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Krajewski Om9 Tif 14
Krajewski Om9 Tif 14
Chapter
Planning and Scheduling
14 Operations
TRUE/FALSE
1. Operations planning and scheduling is the process of making sure demand and supply
plans are in balance.
Answer: True
Reference: Introduction
Difficulty: Easy
Keywords: operations planning and scheduling, demand, supply
2. The operations planning and scheduling process moves from the short term scheduling
level to the aggregate level.
Answer: False
Reference: Introduction
Difficulty: Easy
Keywords: operations planning and scheduling, aggregate level, short term scheduling
level
3. A product family is a group of customers, services, or products that have similar demand
requirements and common processes, labor, and materials requirements.
Answer: True
Reference: Stages in Operations Planning and Scheduling
Difficulty: Moderate
Keywords: product family
4. The best mix of full- and part-time employees is a sales and operations planning decision.
Answer: True
Reference: Stages in Operations Planning and Scheduling
Difficulty: Moderate
Keywords: sales and operations planning decisions, labor mix, full-time, part-time
5. The sales and operations plan typically has a one-year planning horizon.
Answer: True
Reference: Stages in Operations Planning and Scheduling
Difficulty: Moderate
Keywords: sales and operations plan, planning horizon
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Chapter 14 Operations Planning and Scheduling
6. A manufacturing firm’s sales and operations plan generates both production plan and a
staffing plan.
Answer: True
Reference: Stages in Operations Planning and Scheduling
Difficulty: Moderate
Keywords: sales and operations plan, production plan, staffing plan
7. A services firm’s sales and operations plan generates both production plan and a staffing
plan.
Answer: False
Reference: Stages in Operations Planning and Scheduling
Difficulty: Moderate
Keywords: sales and operations plan, production plan, staffing plan
9. A master production schedule is a schedule that specifies the timing, size, and sequence
of production for aggregated product families.
Answer: False
Reference: Stages in Operations Planning and Scheduling
Difficulty: Moderate
Keywords: master production schedule
10. One objective of a sales and operations plan is to minimize changes in production rates.
Answer: True
Reference: Managing Demand
Difficulty: Moderate
Keywords: sales and operations plan, objectives
11. Complementary products are actions that attempt to modify demand and, consequently,
resource requirements.
Answer: False
Reference: Managing Demand
Difficulty: Moderate
Keywords: complementary products
12. Some ways to manage demand include building anticipation inventories of goods and
hiring or laying off employees.
Answer: False
Reference: Managing Demand
Difficulty: Moderate
Keywords: anticipation inventories, workforce adjustments
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Chapter 14 Operations Planning and Scheduling
13. Revenue management is a way to manage demand by varying price at the right time for
various customer segments to maximize revenues generated from existing supply
capacity.
Answer: True
Reference: Managing Demand
Difficulty: Moderate
Keywords: revenue management, price variations, existing supply capacity
15. One distinction between manufacturing and services that affects sales and operations
plans is that services have difficulty creating inventories in anticipation of uneven
demand.
Answer: True
Reference: Sales and Operations Plans
Difficulty: Moderate
Keywords: service, anticipation inventory
16. Undertime is the situation that occurs when employees do not have enough productive
work for the regular-time workday or workweek.
Answer: True
Reference: Sales and Operations Plans
Difficulty: Moderate
Keywords: undertime, regular time
17. A level strategy matches demand during the planning horizon by varying either the
workforce level or the output rate.
Answer: False
Reference: Sales and Operations Plans
Difficulty: Moderate
Keywords: level output strategy
18. One type of cost considered when preparing a sales and operations plan is inventory
holding cost.
Answer: True
Reference: Sales and Operations Plans
Difficulty: Moderate
Keywords: sales and operations planning, inventory holding cost
19. Once a demand forecast has been entered into a sales and operations plan, it cannot be
updated since it would skew the process results.
Answer: False
Reference: Sales and Operations Plans
Difficulty: Easy
Keywords: sales and operations planning process, demand forecast
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Chapter 14 Operations Planning and Scheduling
20. The spreadsheet approach to sales and operations planning for a services provider
includes inventory costs as one factor to be considered.
