increases and outplace them when demand decreases
Stock up excessive inventory during the periods of low demand.
Purchase the shortages from subcontractors.
Allow the employees to work overtime when the demand is low.
All of the above
Hire additional workers when demand increases and outplace them when demand decreases
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.
160
A pure level strategy for aggregate production planning:
Maintains a stable workforce working at a constant output rate.
Varies the output by changing the number of hours worked through flexible work schedules or
overtime
Matches the production rate to monthly demand by hiring and laying off
Uses a part-time workforce when the demand exceeds the production rate.
Never uses inventory to buffer against the changes in demand.
, Maintains a stable workforce working at a constant output rate.
Which of the following circumstances would provide an incentive for employing a level (vs. chase)
plan?
The product is perishable
Warehouse space for finished goods is limited.
Inventory carrying costs are very high.
The production process requires highly trained labor.
None of the above (i.e., all are incentives for a chase plan).
The production process requires highly trained labor.
Mole Mfg. 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
$13,000 and 160 workers
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 2-1930; Period 3-2260; Period 4-910.
1990
Which of the following costs are NOT considered in developing an aggregate production plan?
Inventory holding costs.
Basic production costs (fixed and variable).
Hiring and training costs.
Layoff and firing expenses
Depreciation costs.
Depreciation costs.
Central Hydraulic Supply
The Central Hydraulic Supply Company is a distributor of hydraulic supplies in the Midwest. Central
handles standard fittings, tubing, and similar items. Generally Central carries an entire product line for
each manufacturer it represents providing local stock for rapid delivery to customers. The parts that
Central stocks are mainly used in the maintenance of large construction equipment. The company
operates 52 weeks per year.
The company reviewed the cost of preparing and processing a requisition, preparing a purchase
order, and making necessary record changes. This was estimated to be $50 per order.
One part that Central stocks is a small hydraulic fitting. Central sells about 20,500 of these fittings per
year (the fitting is purchases for $14 and sells for $19). The manufacturer from whom Central buys the
fitting does not offer any quantity discount. The manufacturer is located about 1,500 miles away and
the fittings are shipped to Central by truck. They all arrive at once.
The annual per unit inventory holding cost is 20% of the item's value.
What is the order quantity that minimizes total annual cost of inventory?
855.7
Central Hydraulic Supply
