Q&A Hero

Q: What types of resources might be scheduled via an MRP II system?

Q: What do we mean by closed-loop MRP?

Q: Describe the tactics for load smoothing in MRP.

Q: Identify the several lot-sizing algorithms used in MRP. Provide at least one advantage and one disadvantage of each.

Q: How can MRP and JIT be effectively integrated?

Q: Describe how MRP II differs from MRP.

Q: What does the part-period balancing lot-sizing technique attempt to do in deciding the lot sizes?

Q: You have seen several methods for lot sizing in MRP. Why is lot sizing important in MRP? Can too much concern be given lot sizing? Answer in a well-developed paragraph.

Q: What is the "supermarket" as it is used in MRP? How does it alter the responsibility for dealing with lead-time offsets?

Q: Describe finite capacity scheduling. How is it more realistic than MRP?

Q: Explain what is meant by "nervousness" of the MRP schedule. Provide an example. Name two tools that are particularly useful in reducing system nervousness in MRP systems.

Q: What are time fences? Why are they used?

Q: An error has been detected in the technical drawing of a product about to be placed on a master production schedule. The part should be 9" by 12", not 9 cm by 12 cm; further, the part should be stainless steel, not ordinary steel. What document transmits the needed change? Where is the corrected information recorded? Why is this important to the master production schedule?

Q: A working MRP system allows a firm to react to even minor changes in production requirements. Discuss both the advantages and disadvantages of having such ability.

Q: What information is necessary for an operations manager to make effective use of a dependent inventory demand model?

Q: Describe briefly the information requirements of basic and extended MRP systems. Comment on the challenge of maintaining timely, accurate information for a large manufacturing operation based on MRP.

Q: Explain the difference between a gross requirements plan and a net requirements plan.

Q: If the explosion of the bill of material tells MRP how much of each part is needed, how does MRP learn when each of these parts is needed?

Q: How does the process choice of an organization affect the basis of its master production schedule?

Q: What is MRP? Identify four benefits from its use.

Q: Describe the role of record accuracy in Wheeled Coach's successful use of MRP. Is this company's experience the exception or the rule? Answer in a well-developed paragraph.

Q: A(n) __________ system is packaged business software that automates and integrates the majority of their business processes, shares common data and practices across the entire enterprise, and produces and accesses information in a real-time environment.

Q: __________ is a system that allows, with MRP in place, inventory data to be augmented by other resource variables.

Q: A(n) __________ can illustrate whether a work center has been scheduled beyond its capacity.

Q: A(n) __________ provides feedback to the capacity plan, master production schedule, and production plan so planning can be kept valid at all times.

Q: The __________ technique may be applicable where a firm's parts and subassemblies are common to a variety of its products.

Q: __________ is a lot-sizing technique that generates exactly what is required to meet the plan.

Q: __________ refers to the time units in a material requirements planning (MRP) system.

Q: __________, unlike MRP, recognizes that departments and machines have limitations on their capacity that must be observed if the schedule is to be realistic.

Q: __________ are a way of allowing a segment of the master schedule to be designated as "not to be rescheduled."

Q: __________ are the result of adjusting gross requirements for inventory on hand and scheduled receipts.

Q: A(n) __________ is a bill of material for components, usually assemblies that exist only temporarily; they are never inventoried.

Q: The __________ is used to correct an erroneous dimension, quantity, or other specification in a bill of material.

Q: Bills of material organized by major subassemblies or by product options are called __________.

Q: A process-focus facility (for example, a print shop) will likely schedule __________ as the focus of its master production schedule.

Q: A(n) __________ is a listing of the components, their description, and the quantity of each required to make one unit of a product.

Q: A(n) __________ is a timetable that specifies what is to be made and when.

Q: __________ is a dependent demand technique that uses a bill of material, inventory, expected receipts, and a master production schedule to determine material requirements.

Q: Wheeled Coach uses __________ as the catalyst for low inventory, high quality, tight schedules, and accurate records.