Answer: False
Reference: Sales and Operations Plans
Difficulty: Easy
Keywords: spreadsheet, sales and operations planning, inventory costs
21. Scheduling involves generating a work schedule for employees or sequences of jobs or
customers at workstations.
Answer: True
Reference: Scheduling
Difficulty: Moderate
Keywords: scheduling, work schedule, sequences of jobs
22. The Gantt chart can be used as a tool for sequencing work on machines and monitoring
its progress.
Answer: True
Reference: Scheduling
Difficulty: Easy
Keyword: Gantt
23. A rotating schedule calls for each employee to work the same days and hours each week.
Answer: False
Reference: Scheduling
Difficulty: Moderate
Keywords: rotating schedule
24. A fixed schedule gives each employee the next employee’s schedule the following week.
Answer: False
Reference: Scheduling
Difficulty: Easy
Keywords: fixed schedule
25. Jobs processed using the first-come-first-served priority rule still permits them to be
expedited.
Answer: True
Reference: Scheduling
Difficulty: Moderate
Keywords: first-come-first-served, FCFS, priority rules, expediting
26. Earliest due date (EDD) is a priority-sequencing rule that states the job requiring the
shortest processing time is the next job to be processed.
Answer: False
Reference: Scheduling
Difficulty: Moderate
Keywords: EDD, priority, sequence, early, due
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Chapter 14 Operations Planning and Scheduling
27. Flow time is only the time a job spends being processed, and excludes any time waiting
to be processed, equipment set up time and time spent moving between operations.
Answer: False
Reference: Scheduling
Difficulty: Moderate
Keyword: flow time
28. Advanced planning and scheduling systems (APS) seek to optimize resources across the
supply chain and align daily operations with strategic goals.
Answer: True
Reference: Scheduling
Difficulty: Moderate
Keywords: APS, supply chain, strategic goals
MULTIPLE CHOICE
30. A sales and operations plan for a manufacturing firm that centers on manufacturing rates
and inventory holdings is:
a. a staffing plan.
b. a production plan.
c. an operations plan.
d. a process plan.
Answer: b
Reference: Introduction
Difficulty: Easy
Keywords: production, sales and operations plan
31. Which one of the following statements about sales and operations planning is best?
a. A production plan generally focuses on production rates and inventory holdings,
whereas a staffing plan focuses on staffing and other labor-related factors.
b. Supply options are actions that adjust demand patterns.
c. Operations and marketing are the only two functional areas that supply inputs for
developing production and staffing plans.
d. A level strategy stabilizes inventory levels by adjusting production rates or staff
levels to match demand levels over the planning horizon.
Answer: a
Reference: Multiple sections
Difficulty: Moderate
Keywords: production plan, staffing plan, sales and operations plan
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Chapter 14 Operations Planning and Scheduling
32. Which one of the following statements about managerial inputs to production and staffing
plans is best?
a. Finance provides labor and machine standards.
b. Human resources provide the training capacity and labor-market conditions.
c. Marketing provides the schedule of sales associates..
d. Materials provide the current staffing level.
Answer: b
Reference: Operations Planning and Scheduling Across the Organization
Difficulty: Moderate
Keywords: production plan, staffing plan, sales and operations plan, managerial inputs
33. Which one of the following statements concerning production and staffing plans is best?
a. Aggregation can be performed along three dimensions: product families, labor, and
time.
b. A staffing plan is the intermediate link between the business plan and the master
production schedule.
c. Production plans are based primarily on information from the master production plan.
d. A master production schedule is a projected statement of income, costs, and profits.
Answer: a
Reference: Stages in Operations Planning and Scheduling
Difficulty: Moderate
Keywords: production plan, staffing plan, sales and operations plan
36. The planning horizon for a sales and operations plan is typically:
a. 0 – 3 months.
b. 3 – 18 months.
c. 18 – 36 months.
d. 36 months – 60 months
Answer: b
Reference: Stages in Operations Planning and Scheduling
Difficulty: Moderate
Keywords: planning horizon
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Chapter 14 Operations Planning and Scheduling
37. A financial assessment of a for-profit organization’s near future (for one or two years
ahead) is a(n):
a. business plan.
b. annual plan.
c. resource plan.
d. financial budget.
