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Chapter 8
Aggregate Planning in the Supply Chain
True/False
1. The goal of aggregate planning is to satisfy demand in a way that minimizes profit、
Answer: False
Difficulty: Easy
2. Aggregate planning is a process by which a pany determines levels of capacity, production, subcontracting, inventory, stockouts, and even pricing over a specified time horizon、
Answer: True
Difficulty: Moderate
3. Aggregate planning solves problems involving aggregate decisions rather than stock keeping unit (SKU) level decisions、
Answer: True
Difficulty: Easy
4. Traditionally, much of aggregate planning is focused within an enterprise and may not always be seen as a part of supply chain management、
Answer: True
Difficulty: Moderate
5. Aggregate planning is an important supply chain issue because, to be effective, it requires inputs from throughout the supply chain, but its results have little impact on the supply chain、
Answer: False
Difficulty: Moderate
6. Short-term production serves as a broad blueprint for operations and establishes the parameters within which aggregate planning decisions are made、
Answer: False
Difficulty: Easy
7. The aggregate planning problem is concerned with determining the production level, inventory level, and capacity level (internal and outsourced) for each period that maximizes the firm’s profit over the planning horizon、
Answer: True
Difficulty: Moderate
8. To create an aggregate plan, a pany must specify the planning horizon for the plan and the duration of each period within the planning horizon、
Answer: True
Difficulty: Easy
9. A planning horizon is usually between three and five years、
Answer: False
Difficulty: Moderate
10. A poor aggregate plan can result in improved sales and profits if the available inventory and capacity are unable to meet demand、
Answer: False
Difficulty: Easy
11. A poor aggregate plan may result in a large amount of excess inventory and capacity, thereby raising costs、
Answer: True
Difficulty: Moderate
12. The aggregate planner must make a trade—off between capacity, inventory, and backlog costs、
Answer: True
Difficulty: Moderate
13. An aggregate plan that increases one cost typically results in the increase of the other two、
Answer: False
Difficulty: Moderate
14. The time flexible strategy is where the production rate is synchronized with the demand rate by varying machine capacity or hiring and laying off employees as the demand rate varies、
Answer: False
Difficulty: Hard
15. The time flexible strategy is where workforce (capacity) is kept stable but the number of hours worked is varied over time in an effort to synchronize production with demand、
Answer: True
Difficulty: Moderate
16. The mixed strategy is where a stable machine capacity and workforce are maintained with a constant output rate with inventory levels fluctuating over time、
Answer: False
Difficulty: Hard
17. Most strategies that an aggregate planner actually uses are in bination, and are referred to as mixed strategies、
Answer: True
Difficulty: Easy
18. A highly effective tool for a pany to use when it tries to maximize profits while being subjected to a series of constraints is aggregate programming、
Answer: False
Difficulty: Moderate
19. To improve the quality of these aggregate plans, forecast errors must be taken into account when formulating aggregate plans、
Answer: True
Difficulty: Moderate
20. Forecasting errors are dealt with in aggregate plans using either safety backlog or safety capacity、
Answer: False
Difficulty: Moderate
21. Safety inventory is defined as inventory held to satisfy demand that is higher than forecasted、
Answer: True
Difficulty: Easy
22. Safety capacity is defined as capacity used to satisfy demand that is lower than forecasted、
Answer: False
Difficulty: Easy
23. panies should work with downstream partners to produce forecasts and with upstream partners to determine constraints when doing aggregate planning、
Answer: True
Difficulty: Easy
24. The aggregate plan should be viewed primarily as an in—house tool that does not need to be municated to supply chain partners、
Answer: False
Difficulty: Easy
25. Given that forecasts are always wrong to some degree, the aggregate plan needs to have some flexibility built into it if it is to be useful、
Answer: True
Difficulty: Moderate
26. A manager should perform sensitivity analysis on the inputs into an aggregate plan to choose the best solution for the range of possibilities that could occur、
Answer: True
Difficulty: Moderate
27. As inputs into the aggregate plan change, managers do not need to make changes to the aggregate plan、
Answer: False
Difficulty: Easy
28. As capacity utilization increases, it bees less important to perform aggregate planning、
Answer: False
Difficulty: Moderate
Multiple Choice
1. The process by which a pany determines levels of capacity, production, subcontracting, inventory, stockouts, and even pricing over a specified time horizon is
