Q&A Hero

Q: Scheduling deals with which three conflicting objectives? A.High efficiency, high profits, and short lead time. B.High profits, low inventories, and good customer service. C.Low inventories, high efficiency, and good customer service. D.Low inventories, good customer service, and short lead time.

Q: Aggregate planning and scheduling differ in that A.the former ensures that capacity is efficiently used, whereas the latter is the acquisition of resources. B.the former is short term, whereas the latter is medium term. C.the former is last in the hierarchy of capacity planning decisions, and the latter is first. D.the former deals with acquiring resources, and the latter deals with allocating resources.

Q: 54. Describe the most important questions to be answered concerning facilities decisions. Apply the questions to a fast-food restaurant chain with expanding demand. Feedback: See below.

Q: A single Ford plant builds a family of pickup trucks to serve the global market. This is an example of a market-focused facility.

Q: Resolving inconsistencies between supply and demand must wait until the end of the annual S&OP process.

Q: Sales and operations planning is a stand-alone system that is used to match supply and demand using a cross-functional approach.

Q: A small cushion strategy is appropriate when capacity is inexpensive.

Q: A wait-and-see facility approach uses a positive capacity cushion.

Q: It is possible in the short term for a firm to operate above 100% utilization.

Q: Capacity utilization = actual output/capacity x 100%.

Q: Aggregate planning assumes that the facility decisions can be changed.

Q: One way of leveling a seasonal demand pattern is by developing complementary products or services.

Q: Facilities planning, aggregate planning, and scheduling form a hierarchy of decisions extending from long range to medium range to short range, respectively, concerning the capacity of operations.

Q: Inventory carrying costs typically include which of the following? A. The cost of capital invested in inventory. B. Storage costs. C. Obsolescence and deterioration costs. D. All of the above.

Q: The output of the S&OP process is A. an operations demand forecast. B. a production schedule. C. an aggregate production plan. D. all of the above.

Q: Which of the following is true regarding sales and operations planning (S&OP)? A. Follows a time horizon of more than 24 months, with updating of the plan quarterly. B. Changes in facilities are the first step in the S&OP process. C. Management can use S&OP to lower inventories or increase flexibility. D. All of the above.

Q: Which of the following fits with a preemptive facilities strategy? A. Wait and see what competitors do, then seek to match or exceed their capacity. B. Create a positive capacity cushion to stimulate the market. C. Reduce risk by allowing capacity to lag the market by a small amount. D. All of the above.

Q: An assembly-line facility desiring enough flexibility to meet unexpected demand is likely to set planned utilization at A. 100%. B. 80%. C. 60%. D. 50% or less.

Q: If a facility has a utilization rate of 80%, and current output levels requires 3,328 hours annually, what is the facilitys annual capacity? A. 2,582 hours. B. 3,785 hours. C. 4,160 hours. D. None of the above.

Q: Which of the following statements best fits with the concept of a level aggregate planning strategy? A. Results in a large amount of labor turnover at certain times of the year. B. The rate of production output will be variable, depending on demand. C. Changes in the workforce will absorb variations in demand. D. None of the above.

Q: Matching supply and demand for the next four quarters best describes A. facilities strategic decisions. B. sales and operations planning decisions. C. scheduling decisions. D. none of the above.

Q: 34. Which of the following statements best fits with the concept of economies of scale? A. Lower per unit costs as the production scale is increased. B. Gains in efficiency due to producing with a smaller facility. C. Higher per unit costs due to problems with communication, coordination, and bureaucratic red tape. D. Producing a greater variety of output that utilizes similar types of raw materials.

