Chapter 11

Aggregate Planning and Master Scheduling

1. Which of the following best describes aggregate planning?
A. the link between intermediate-term planning and short-term operating decisions

B. a collection of objective planning tools

C. make-or-buy decisions

D. an attempt to respond to predicted demand within the constraints set by product, process, and
location decisions

E. manpower planning


2. Effectively using labor resources during periods of peak demand and low demand would be the
goal of aggregate planners in:
A. manufacturing.

B. military.

C. archeology.

D. libraries.

E. financial services.


3. Aggregate planning is capacity planning for:
A. the long range.

B. the intermediate range.

C. the short range.

D. typically one to three months.

E. typically one or more years.


4. One area to which aggregate planning decisions relate is:
A. job sequencing

B. customer order quantities

C. inventory levels

D. location

E. layout


5. Which of the following is an input to aggregate planning?
A. ending inventory

B. demand forecasts for each period

C. customer levels

D. setup costs

E. quantity discounts


6. Essentially, the output of aggregate planning is the:
A. marketing plan.

B. production plan.

C. rough-cut capacity plan.

D. assignment plan.

E. material requirements plan.


7. In doing aggregate planning for a firm producing paint, the aggregate planners would most likely
deal with:
A. just gallons of paint, without concern for the different colors and sizes.

B. gallons of paint, but be concerned with the different colors to be produced.

C. gallons, quarts, pints, and all the different sizes to be produced.

D. all the different sizes and all the different colors by size.

E. all of the different colors targeted for different markets.


8. Aggregate planning requires which of the following information?
(I) a forecast of expected demand
(II) current levels of inventory
(III) policies regarding employment levels
A. II only

B. I and II only

C. I and III only

D. I, II, and III

E. II and III only


9. Aggregate planners attempt to balance:
A. demand and inventories.

B. demand and costs.

C. capacity and inventories.

D. capacity and costs.

E. capacity and demand.


10. Which of the following is not an input to the aggregate planning process?
A. resources available

B. demand forecast

C. policies on workforce changes

D. master production schedules

E. cost information


11. Which one of the following would not be considered a decision option for purposes of aggregate
planning?
A. inventory levels

B. manpower levels

C. pricing

D. production costs

E. promotion


12. Which of the following is not a basic option for altering the availability of capacity in a service
environment?
A. overtime

B. hiring/layoff

C. part time

D. inventory

E. All of the choices are options.


13. Which one of the following is not a basic option for altering demand?
A. promotion

B. backordering

C. pricing

D. subcontracting

E. All are demand options.


14. One option for altering the pattern of demand is:
A. back orders.

B. overtime.

C. part-time workers.

D. inventories.

E. subcontracting.


15. Which of the following would not be a strategy associated with adjusting aggregate capacity to
meet expected demand?
A. Subcontract.

B. Vary the size of the workforce.

C. Vary the intensity of workforce utilization.

D. Allow inventory levels to vary.

E. Use back orders.


16. One option for altering the availability of manufacturing capacity is:
A. pricing.

B. promotion.

C. back orders.

D. inventories.

E. yield management.


17. One option for altering the availability of capacity is:
A. use of overtime or slack time.

B. pricing.

C. promotion.

D. back orders.

E. rigidly fixing work schedules.


18. In order to use the level capacity strategy, variations in demand are met by:
A. varying output during regular time without changing employment levels.

B. varying output during regular time by changing employment levels.

C. varying output by changing overtime levels.

D. using combination of inventories, overtime, part time, and back orders.

E. price adjustments.


19. In using the chase strategy, variations in demand could be met by:
A. varying output during regular time without changing employment levels.

B. varying output during regular time by changing employment levels.

C. varying output with and without changing employment levels.

D. varying inventory levels.

E. price increases.


20. Uncommitted inventory is called:
A. available-to-promise inventory.

B. free inventory.

C. safety stock.

D. lead time inventory.

E. obsolete inventory.


21. Aggregate planners seek to match supply and demand:
A. at minimum overall cost.

B. by changing company policy.

C. by minimizing layoffs.

D. keeping inventories at a minimum.

E. by minimizing hires.


22. In practice, the more commonly used techniques for aggregate planning are:
A. mathematical techniques.

B. informal trial-and-error techniques.

C. transportation models.

D. simulation models.

E. linear programming optimization.


23. The main disadvantage(s) of informal techniques used for aggregate planning is(are):
A. they are expensive to do.

B. they may not result in the best plan.

C. they take a long time to do.

D. they require the use of a computer.

E. the lack of formal education of the planners.


24. Inventory information for firm ABC:

What is the expected inventory at the end of April 2008?
A. 350

B. 250

C. 150

D. 50

E. 80


25. Inventory information for firm ABC:

What was the inventory at the end of March 2008?
A. 350

B. 250

C. 150

D. 50

E. 400


26. Linear programming to produce an aggregate plan:
A. will produce the best plan if accurate inputs are used.

B. is the most widely used technique.

C. is easy to implement.

D. will produce a plan that may not be the best plan.

E. requires an Excel spreadsheet.


27. Simulation to produce an aggregate plan:
A. will produce the best plan.

B. is the most widely used technique.

C. is easy to implement.

D. will produce a plan that may not be the best plan.

E. requires a minimum of four iterations to be accurate.


28. Which of the following is most closely associated with disaggregation?
A. subcontracting

B. master schedule

C. diversity

D. varying inventory levels

E. firing and laying off


29. The direct result of disaggregating the aggregate plan is the:
A. marketing plan.

B. production plan.

C. rough-cut capacity plan.

D. master schedule.

E. material requirements plan.


30. Moving from the aggregate plan to a master production schedule requires:
A. rough-cut capacity planning.

B. disaggregation.

C. suboptimization.

D. strategy formulation.

E. chase strategies.


31. That portion of projected inventory which enables marketing to make realistic commitments
about delivery dates for new orders is:
A. beginning inventory.