Q: All of the following are advantages of enterprise resource planning (ERP) except it A) creates commonality of databases B) increases communications and collaboration worldwide C) helps integrate multiple sites and business units D) requires major changes in the company and its processes to implement E) can provide a strategic advantage over competitors

Q: Which of the following regarding enterprise resource planning (ERP) is true? A) It involves an ongoing process for implementation. B) It can incorporate improved, reengineered "best processes." C) It has a software database that is off-the-shelf coding. D) ERP systems usually include MRP, financial and human resource information. E) All of the above are true.

Q: Which of the following is false concerning enterprise resource planning (ERP)? A) It attempts to automate and integrate the majority of business processes. B) It shares common data and practices across the enterprise. C) It is inexpensive to implement. D) It provides and accesses information in a real-time environment. E) All of the above are true.

Q: Which of the following is not a disadvantage of ERP systems? A) They involve an ongoing process for implementation, which may never be completed B) They have software that is off-the-shelf coding. C) Expertise in ERP is limited, with staffing an ongoing problem. D) They are so complex that many companies cannot adjust to them. E) Implementation may require major changes in the company and its processes.

Q: A manufacturing plant has created the following forecast and would like to apply a graphical aggregate planning method. Complete the table and calculate the difference between Jan.'s forecast demand per working day vs a level production model for the entire period? Month Expected Demand Production Days Demand per Day (to the nearest whole unit) Jan. 1800 22 Feb. 1400 18 Mar. 1600 21 Answer: Month Expected Demand Production Days Demand per Day (to the nearest whole unit) Jan. 1800 22 82 Feb. 1400 18 78 Mar. 1600 21 76 Total expected demand/ Total # working days = level production rate = 79 units/day Thus the difference between Jan. and the level production is 3 units. *Note- this problem requires use of basic calculus and have content related to, but not expressly performed in, the text. As such they are more difficult than usual problems and require reflective thinking on the students' behalf. 18) A hotel chain is considering using yield management to increase profits. Its plan is to sell unsold rooms at a discounted rate very close to the night of stay. For example, an unsold Friday night room would be discounted early in the week. It estimates that the percentage of sold rooms (total) would be equal to 50+X, where X is the % discounted off of regular price. Meanwhile the % of rooms sold for full price compared to the discount would be 100-2X (some people would wait to book gambling a discount would happen). Find the ideal discount %. Answer: Revenue is equal to demand * (% sold at full price * full price +% sold at discounted price * discounted price) Since no price is given, full price can be assumed to be 100 hundred dollars for calculations, making the discounted price simply 100-X. Thus revenue is (50+X)[ (100-2x)(100)+(2x)(100-x) ] which simplifies to -2x^3-100x^2+10000x+500000

Q: A manager is applying the transportation model of linear programming to solve an aggregate planning problem. Demand in period 1 is 100 units and in period 2 demand is 150 units. The manager has 125 hours of regular employment available for $10/hour each period. In addition, 50 hours of overtime are available for $15/hour each period. If holding costs are $2 per unit each period, how many hours of regular employment should be used in period 1 (assume demand must be met in both periods 1 and 2 for the lowest possible cost and that production is 1 unit per hour)?

Q: A train company is considering applying yield management principles to its ticket sales. Suppose that there is no variable cost in the operation, only a fixed cost to run each train. The company decides that a student ticket will sell for half the cost of a business ticket. If demand for the business tickets is given by 50-3x where x is the sales price of a business ticket and demand for student tickets is given by 70-y^2 where y is the price of a student ticket how much should the company charge for tickets to maximize revenue?