Answer: a
Reference: Stages in Operations Planning and Scheduling
Difficulty: Easy
Keywords: financial plan, business plan, for-profit organization
38. A financial assessment of a not-for-profit organization’s near future (for one or two years
ahead) is a(n):
a. business plan.
b. annual plan.
c. resource plan.
d. financial budget.
Answer: b
Reference: Stages in Operations Planning and Scheduling
Difficulty: Easy
Keywords: financial plan, business plan, not-for-profit organization
39. The intermediate link between the business plan and the MPS is the:
a. annual plan.
b. production plan.
c. financial plan.
d. workforce schedule.
Answer: b
Reference: Multiple sections
Difficulty: Moderate
Keywords: business plan, MPS, master production schedule
40. Based on the sales and operations plan for a service provider, the next planning level is:
a. scheduling.
b. annual planning.
c. constraint management.
d. resource planning.
Answer: d
Reference: Stages in Operations Planning and Scheduling
Difficulty: Moderate
Keywords: sales and operations plan, service provider, resource plan
41. The lowest planning level in a sales and operations plan is:
a. resource planning.
b. forecasting.
c. scheduling.
d. sales and operations planning.
Answer: c
Reference: Stages in Operations Planning and Scheduling
Difficulty: Moderate
Keywords: sales and operations plan, scheduling
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Chapter 14 Operations Planning and Scheduling
42. The timing and size of production quantities for each product in the product family is
specified by the:
a. master production schedule.
b. material requirements plan.
c. resource plan.
d. scheduling plan.
Answer: a
Reference: Stages in Operations Planning and Scheduling
Difficulty: Moderate
Keywords: master production schedule
43. The plans for the components, purchased materials, and workstations are developed in
the:
a. master production scheduling process.
b. material requirements planning process.
c. scheduling process.
d. constraint management process.
Answer: b
Reference: Stages in Operations Planning and Scheduling
Difficulty: Moderate
Keywords: material requirements plan, MRP
44. A TV repair service company has a seasonal demand for its service, and there is a general
shortage of skilled TV repairpersons. Which one of the following is a demand option
production-planning alternative suitable for this situation?
a. Hire and lay off workers to match the demand requirements.
b. Increase the backlog for short-term demand surges.
c. Build anticipation inventories.
d. Subcontract work out during peak demand periods.
Answer: b
Reference: Managing Demand
Difficulty: Moderate
Keywords: demand options, backlog
45. Which one of the following is a demand option for sales and operations planning?
a. Use seasonal inventories to buffer the manufacturing process from variations in
customer demand.
b. Offer complementary products or services with contra cyclical demand requirements.
c. Use overtime and undertime to change workforce levels.
d. Use subcontracting to overcome short-term capacity shortages.
Answer: b
Reference: Managing Demand
Difficulty: Moderate
Keywords: demand options, supply options
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Chapter 14 Operations Planning and Scheduling
46. A company is attempting to cope with seasonal demand patterns by managing its
demand. Which one of the following will NOT help achieve this aim?
a. Complementary products or services
b. Adjusting workforce levels
c. Promotional campaigns
d. Creative pricing
Answer: b
Reference: Managing Demand
Difficulty: Moderate
Keywords: demand options, supply options
48. An aggressive advertising campaign was credited with K-Tel’s inability to keep K-Fed’s
latest CD on the shelves. K-Tel continued to accept orders and promised to ship as soon
as they could burn new discs. Customers weren’t happy, but were willing to wait. This
unfortunate situation can be described as a:
a. stockout.
b. backlog.
c. backorder.
d. lost sale.
Answer: c
Reference: Managing Demand
Difficulty: Moderate
Keywords: demand options, backorder
49. A customer is given a due date for their product order with:
a. backlog.
b. reservation.
c. service on demand.
d. appointment.