a. aggregate planning、
b. detail planning、
c. inventory planning、
d. sales planning、
e. all of the above
Answer: a
Difficulty: Moderate
2. The goal of aggregate planning is to
a. dissatisfy customers in a way that maximizes profit、
b. dissatisfy customers in a way that minimizes profit、
c. satisfy demand in a way that maximizes profit、
d. satisfy demand in a way that minimizes profit、
e. none of the above
Answer: c
Difficulty: Easy
3. Aggregate planning solves problems involving
a. aggregate decisions and stock keeping unit (SKU) level decisions、
b. aggregate decisions or stock keeping unit (SKU) level decisions、
c. aggregate decisions rather than stock keeping unit (SKU) level decisions、
d. stock keeping unit (SKU) level decisions rather than aggregate decisions、
e. b and c only
Answer: c
Difficulty: Easy
4. Aggregate planning, to be effective, requires inputs from
a. all customers、
b. all departments、
c. all suppliers、
d. throughout the supply chain、
e. throughout the pany、
Answer: d
Difficulty: Moderate
5. Much of aggregate planning has traditionally been focused
a. on short-term production scheduling、
b. on customer relationship management、
c. within an enterprise、
d. beyond enterprise boundaries、
e. all of the above
Answer: c
Difficulty: Moderate
6. Which of the following are not operational parameters the aggregate planner is concerned with?
a. production rate
b. workforce
c. overtime
d. backorders
e. inventory on hand
Answer: d
Difficulty: Moderate
7. The operational parameter concerned with the number of units pleted per unit time (such as per week or per month) is
a. production rate、
b. workforce、
c. overtime、
d. backlog、
e. inventory on hand、
Answer: a
Difficulty: Easy
8. The operational parameter concerned with the number of workers/units of capacity needed for production is
a. production rate、
b. workforce、
c. overtime、
d. backlog、
e. inventory on hand、
Answer: b
Difficulty: Easy
9. The operational parameter concerned with the amount of overtime production planned is
a. production rate、
b. workforce、
c. overtime、
d. backlog、
e. inventory on hand、
Answer: c
Difficulty: Easy
10. The operational parameter concerned with demand not satisfied in the period in which it arises, but carried over to future periods is
a. production rate、
b. workforce、
c. overtime、
d. backlog、
e. inventory on hand、
Answer: d
Difficulty: Easy
11. The operational parameter concerned with the planned inventory carried over the various periods in the planning horizon is
a. production rate、
b. workforce、
c. overtime、
d. backlog、
e. inventory on hand、
Answer: e
Difficulty: Easy
12. The operational parameter concerned with the number of units of machine capacity needed for production is
a. machine capacity level、
b. subcontracting、
c. overtime、
d. backlog、
e. inventory on hand、
Answer: a
Difficulty: Easy
13. The operational parameter concerned with the subcontracted capacity required over the planning horizon is
a. machine capacity level、
b. subcontracting、
c. overtime、
d. backlog、
e. inventory on hand、
Answer: c
Difficulty: Easy
14. The aggregate plan
a. serves as a broad blueprint for operations、
b. establishes the parameters within which short-term production and distribution decisions are made、
c. allows the supply chain to alter capacity allocations and change supply contracts、