Q: A large consulting firm is deciding on if its workforce should be expanded, maintained, or decreased. Suppose that demand is given in week long projects, and that a consultant can work on 3 projects each month (1 week off for personal leave and/or other duties such as conferences, etc). Currently there are 25 consultants. Ten consultants are trained for LEAN and 15 for Six Sigma, with 5 of those consultants being overlaps (the consultant is trained for BOTH LEAN and Six Sigma). Assume that all consultants can do the general work. Complete the table (the forecast period is an upcoming month) and prepare a recommendation. Category Best Forecast (# projects) Likely Forecast (# projects) Worst Forecast (# projects) Max Demand in # of people Number of Qualified People LEAN 42 24 12 Six Sigma 45 36 30 General 75 60 57

Q: A professional services firm is investigating yield management as a means of taking advantage of unused capacity. Analysts for this firm estimate a demand curve for the firm's service, which is sold by the hour. Points on this demand curve include 9000 hours at the current rate of $60 per hour, 9500 hours at $55, 10,000 hours at $50, and 10,500 hours at $45. Based on this demand curve, what price point would be best for the firm, if its objective is maximum revenue?

Q: A small private university normally charges the same price $200per credit-hour for all courses and for all students. While the university is pretty near capacity in the fall and spring, it finds that its classrooms are only about 60 percent occupied during the summer session. A student of operations management (who has recently read this chapter) wonders if yield management might be useful to both the university and its students alike. This student, with help from some economics majors, estimates a demand curve for summer course enrollment. Points on this demand curve include 9000 credit-hours at the current rate of $200, 12,000 credit hours at $180, 15,000 credit-hours at $160, and 18,000 credit-hours at $140. Based on this demand curve, what price point would best serve the university, if its objective is the greatest revenue for the summer session?

Q: Byron's Manufacturing makes tables. Demand for the next four months and capacities of the plant are shown in the table below. Unit cost on regular time is $40. Overtime cost is 150% of regular time cost. Subcontracting is available in substantial quantity at $75 per unit. Holding costs are $5 per table per month; back orders cost the firm $10 per unit per month. Byron's management believes that the transportation algorithm can be used to optimize this scheduling problem. The firm has 50 units of beginning inventory and anticipates no ending inventory. March April May June Demand 400 600 600 700 Regular capacity 400 400 400 400 Overtime capacity 100 100 100 100 Subcontract cap. 150 50 50 50 a. How many units will be produced on regular time in June? b. How many units will be produced by subcontracting over the four-month period? c. What will be the inventory at the end of April? d. What will be total production from all sources in April? e. What will be the total cost of the optimum solution? f. Does the firm utilize the expensive options of subcontracting and back ordering? When; why?

Q: Fred's Fabrication has the following aggregate demand requirements and other data for the upcoming four quarters. Quarter Demand Previous quarter's output 800 units 1 700 Beginning inventory 0 units 2 900 Stockout cost $100 per unit 3 1200 Inventory holding cost $10 per unit at end of quarter 4 600 Hiring workers $20 per unit Laying off workers $40 per unit Subcontracting cost $200 per unit Unit cost $100 per unit Which of the following production plans is better: Plan Achase demand by hiring and layoffs; Plan Bpure level strategy, or Plan C700 level with the remainder by subcontracting?

Q: Houma Containers, Inc., makes industrial fiberglass tanks that are used on offshore oil platforms. Demand for the next four months and capacities of the plant are shown in the table below. Unit cost on regular time is $400. Overtime cost is 150% of regular time cost. Subcontracting is available in substantial quantity but at a very high cost, $1100 per unit. Holding costs are $200 per tank per month; back orders cost the firm $1000 per unit per month. Houma's management believes that the transportation algorithm can be used to optimize this scheduling problem. The firm has no beginning inventory and anticipates no ending inventory. March April May June Demand 300 500 300 350 Regular capacity 200 200 250 250 Overtime capacity 50 50 50 50 Subcontract cap. 150 100 100 150 a. How many units will be produced on regular time in June? b. How many units will be produced by subcontracting over the four-month period? c. What will be the inventory at the end of April? d. What will be total production from all sources in April? e. What will be the total cost of the optimum solution? f. Does the firm utilize the expensive options of subcontracting and back ordering? When; why?