Q: Assume you have been assigned the task of identifying a chase strategy aggregate production plan for the coming year. You have been informed that beginning inventory is 500 units, your plan should provide an ending inventory for the year equal to 200 units, and you have been provided the following forecasts of aggregate demand. Knowing that the typical objective of chase plans is to avoid carrying inventory, what should you choose as the planned rate of production for the first quarter? Quarter Forecast 1 6,000 2 5,500 3 5,000 4 6,500 A.6,250 units B.6,000 units C.5,750 units D.5,500 units

Q: Assume you have been assigned the task of identifying a level strategy aggregate production plan for the coming year. You have been informed that beginning inventory is 2,000 units, your plan should provide an ending inventory for the year equal to 500 units, and you have been provided the following forecasts of aggregate demand. What should be the planned rate of quarterly production? Quarter Forecast 1 6,000 2 5,500 3 5,000 4 6,500 A.6,500 units B.6,000 units C.5,625 units D.5,375 units

Q: Correctly complete the following sentence. Aggregate planning typically A.entails a planning horizon of about 12 months. B.is an activity of matching supply with demand. C.is done for a single, or a few, overall measures of output. D.has all of the above features.

Q: There are four basic types of facility choices. Which of the following statements concerning facility choice is NOT true? A.Process-focused facilities generally have one technology, or at most two, and usually produce components or parts that are shipped to other facilities for further processing or assembly. B.Market-focused facilities are typically located in the markets they serve, commonly serving local customers, and are frequently service firms. C.Demand-focused facilities are quickly constructed and have the ability to serve global markets with fast order response times as warranted by the nature of customer demand. D.General-purpose facilities are commonly used by smaller companies and may produce several types of products and use several different processes.

Q: Five primary factors were listed for consideration when making facility-planning decisions. Which of the following is NOT one of those factors? A.Expected future demand. B.Global concerns. C.Purchased materials. D.Expected competitive moves.

Q: Effective capacity is A.also called theoretical capacity. B.base capacity plus time for maintenance, breaks, and absenteeism. C.the amount of capacity that can be used in planning for actual output. D.all of the above.

Q: Facility planning entails asking crucial questions, including all of the following EXCEPT A.How much total capacity is needed? B.How much capacity does the competition have? C.Where should facilities be located? D.When is the capacity needed?

Q: Which of the following represents the hierarchy of decisions concerning the capacity of operations ranging from long-term to short-term? A.Facility planning to aggregate planning to scheduling, respectively. B.Aggregate planning to scheduling to facility planning, respectively. C.Scheduling to facility planning to aggregate planning, respectively. D.Aggregate planning to facility planning to scheduling, respectively.

Q: The ABC Cement Corporation produces a high-quality cement that is supplied to construction companies. The potential demand and the probability of each potential demand quantity are given for the upcoming year: Demand in Tons Probability 500,000 0.3 250,000 0.4 300,000 0.3 Assuming manufacturing capacity of 700,000 tons, the estimated capacity cushion A.is 340,000 tons. .is 360,000 tons. C.is >1,000,000 tons. D.cannot be computed from this information.

Q: A small capacity cushion .maximizes utilization. B.is used when capacity is inexpensive. C.means that the cushion is 0%. D.is a competitive disadvantage.

Q: A large capacity cushion is appropriate when A.a make-to-stock process is used. .a firm is attempting to capture market share in a growing industry. C.the market for its products or services is shrinking. D.a firm wants its capacity to match average demand.

Q: Which of the following accurately describes a chase strategy? A.The firm produces the same amount each day over the planning period and deals with the variations in demand with inventory or overtime. B.The firm produces at the same level for half of the year, and then adjusts production to another level and produces at that level for the remainder of the year. C.The firm produces exactly what is needed each month. D.None of the above.

Q: Aggregate planning costs do NOT include A.hiring and layoff costs. B.part-time labor costs. C.subcontracting costs. D.inventory ordering costs.

Q: Under a level strategy, variations in demand are managed by A.varying the number of workers. B.using advertising and price changes. .varying inventory levels. D.all of the above.

Q: Which of the following is NOT true about aggregate planning in service organizations? A.A time horizon of 12 months, on average, is used. B.Both supply and demand variables can be changed. C.Inventory and capacity trade-offs are required. D.Facilities are considered fixed.

Q: One option for altering the pattern of demand through aggregate planning is A.using overtime. B.carrying inventory. C.subcontracting. D.pricing.

