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Exam 8: Aggregate Planning in a Supply Chain

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Question 21

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The goal of aggregate planning is to satisfy demand in a way that minimizes profit.

A) True
B) False

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Question 22

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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 level strategy,so over the next five months they should produce

A) 200,300,500,300,200.
B) 500,400,300,200,100.
C) 100,200,300,400,500.
D) 300,300,300,300,300.

E) C) and D)
F) None of the above

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Question 23

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As inputs into the aggregate plan change,managers do not need to make changes to the aggregate plan.

Linear programming finds the solution for an aggregate plan that creates the highest profit while satisfying the constraints that a company faces.

As capacity utilization increases,it becomes less important to perform aggregate planning.

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.

The length of the planning horizon in aggregate planning is usually between

Aggregate planning solves problems involving

The aggregate plan should be communicated to

Scenario 8.3 - Mousetraps A company faces the aggregate planning problem shown in the table below.Cost of regular production is $15 per unit,the cost of producing the same unit on overtime is $22.50,the cost of subcontracting is $27 per unit,and the cost of carrying a unit in inventory from one month to the next is $10. $\begin{array} { | l | c | c | c | c | c | } \hline & \text { July } & \text { August } & \text { September } & \text { October } & \text { November } \\\hline \text { Forecast } & 800 & 650 & 450 & 550 & 900 \\\hline \text { Beginning Inventory } & 140 & & & & \\\hline \text { Regular Time } & & & & & \\\hline \text { Overtime } & & & & & \\\hline \text { Subcontracting } & & & & & \\\hline \text { Ending Inventory } & & & & & \\\hline\end{array}$ The labor contract at the plant prohibits both overtime and subcontracting output to exceed 250 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. -Which month has a positive ending inventory for the optimal aggregate plan for Scenario 8.3?

An aggregate planning horizon is usually between three and five years.

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. $\begin{array} { | l | c | c | c | c | c | } \hline & \text { January } & \text { February } & \text { March } & \text { April } & \text { May } \\\hline \text { Forecast } & 400 & 800 & 1200 & 700 & 300 \\\hline \text { Beginning Inventory } & 100 & & & & \\\hline \text { Regular Time } & & & & & \\\hline \text { Overtime } & & & & & \\\hline \text { Subcontracting } & & & & & \\\hline \text { Ending Inventory } & & & & & \\\hline\end{array}$ 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?

Discuss the primary objective and operational parameters of aggregate planning.

When formulating aggregate plans,

Scenario 8.3 - Mousetraps A company faces the aggregate planning problem shown in the table below.Cost of regular production is $15 per unit,the cost of producing the same unit on overtime is $22.50,the cost of subcontracting is $27 per unit,and the cost of carrying a unit in inventory from one month to the next is $10. $\begin{array} { | l | c | c | c | c | c | } \hline & \text { July } & \text { August } & \text { September } & \text { October } & \text { November } \\\hline \text { Forecast } & 800 & 650 & 450 & 550 & 900 \\\hline \text { Beginning Inventory } & 140 & & & & \\\hline \text { Regular Time } & & & & & \\\hline \text { Overtime } & & & & & \\\hline \text { Subcontracting } & & & & & \\\hline \text { Ending Inventory } & & & & & \\\hline\end{array}$ The labor contract at the plant prohibits both overtime and subcontracting output to exceed 250 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 8.3?

Scenario 8.1 - Gang Aft Agley Gang Aft Agley,a manufacturing company,faces the aggregate planning problem shown in the table below.Cost of regular production is $5 per unit,the cost of producing the same unit on overtime is $7.50,the cost of subcontracting is $9 per unit,and the cost of carrying a unit in inventory from one month to the next is $2. $\begin{array} { | l | c | c | c | c | c | } \hline & \text { January } & \text { February } & \text { March } & \text { April } & \text { May } \\\hline \text { Forecast } & 500 & 750 & 1200 & 650 & 300 \\\hline \text { Beginning Inventory } & 100 & & & & \\\hline \text { Regular Time } & & & & & \\\hline \text { Overtime } & & & & & \\\hline \text { Subcontracting } & & & & & \\\hline \text { Ending Inventory } & & & & & \\\hline\end{array}$ The labor contract at the plant prohibits both overtime and subcontracting output to exceed 300 units in any five month window.The plant capacity is 600 units per month produced using two shifts,regardless of the number of days in a month.By policy,management wants to avoid stockouts. -What is the optimal total cost of the aggregate plan developed to address Scenario 8.1?

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. $\begin{array} { | l | c | c | c | c | c | } \hline & \text { January } & \text { February } & \text { March } & \text { April } & \text { May } \\\hline \text { Forecast } & 400 & 800 & 1200 & 700 & 300 \\\hline \text { Beginning Inventory } & 100 & & & & \\\hline \text { Regular Time } & & & & & \\\hline \text { Overtime } & & & & & \\\hline \text { Subcontracting } & & & & & \\\hline \text { Ending Inventory } & & & & & \\\hline\end{array}$ 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. -What is the optimal total cost of the aggregate plan developed to address Scenario 8.2?

The goal of aggregate planning is to

The process by which a company determines levels of capacity, production, subcontracting, inventory, stockouts, and even pricing over a specified time horizon is

A highly effective tool for a company to use when it tries to maximize profits while being subjected to a series of constraints is