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Exam 8: Aggregate Planning in a Supply Chain

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Question 1

True/False

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Traditionally, much of aggregate planning is focused within an enterprise and may not always be seen as a part of supply chain management.

A) True
B) False

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Question 2

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A highly effective tool for a company 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) A) and B)
F) A) and C)

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Question 3

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Demand is forecast for the next five months as 200, 300, 500, 300, 200. The production planner decides to adopt a chase strategy, so over the next five months they should produce

Companies should work with downstream partners to produce forecasts and with upstream partners to determine constraints when doing aggregate planning.

A poor aggregate plan can result in

Safety capacity is defined as capacity used to satisfy demand that is lower than forecasted.

Most strategies that an aggregate planner actually uses are in combination, and are referred to as hybrid strategies.

The fundamental trade-offs available to an aggregate planner are between

Much of aggregate planning has traditionally been focused

The planning horizon is

The operational parameter concerned with the number of units completed per unit time (such as per week or per month) is

As capacity utilization increases,

Scenario 8.2 - Willow A company faces the aggregate planning problem shown in the table below. Cost of regular production is $8 per unit, the cost of producing the same unit on overtime is $15, the cost of subcontracting is $12 per unit, and the cost of carrying a unit in inventory from one month to the next is $6. $\begin{array}{|l|c|c|c|c|c|}\hline & \text { January } & \text { February } & \text { March } & \text { April } & \text { May } \\\hline \text { Forecast } & 400 & 800 & 1200 & 700 & 300 \\\hline \text { Beginning Inventory } & 100 & & & & \\\hline \text { Regular Time } & & & & & \\\hline \text { Qvertime } & & & & & \\\hline \text { Subcontracting } & & & & & \\\hline \text { Ending Inventory } & & & & & \\\hline\end{array}$ The labor contract at the plant prohibits both overtime and subcontracting output to exceed 400 units in any five month window. The plant capacity is 20 units per day produced using two shifts and the plant runs seven days a week. By policy, management wants to avoid stockouts. -How many units are produced using overtime in the optimal aggregate plan developed to address Scenario 8.2?

The aggregate plan needs to

The operational parameter concerned with the planned inventory carried over the various periods in the planning horizon is

Scenario 8.2 - Willow A company faces the aggregate planning problem shown in the table below. Cost of regular production is $8 per unit, the cost of producing the same unit on overtime is $15, the cost of subcontracting is $12 per unit, and the cost of carrying a unit in inventory from one month to the next is $6. $\begin{array}{|l|c|c|c|c|c|}\hline & \text { January } & \text { February } & \text { March } & \text { April } & \text { May } \\\hline \text { Forecast } & 400 & 800 & 1200 & 700 & 300 \\\hline \text { Beginning Inventory } & 100 & & & & \\\hline \text { Regular Time } & & & & & \\\hline \text { Qvertime } & & & & & \\\hline \text { Subcontracting } & & & & & \\\hline \text { Ending Inventory } & & & & & \\\hline\end{array}$ The labor contract at the plant prohibits both overtime and subcontracting output to exceed 400 units in any five month window. The plant capacity is 20 units per day produced using two shifts and the plant runs seven days a week. By policy, management wants to avoid stockouts. -How many months does the regular time output exceed plant capacity in the optimal solution to Scenario 8.2?

Aggregate planning should consider information from

To create an aggregate plan, a company must specify the planning horizon for the plan and the duration of each period within the planning horizon.

Aggregate planning is concerned with determining

Explain the basic strategies that an aggregate planner has available to balance the various costs and meet demand.