B. safety stock inventory.

C. available-to-promise inventory.

D. high-margin inventory.

E. master production schedule arrivals.


32. Proactive and reactive aggregate planning strategies are best associated with:
A. input and output.

B. make and buy.

C. quantitative and qualitative.

D. exact and approximate.

E. demand and capacity options.


33. Using dynamic pricing in response to capacity variability to ensure that perishable inventory is
not wasted is known as:
A. yield management.

B. profit minimization.

C. capacity loading.

D. demand optimization.

E. perishability avoidance.


34. Which of the following are typically in play in a circumstance in which yield management is
worthwhile?
(I) Perishable capacity
(II) Ample finished goods storage
(III) Demand variability
(IV) Low holding costs
A. I, II, and IV only

B. I and III only

C. III only

D. II and III only

E. II, III, and IV only


35. Aggregate planning for services is more difficult than aggregate planning for manufacturing
because __________ and __________ are more difficult to predict.
A. capacity availability; customer tastes

B. holding costs; overtime costs

C. demand; capacity availability

D. capacity change costs; holding costs

E. hiring costs; holding costs


36. One thing that makes aggregate planning in services easier than aggregate planning in
manufacturing is:
A. inventory is cheaper to hold.

B. labor availability is more predictable.

C. inventory is less perishable.

D. labor is more flexible.

E. demand is less variable.


37. Aggregate planning in the case of a high-volume product output business such as a restaurant is
directed toward:
A. smoothing the service rate.

B. reducing the size of the workforce.

C. making the kitchen and waitstaff more flexible.

D. coming up with a fixed staffing level.

E. making weekly work schedules more stable.


38. A company's product line consists of 40 percent Product A, 40 percent Product B, and 20
percent Product C. The aggregate plan calls for total production that averages 1,100 units per quarter.
Quarter 1 production will be 800 units, quarter 2 production will be 1,400 units, and quarter 3
production will be 1,200 units. How many units of Product A will be produced in quarter 4?
A. 320 units

B. 400 units

C. 440 units

D. 480 units

E. 560 units


39. A firm has 43 units of a certain product on hand. Forecasts for the first two planning periods are
20 units each. A production quantity of 80 units is planned to be available in period 3. Customer orders
are 22 for period 1 and 17 for period 2. What is the projected on-hand inventory at the end of period 2?
A. 21

B. 1

C. 12

D. 20

E. impossible to say without more information


40. What quantity is available for commitment to new customers in either of the first two periods?
A. 21

B. 1

C. 20

D. 4

E. impossible to say without more information


41. A firm has 56 units of product X on hand. Forecasts of demand are for 20 units per week. An
MPS quantity of 100 units is planned to arrive in period 3. Customer orders are 24 for period 1, 18 for
period 2, and 15 for period 3.
What is the projected on-hand inventory at the end of period 2?
A. 14

B. 32

C. 12

D. 20

E. impossible to say without more information


42. A firm has 56 units of product X on hand. Forecasts of demand are for 20 units per week. An
MPS quantity of 100 units is planned to arrive in period 3. Customer orders are 24 for period 1, 18 for
period 2, and 15 for period 3.
What quantity is available for commitment to new customers prior to the receipt of the MPS quantity in
week 3?
A. 14

B. 32

C. 12

D. 20

E. impossible to say without more information


43. When the opportunity cost of lost revenue is relatively high, _________ become(s) relatively
more attractive.
A. layoffs

B. back orders

C. excess capacity

D. disaggregation

E. minimal inventory


44. The more __________ demand is, the more the aggregate plan will tend to reflect the
____________ strategy.
A. stable; level

B. aggregated; outsourcing

C. variable; level

D. complex; uncommitted

E. stable; chase


45. In a service setting, the aggregate plan results in a time-phased projection of __________
requirements.
A. customer

B. staff

C. inventory

D. subcontracting

E. outsourcing


46. Which of the following differs between aggregate planning in services and aggregate planning in
manufacturing?
A. uncertainty in demand

B. costs of storing inventory

C. the perishability of capacity

D. cost of overtime

E. cost of hiring


47. At XYZ Corp., the aggregate planning unit reflects the fact that 50 percent of its output is
product version A, 30 percent is version B, and 20 percent is version C. Suppose that over the coming
year forecasted total demand (in planning units) is for 10,400 units. Once the production plan is
disaggregated, what will the weekly forecast for version A be (assume 52 weeks per year)?
A. 1,000

B. 200

C. 400

D. 100

E. 50


48. A master production schedule quantity of 300 units will arrive in week 6. Weekly demand over
weeks 3 through 10 is forecasted at 50 units. At present, orders have been booked in various quantities
in weeks 1, 2, 3, and 4. What is available to promise for week 6?
A. 50

B. 6

C. 300

D. 100

E. cannot be determined without projected on-hand information


49. Which of the following steps is necessary to ensure that a master schedule is valid?
A. worker scheduling

B. order promising

C. inventory counting

D. order booking

E. rough-cut capacity planning