Q: Which of the following statement(s) correctly describes aggregate planning? A.Aggregate planning is concerned with matching supply and demand of output. B.Aggregate planning determines not only the output levels planned but also the appropriate resource mix to be used. C.The aim of aggregate planning is to set overall output levels for the medium-range future. D.All of the above.

Q: Which of the following statements is true about facilities decisions? A.They are generally short-range. B.They are not critical because they determine only future availability of output. C.They involve all organizational units and are often made at the highest corporate level. D.They are simple and easy to analyze.

Q: The most popular type of facility used by Fortune 500 companies is A.product-focused. B.process-focused. C.market-focused. D.general-purpose.

Q: The type of strategy used with respect to the amount of capacity cushion when "the cost or consequence of running out is approximately in balance with the cost of excess capacity" is called: A.small cushion. B.large cushion. C.moderate cushion. D.none of the above.

Q: Which of the following is NOT a factor affecting the elements of a facilities strategy? A.Cost of facilities. B.Likely behavior of competitors. C.Business strategy. D.Whether the company uses make-to-stock or assemble-to-order.

Q: The aggregate planning problem A.should consider only supply management options. B. affects only marketing and production, but human resources are not involved in decisions. C.should consider only demand management options. D.needs to consider multiple trade-offs such as customer service level, inventory levels, labor force stability, and costs.

Q: Aggregate planning differs from scheduling in that A.the former refers to the long range and the latter refers to the short range. B.the former is concerned with allocating available resources and the latter with the acquisition of resources. C.the former refers to the long range and the latter refers to the medium range. D.the former is concerned with the acquisition of resources and the latter with allocating available resources.

Q: Supply management variables include A.inventory, subcontracting, and cooperative arrangements. B.complementary offerings, inventory, and overtime. C.subcontracting, hiring, and reservations. D.all of the above.

Q: Demand management variables include A.pricing, inventory, and advertising. B.reservations, pricing, and advertising. C.subcontracting, advertising, and pricing. D.inventory, reservations, and pricing.

Q: In aggregate planning, A.the concern is over a long-range planning horizon. B.output levels are set in the face of certain demand. C."aggregate" implies that planning is done for a single overall measure of output or at most a few products. D.firms should never consider overtime, hiring, firing, or subcontracting.

Q: Why is it dangerous to justify capacity expansion using economies of scale? A.It is far too specific to use as a basis for capacity decisions. B.Volume, capacity, and process considerations are looked at individually. C.The common notion that unit costs decline for larger facilities due to size is not always accurate. D.It requires consideration of quality, dependability, and flexibility.

Q: Which of the following statements regarding capacity is NOT true? A.Capacity can be measured in several units such as hours of output, number of units produced, number of customers served, and the like. B.Effective capacity is generally less than the theoretical capacity. C.Capacity is the maximum output that could be produced over a period of time. D.The maximum output of a process is not a meaningful measure.

Q: Which of the following functions is NOT affected directly by the facilities decision? A.Operations. B.Marketing. C.Finance. D.All of the above are directly affected.

Q: Facilities decisions A.are medium-range capacity decisions. B.should consider one of the five crucial questions of how much, how large, when, where, and what type. C.constrain all other capacity decisions. D.require planning for one year only.

Q: If one time series model is used for forecasting a low-demand item and another time series model is used for forecasting a high-demand item, which measure of forecast accuracy provides a valid comparison of the errors from these two time series? A.CFE B.MSE C.MAD D.MAPE

Q: Forecast error is used for all of the following EXCEPT A.to monitor erratic demand observations or outliers. B.to determine when the forecasting method is no longer tracking actual demand and needs to be reset. .to determine the capacity cushion. D.to determine parameter values that provide the most accurate forecasts.

Q: The forecast was 70 units for the current period while actual demand was 76. The forecast for the next period is 75.8. What is alpha if a simple exponential smoothing forecast method is being used? A.0.004 .0.967 C.0.040 D.0.097

Q: Using exponential smoothing, if we want forecasts to be very responsive to recent demand, the value of alpha should be A.large. B.moderate. C.small. D.The value of alpha does not matter.

