P370 Final Exam Questions With Complete
Solutions.
Aggregate Production Planning
A managerial statement of time-phased production rates, workforce level, and inventory investment
which takes into account customer requirements and capacity limitations
APP
Aggregate Production Planning
-(intermediate term usually 3-18 months)
-Everything is turned into LABOR HOURS
-High level plans DON'T make things happen... Detailed things do!
Objectives of APP
1. Specify the optimal combination of production rate, workforce level, and inventory on hand
2. Minimize the cost of resources required to meet demand over that period
MPS
Master Production Scheduling
Master Production Scheduling Characteristics
-1st level of disaggregation of the aggregate plan (begin to break down the products into more real
end items)
-Horizon and buckets are no larger than APP and are often shorter (greater frequency of revision)
-Rolling Horizons
MRP
Materials Requirements Planning: what materials to meet the MPS
Materials Requirements Planning Characteristics
-EXTREME detail, down to nut and bolt
-No fictitious or theoretical units/products
Shop Floor Scheduling
Detailed, actual production schedule
Time Horizon vs Time Bucket
horizon (years) is usually the term of the plan and the buckets are divisions of the horizon (months)
Aggregate
-Classes of products
-Labor or other inputs
-Geographic location of production
-Often fictitious
Rolling Horizon of 5 months (example)
Always 5 months out no matter where we are in plan
, 3 Production Planning Strategies
-Chase
-Level
-Stable Workforce
Chase Strategy
Perfectly match demand by varying PRODUCTION and MANPOWER by hiring and firing
Chase Strategy Characteristics
Goal: hit forecast without waste (reduce stock outs and high inventory)
-Workforce & hours need to change to meet forecast
-Need EASILY trained employees
-DOWNSIDE: hiring/firing costs; morale decreases
Level Strategy
Maintain a CONSTANT production/workforce level to buffer against the changes in demand
Level Strategy Characteristics
-EASIEST of the 3 to pursue
-Goal: constant workforce & output production level but fluctuating inventory
Stable Workforce Strategy
Stable workforce working at a constant output rate, allowing variable working hours to buffer against
variation
Stable Workforce Characteristics
-Shortages/Surpluses absorbed by fluctuating inventory levels, order backlogs, and lost sales
-Try to keep inventory as low as possible
-UPSIDE: size of workforce constant, hours fluctuates; limits hiring/firing costs
-DOWNSIDE: Decreased customer service, increased inventory costs; possibility of inventory
becoming obsolete.
Balance Equation
Ending Inventory= Beginning Inventory+Production-Demand
3 Types of Inventory
-Raw Materials
-Work in Process (WIP)
-Finished Good
4 Reasons for Holding Inventory
-Safety Stock
-Cycle Stock
-Pipeline Stock
-Seasonal Stock
Solutions.
Aggregate Production Planning
A managerial statement of time-phased production rates, workforce level, and inventory investment
which takes into account customer requirements and capacity limitations
APP
Aggregate Production Planning
-(intermediate term usually 3-18 months)
-Everything is turned into LABOR HOURS
-High level plans DON'T make things happen... Detailed things do!
Objectives of APP
1. Specify the optimal combination of production rate, workforce level, and inventory on hand
2. Minimize the cost of resources required to meet demand over that period
MPS
Master Production Scheduling
Master Production Scheduling Characteristics
-1st level of disaggregation of the aggregate plan (begin to break down the products into more real
end items)
-Horizon and buckets are no larger than APP and are often shorter (greater frequency of revision)
-Rolling Horizons
MRP
Materials Requirements Planning: what materials to meet the MPS
Materials Requirements Planning Characteristics
-EXTREME detail, down to nut and bolt
-No fictitious or theoretical units/products
Shop Floor Scheduling
Detailed, actual production schedule
Time Horizon vs Time Bucket
horizon (years) is usually the term of the plan and the buckets are divisions of the horizon (months)
Aggregate
-Classes of products
-Labor or other inputs
-Geographic location of production
-Often fictitious
Rolling Horizon of 5 months (example)
Always 5 months out no matter where we are in plan
, 3 Production Planning Strategies
-Chase
-Level
-Stable Workforce
Chase Strategy
Perfectly match demand by varying PRODUCTION and MANPOWER by hiring and firing
Chase Strategy Characteristics
Goal: hit forecast without waste (reduce stock outs and high inventory)
-Workforce & hours need to change to meet forecast
-Need EASILY trained employees
-DOWNSIDE: hiring/firing costs; morale decreases
Level Strategy
Maintain a CONSTANT production/workforce level to buffer against the changes in demand
Level Strategy Characteristics
-EASIEST of the 3 to pursue
-Goal: constant workforce & output production level but fluctuating inventory
Stable Workforce Strategy
Stable workforce working at a constant output rate, allowing variable working hours to buffer against
variation
Stable Workforce Characteristics
-Shortages/Surpluses absorbed by fluctuating inventory levels, order backlogs, and lost sales
-Try to keep inventory as low as possible
-UPSIDE: size of workforce constant, hours fluctuates; limits hiring/firing costs
-DOWNSIDE: Decreased customer service, increased inventory costs; possibility of inventory
becoming obsolete.
Balance Equation
Ending Inventory= Beginning Inventory+Production-Demand
3 Types of Inventory
-Raw Materials
-Work in Process (WIP)
-Finished Good
4 Reasons for Holding Inventory
-Safety Stock
-Cycle Stock
-Pipeline Stock
-Seasonal Stock