Q: An electronics manufacturer makes video security systems for parking lots. Demand estimates for the next four quarters are 15, 9, 23, and 17 units. Prepare an aggregate plan that uses inventory, regular time, overtime, and back orders. Subcontracting is not allowed. Regular time capacity is 12 units for quarters 1 and 2, 15 units for quarters 3 and 4. Overtime capacity is 6 units per quarter. Regular time cost is $20,000 per system, while overtime cost is $30,000 per unit. Back order cost is $2000 per system per quarter; inventory holding cost is $500 per unit per quarter. Beginning inventory is zero. Complete the table of data inputs for solving this aggregate planning problem with the transportation method. Specifically, how many sources are there, and how many destinations? What is the supply from each source, and the demand of each destination? What is the cost of each source-destination pair?

Q: Golden Eagle Machine Works has the following demand requirements and other data for the upcoming four quarters. Quarter Demand Previous quarter's output 2500 units 1 2300 Beginning inventory 200 units 2 2400 Stockout (backorder) cost $50 per unit 3 2600 Inventory holding cost $10 per unit at end of quarter 4 2100 Hiring workers $4 per unit Laying off workers $8 per unit Unit cost $30 per unit What is the total cost of pursuing a chase aggregate plan over the coming year?

Q: Osprey Machine Works has the following demand requirements and other data for the upcoming four quarters. Quarter Demand Previous quarter's output 2500 units 1 2300 Beginning inventory 200 units 2 2400 Stockout (backorder) cost $50 per unit 3 2600 Inventory holding cost $10 per unit at end of quarter 4 2100 Hiring workers $4 per unit Laying off workers $8 per unit Unit cost $30 per unit Overtime $10 extra per unit What is the total cost of pursuing a level aggregate plan over the coming year?

Q: Reddick's Specialty Electronics makes weatherproof surveillance systems for parking lots. Demand estimates for the next four quarters are 25, 9, 13, and 17 units. Prepare an aggregate plan that uses inventory, regular time and overtime and back orders. Subcontracting is not allowed. Regular time capacity is 15 units for quarters 1 and 2, 18 units for quarters 3 and 4. Overtime capacity is 3 units per quarter. Regular time cost is $2000 per unit, while overtime cost is $3000 per unit. Back order cost is $300 per unit per quarter; inventory holding cost is $100 per unit per quarter. Beginning inventory is zero. The data inputs for this problem, and the optimal solution, generated by microcomputer software, appear below. Answer the following questions based on the scenario and the solution. a. How many total units will be produced in quarter 1 for delivery in quarter 1? b. How many units in total will be used to fill back orders over the four quarters? c. What is the cost to produce one unit in Quarter 4 using overtime to deliver in quarter 1 (filling a back order)? d. At the end of quarter 3, what is the ending inventory of finished systems? e. What is the total cost of the solution? f. What is the average cost per unit?

Q: Washington Laundry Products, Inc., makes commercial and industrial laundry machines (the kinds hotels use), and has these aggregate demand requirements for the next six months. The firm has regular capacity for 200 units, and overtime capacity for 40 more. Currently, subcontracting can supply up to 100 units per month, but the subcontracting firm may soon be unavailable. Month Demand Costs and other data 1 220 Previous output level 150 units 2 160 Beginning inventory 100 units 3 200 Stockout cost $250 per unit 4 210 Inventory holding cost $100 per unit at end of month 5 200 Unit Cost, regular time $1,200 per unit 6 190 Subcontracting $2,000 per unit Unit Cost, overtime $1,500 per unit Hiring workers $200 per unit Laying off workers $500 per unit Which is cheaper: to produce level, incurring back orders and inventory charges; or to produce a base quantity of 120, using first, overtime, then subcontracting, to meet demand?

Q: A manufacturer of industrial seafood processing equipment wants you to develop an aggregate plan for the four quarters of the upcoming year using the following data on demand and capacity. Quarter Units Regular Time Over- time Sub- contract Initial inventory Regular time cost 250 units $1.25/unit 1 200 400 80 100 Overtime cost $1.50/unit 2 750 400 80 100 Subcontracting cost 2.00/unit 3 1200 800 160 100 Carrying cost $0.50/unit/quarter 4 450 400 80 100 No back ordering is allowed a. Find the optimal plan using the transportation method. b. What is the cost of the plan? c. Does any regular time capacity go unused? How much in what periods? d. What capacity went unused in this solution (list in detail)?