Answer: a
Reference: Managing Demand
Difficulty: Easy
Keywords: customer, demand options, backlog
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Chapter 14 Operations Planning and Scheduling
50. Which one of the following statements on sales and operations planning is best?
a. Creative pricing is an example of a demand option sales and operations planning
strategy.
b. Chase strategies are always the lowest cost alternative but are often not chosen
because of other factors.
c. Vacation schedules are rarely used as a supply option because the planners are at the
mercy of the employees’ choices for free time.
d. A mixed strategy is one that “mixes” the demand of complementary products to level
the aggregate demand rate.
Answer: a
Reference: Managing Demand
Difficulty: Moderate
Keywords: sales and operations plan, creative pricing, demand options
51. The process of varying pricing at the right time for different customer segments to
maximize revenue generated from existing supply capacity is called:
a. supply planning.
b. backlogging.
c. backordering.
d. revenue management.
Answer: d
Reference: Managing Demand
Difficulty: Easy
Keywords: revenue management, pricing, revenue, capacity
53. Which one of the following statements about sales and operations planning is best?
a. Supply options are actions that adjust demand patterns.
b. All functional areas should supply inputs for developing production and staffing
plans.
c. The production plan specifies the timing and size of production quantities for each
product in the product families.
d. The staffing plan is to service organizations what competitive priorities are to
manufacturing organizations.
Answer: b
Reference: Multiple sections
Difficulty: Moderate
Keywords: production plan, staffing plan, sales and operations plan
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Chapter 14 Operations Planning and Scheduling
55. Which one of the following statements concerning supply options is best?
a. Subcontracting can help overcome short-term capacity shortages by offloading work
on other producers.
b. Creating anticipation inventory increases customization and is particularly favored in
the service industry.
c. Adjusting workforce levels is preferred when the workforce is skilled and the labor
pool is small.
d. Using overtime capacity usually improves worker hourly productivity.
Answer: a
Reference: Sales and Operations Plans
Difficulty: Moderate
Keywords: supply options
56. Two basic types of decision alternatives are used to arrive at acceptable production or
staffing plans: supply options and demand options. If an organization that faces seasonal
demand uses a supply option approach, which one of the following actions is it most
likely to implement?
a. Introduction of complementary products
b. Creating a stock of anticipation inventory
c. Advertising to generate demand during off-peak periods
d. Discounting products in off-peak periods
Answer: b
Reference: Sales and Operations Plans
Difficulty: Moderate
Keywords: supply options, demand options, anticipation inventory
57. Which one of the following statements concerning sales and operations planning
alternatives is best?
a. Building anticipation inventory during the slack season is a demand management
option a firm can follow to satisfy seasonal demand patterns.
b. Adjusting workforce levels is an attractive reactive alternative when the cost of
training and unemployment compensation is high.
c. Creating anticipation inventory has the advantage of increasing customization.
d. Using overtime is an undesirable option when the overtime wage premium is high
and sustained levels of top worker productivity are important.
Answer: d
Reference: Sales and Operations Plans
Difficulty: Hard
Keywords: sales and operations planning, overtime
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Chapter 14 Operations Planning and Scheduling
58. Which one of the following conditions favors a level strategy for manufacturing firms?
a. High availability of workers
b. Short shelf life of inventory
c. Highly automated equipment and a make-to-stock strategy
d. High inventory-holding cost
Answer: c
Reference: Sales and Operations Plans
Difficulty: Moderate
Keywords: level strategy, sales and operations plan
59. Which one of the following statements regarding production and staffing plans is best?
a. A producer of greeting cards for all occasions can use a level strategy to good
advantage because of the complementary nature of the products and the workforce to
produce many varieties of cards.
b. The production plan outlines time-phased production rates, workforce levels, and
inventories without considering capacity limitations.
c. A decision to vertically integrate is one of the possible demand options a firm may
employ when operating under uneven demand conditions.
d. An advantage of employing demand options is that creative pricing and promotional
campaigns increase the contribution margin.