Q: Which of the following statements is/are true about time series forecasting? A.The basic strategy is to identify the magnitude and form of each component based on available past data. B.It is used to make detailed analyses of past demand patterns over time and to project these patterns forward into the future. C.Demand can be divided into components such as average level, trend, seasonality, cycle and error. D.All of the above.

Q: Which phrase most closely describes the Delphi forecasting technique? A.Consumer survey. B.Individual opinions. C.Rounds of anonymous data collection. D.Test markets.

Q: Which of the following is NOT a measure of forecast accuracy? A.Mean square error. B.Cumulative sum of forecast error. C.Mean absolute deviation of forecast error. D.Cumulative absolute deviation of forecast error.

Q: Using the data from Question 11, calculate the forecast for period 7 using a four-period moving average: A.60 B.43.25 C.57.75 D.55.25

Q: The Grand Bakery produces 60 special sourdough rolls every day. Any rolls that are not sold each day are given to the employees. The bakery collected sales data from the past week: Day Rolls Sold 1 50 2 50 3 48 4 60 5 53 6 60 What is the value of F6 if the bakery uses a 3-day weighted moving average with W1 = 0.6, W2 = 0.2, and W3 = 0.2? A.51.4 B.53.4 C.58.6 D.None of the above

Q: Given the following information for period 15, what will be the smoothed mean absolute deviation for period 16? Demand = 120 Forecast = 180 MAD15 = 50 Alpha = 0.3 A.77 B.53 C.17 D.43

Q: What is the exponentially smoothed forecast for week 6? (Use F5 = 33 and alpha = 0.0.) A.33 B.31.7 C.30 D.20

Q: If a sales representative tells his or her manager, "I hope to sell 20% more than last year," this should be considered A.a forecast. B.a performance measure. C.a goal. D.a production plan.

Q: The difference between actual demand and the forecast is .forecast error. B.mean absolute percentage error. C.absolute deviation of forecast error. D.mean absolute deviation of forecast error.

Q: A small company that manufactures rubber boots is selecting a method to forecast demand for the next 10 years. The company recently expanded its facilities, doubling its capacity. Which of the following forecasting methods would be preferred? A.Qualitative B.Simple exponential smoothing C.Econometric D.Box-Jenkins

Q: When should qualitative methods NOT be used? A.When historic data are unreliable. B.When it is impossible to obtain historic data. C.For short-range, repetitive decisions. D.When making major costly decisions, such as facilities location.

Q: A regression model is an example of which type of forecasting method? A.Causal B.Historical analogy C.Qualitative D.Life cycle analogy

Q: A qualitative forecast would most likely be used for A.aggregate planning. B.scheduling. C.process design. D.inventory management.

Q: Describe each of the five demand components in a time series (of past demand data). Feedback: See below.

Q: United Colors of Benetton is facing a serious problem. The global fashion garment manufacturer and retailer is well known for its speed of new product introduction. The firm is planning to introduce its 2017 summer collection and wants to estimate demand. Demand levels from past years are shown below. Year Demand (in millions) Forecast (in millions) 2008 150 140 2009 170 180 2010 190 190 2011 270 290 2012 220 270 2013 150 250 2014 290 260 2015 320 280 2016 300 310 Suggest a suitable forecasting method that Benetton could utilize while predicting demand for the upcoming year. Describe the important factors that should be considered while selecting the forecast method. Feedback: See below.

Q: The goal of forecasting is to select a method that delivers a balance between the lowest possible error along with acceptable forecasting costs.

Q: Lengthening the forecast time horizon is a main method for counteracting forecast error.

Q: Increasing the flexibility of operations and the supply chain is a main method for counteracting forecast error.

Q: Actual demand is always equivalent to actual sales.

Q: The Box-Jenkins method requires 12 past data points.

Q: Simple exponential smoothing forecasts are reliable for forecasting long-term demand patterns.

Q: Tracking signal is the ratio between cumulative forecast error and the most recent estimate of mean absolute deviation.

Q: A time series forecast model includes only a level (average) term, representing past average demand.

Q: Quantitative forecasting methods should be used for predicting the demand patterns of new products introduced in the market.