d. all of the above
e. b and c only
Answer: d
Difficulty: Moderate
15. Aggregate planning is concerned with determining
a. the production level, sales level, and capacity for each period、
b. the demand level, inventory level, and capacity for each period、
c. the production level, inventory level, and capacity for each period、
d. the production level, staffing level, and capacity for each period、
e. none of the above
Answer: c
Difficulty: Moderate
16. To create an aggregate plan, a pany must specify
a. the planning horizon for the plan、
b. the duration of each period within the planning horizon、
c. key information required、
d. all of the above
e. a and b only
Answer: d
Difficulty: Moderate
17. The planning horizon is
a. the time period over which the aggregate plan is to produce a solution、
b. the duration of each time period in the aggregate plan、
c. the length of time required to produce the aggregate plan、
d. the solution to the aggregate plan、
e. none of the above
Answer: a
Difficulty: Easy
18. The length of the planning horizon is usually between
a. one and three months、
b. three and eighteen months、
c. one and three years、
d. three and five years、
e. none of the above
Answer: b
Difficulty: Moderate
19. Which of the following is not information needed by the aggregate planner?
a. demand forecast for each period in the planning horizon
b. production costs
c. labor costs
d. cost of subcontracting production
e. cost of changing the demand forecast
Answer: e
Difficulty: Moderate
20. The cost of changing capacity includes the
a. cost of adding machine capacity、
b. cost of reducing machine capacity、
c. cost of hiring workforce、
d. cost of laying off workforce、
e. all of the above
Answer: e
Difficulty: Easy
21. Which of the following is not a cost of changing capacity?
a. cost of adding machine capacity
b. cost of hiring workforce
c. cost of laying off workforce
d. cost of overtime
e. cost of reducing machine capacity
Answer: d
Difficulty: Moderate
22. Which of the following is not a constraint the aggregate planner needs to consider?
a. limits on stockouts and backlogs
b. limits on overtime
c. limits on sales missions
d. limits on layoffs
e. limits on capital available
Answer: c
Difficulty: Moderate
23. A poor aggregate plan can result in
a. appropriate inventory levels、
b. efficient use of capacity、
c. better sales and lost profits、
d. lost sales and lost profits、
e. lost sales and better profits、
Answer: d
Difficulty: Hard
24. The fundamental trade—offs available to an aggregate planner are between
a. capability, inventory, and backlog costs、
b. capability, inventory, and sales costs、
c. capacity, inventory, and backlog costs、
d. capacity, inventory, and sales costs、
e. none of the above
Answer: c
Difficulty: Easy
25. Which of the following is not a distinct aggregate planning strategy for achieving balance between capacity, inventory, and backlog costs?
a. adjustable strategy
b. Chase strategy
c. level strategy
d. mixed strategy
e. time flexible strategy
Answer: a
Difficulty: Easy
26. The strategy where the production rate is synchronized with the demand rate by varying machine capacity or hiring and laying off employees as the demand rate varies is the
a. adjustable strategy、
b. Chase strategy、
c. level strategy、
d. mixed strategy、
e. time flexible strategy、
Answer: b
Difficulty: Moderate
27. The strategy where workforce (capacity) is kept stable but the number of hours worked is varied over time in an effort to synchronize production with demand is the
a. adjustable strategy、
b. Chase strategy、
c. level strategy、
d. mixed strategy、
e. time flexible strategy、
Answer: e
Difficulty: Moderate
28. The strategy where a stable machine capacity and workforce are maintained with a constant output rate, with inventory levels fluctuating over time, is the
a. adjustable strategy、
b. Chase strategy、
c. level strategy、
d. mixed strategy、
e. time flexible strategy、
Answer: c
Difficulty: Hard
29. Most strategies that an aggregate planner actually uses are in bination and are referred to as the
a. adjustable strategy、
b. Chase strategy、
c. level strategy、
d. mixed strategy、
e. time flexible strategy、
Answer: d
Difficulty: Easy
30. A highly effective tool for a pany to use when it tries to maximize profits while being subjected to a series of constraints is
a. aggregate programming、
b. distribution programming、
c. production programming、
d. linear programming、
e. manufacturing programming、
Answer: d
Difficulty: Moderate
31. When formulating aggregate plans,
a. forecast errors have no impact、
b. forecast errors must be taken into account、
c. forecast accuracy is assumed、
d. forecast accuracy is not a factor、
e. none of the above
Answer: b
Difficulty: Moderate
32. Forecasting errors are dealt with using
a. safety backlog、
b. safety capacity、
c. safety inventory、
d. all of the above
e. b and c only
Answer: e
Difficulty: Moderate
33. Inventory held to satisfy demand that is higher than forecasted is
a. safety backlog、
b. safety capacity、
c. safety inventory、
d. safety sales、
e. safety workforce、
Answer: c
Difficulty: Easy
34. Capacity used to satisfy demand that is higher than forecasted is
a. safety backlog、
b. safety capacity、
c. safety inventory、
d. safety sales、
e. safety workforce、
Answer: b
Difficulty: Easy
35. Which of the following is an approach a pany can use to create a buffer for forecast error using safety inventory?
a. overtime
b. carry extra workforce permanently
c. build and carry extra inventories
d. subcontracting
e. purchase capacity or product from an open or spot market
Answer: a
Difficulty: Easy
36. Which of the following is not an approach a pany can use to create a buffer for forecast error using safety capacity?
a. overtime
b. carry extra workforce permanently
c. build and carry extra inventories
d. subcontracting
e. purchase capacity or product from an open or spot market
Answer: c
Difficulty: Easy
37. Aggregate planning should consider information from
a. only the enterprise as its breadth of scope、
b. downstream partners to produce forecasts、
c. upstream partners to determine constraints、
d. all of the above
e. b and c only
Answer: d
Difficulty: Easy
38. The quality of the aggregate plan can be improved by using information from
a. only the local firm、
b. only downstream partners、
c. only upstream partners、
d. all parts of the supply
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