Q: Osprey Fabrication has the following aggregate demand requirements and other data for the upcoming four quarters. Quarter Demand Previous quarter's output 1300 units 1 1400 Beginning inventory 0 units 2 1200 Stockout cost $50 per unit 3 1600 Inventory holding cost $10 per unit at end of quarter 4 1500 Hiring workers $40 per unit Laying off workers $80 per unit Subcontracting cost $60 per unit Unit cost $30 per unit Overtime $15 extra per unit Which of the following production plans is better: Plan Achase demand by hiring and layoffs; Plan Bpure level strategy, or Plan C1350 level with the remainder by subcontracting?

Q: Eagle Fabrication has the following aggregate demand requirements and other data for the upcoming four quarters. Quarter Demand Previous quarter's output 1500 units 1 1300 Beginning inventory 200 units 2 1400 Stockout cost $50 per unit 3 1500 Inventory holding cost $10 per unit at end of quarter 4 1300 Hiring workers $4 per unit Laying off workers $8 per unit Unit cost $30 per unit Overtime $10 extra per unit Which of the following production plans is better: Plan Achase demand by hiring and layoffs; or Plan Bproduce at a constant rate of 1200 and obtain the remainder from overtime?

Q: Fairview Industries is preparing its aggregate plan for the second half of the year. The table below contains monthly demand estimates and working days per month. Complete the table by computing total demand, demand per day (for each month), and the average requirement (in units per day) over the six-month planning horizon. Prepare a graph of forecast demand and level production, by months, for the planning period. Label your graph carefully. Month Expected Demand Production Days Demand per Day July 18,000 20 August 21,000 23 September 17,500 21 October 12,500 21 November 12,000 20 December 13,500 21 TOTAL

Q: How does "yield management" impact the aggregate plan?

Q: How does aggregate planning in services differ from aggregate planning in manufacturing?

Q: What conditions make yield management of interest?

Q: What are successful techniques of controlling the cost of labor involved in service firms?

Q: Identify some mathematical approaches to aggregate planning. Which are optimizing? Which are heuristic?

Q: Identify some firms that provide yield management software.

Q: Describe the advantages and limitations of the transportation method for aggregate planning.

Q: List, in order, the five steps of the graphical method of aggregate planning. Is it possible that these steps can be properly followed and the solution properly implemented without using a graph? Explain.

Q: Describe the advantages and limitations of the graphical method of aggregate planning.

Q: Normally, the transportation model is used to solve problems involving several physical sources of product and several physical uses of the product, as in factories and warehouses. How is it possible to use the transportation model where the "routes" are from one time period to another? Describe how this provides aggregate planners with a usable mathematical model.

Q: The text states that trial-and-error methods continue to be widely used, in spite of the development of various models. Using your knowledge from earlier in this course or from other quantitative courses you might have taken, speculate on why managers continue to use "primitive" devices when such sophistication is available.

Q: What is the purpose of aggregate planning? Describe some demand and capacity options for implementing plans.

Q: What are the disadvantages common to the following two strategies: (1) varying inventory levels and (2) back ordering during periods of high demand?

Q: What is the primary management challenge when implementing yield management?

Q: Most people would argue that a service firm must follow chase or mixed strategies. On the other hand, most state agencies, which are clearly service-oriented, are not at all able to "chase" demand. Discuss how they manipulate demand to allow the level strategy to be used.

Q: If a service firm were to attempt a pure level strategy for aggregate planning, should its level of output be at average demand, peak demand, or minimum demand?

Q: The textbook illustrates demand management in the form of price cuts or discounts. Can demand manipulation for aggregate planning involve price increases? Explain; provide an example.

Q: Compare the chase versus level strategy options.

Q: Explain the fundamental difference between the "capacity options" and the "demand options" of aggregate planning strategies.