Answer: a
Reference: Sales and Operations Plans
Difficulty: Moderate
Keywords: production plans, staffing plans, sales and operations plan
60. Which one of the following statements about sales and operations planning is best?
a. When a firm wants to minimize its inventory investment, it should use a level
production-planning strategy.
b. When a firm wants to emphasize stability in its workforce, it should adopt a level
production-planning strategy.
c. A make-to-stock production plan that wants to emphasize plant utilization should
adopt a chase production strategy.
d. A make-to-stock production plan that wants to minimize changes in production rates
should adopt a chase production-planning strategy.
Answer: b
Reference: Sales and Operations Plans
Difficulty: Hard
Keywords: level strategy, sales and operations plan, stable workforce
61. Which one of the following conditions can make a level strategy the most attractive?
a. The cost of changing the workforce levels is low.
b. Products complementary to the existing products can be produced easily with the
given facilities.
c. The shelf life of the goods being produced is limited.
d. Inventory-holding costs are high.
Answer: b
Reference: Sales and Operations Plans
Difficulty: Hard
Keywords: level strategy, complementary products
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Chapter 14 Operations Planning and Scheduling
63. The sales and operations planning strategy to be used should be consistent with the
business environment. Which one of the following pairs of business environment and
strategy is consistent?
a. Skilled labor in short supply; adjust workforce levels
b. Low inventory holding cost; build anticipation inventory
c. Ample labor supply; increase backlog for short-term demand surges
d. Seasonal requirements and ample, unskilled labor supply; subcontracting
Answer: b
Reference: Sales and Operations Plans
Difficulty: Moderate
Keywords: sales and operations planning, anticipation inventory, inventory holding cost
64. Which one of the following statements about costs of sales and operations plans is best?
a. Overtime wages are typically 50% of regular time wages, exclusive of fringe
benefits.
b. The cost of capital is not generally included in the inventory-holding cost.
c. Fringe benefits, which are a part of regular-time costs, do not typically include health
insurance and paid vacations.
d. Hiring costs include the costs of advertising jobs, interviews, training programs for
new employees, and initial paperwork.
Answer: d
Reference: Sales and Operations Plans
Difficulty: Moderate
Keywords: sales and operations plan, hiring costs
65. Which of the following is the best example of a physical constraint on the sales and
operations plan?
a. Inventory storage space
b. Level of backorders
c. Use of overtime
d. Safety stock levels
Answer: a
Reference: Sales and Operations Plans
Difficulty: Moderate
Keywords: sales and operations plan, physical constraint
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Chapter 14 Operations Planning and Scheduling
Table 14.1
Bart Incorporated manufactures rotary air fans and uses a production-planning horizon of
one-half year. It allows for regular time, part time, overtime, and subcontracting production
to meet the demand but no more than 12 units may be made by each of these methods. Both
anticipation inventory and backorders are allowed. The beginning (or current) inventory is
20 units. Their first attempt at a sales and operations plan has resulted in the following.
1 2 3 4 5 6 Total
Inputs
Forecasted demand 100 125 120 80 75 70 570
Workforce Level 80 80 80 80 80 80 480
Part Time 12 12 12 12 12 12 72
Overtime 0 0 0 0 0 0 0
Subcontract 0 0 0 0 0 0 0
Derived
Beginning inventory 20 12 0 0 0 0
Ending inventory 12 0 0 0 0 2
Backlog 0 21 49 37 20 0 127
Calculated
Workforce level $5 400 400 400 400 400 400 $2,400
Part Time $6 72 72 72 72 72 72 $432
Overtime $7.5 0 0 0 0 0 0 $0
Subcontract $8 0 0 0 0 0 0 $0
Inventory holding $5 80 30 0 0 0 5 $115
Back orders $20 0 420 980 740 400 0 $2,540
66. Use the information in Table 14.1. According to the production plan, what will be the
total ending inventory in the second month after the second month’s demand is satisfied?
a. – 21 units
b. 0 units
c. 21 units
d. This cannot be determined from the information provided.
Answer: a
Reference: Sales and Operations Plans
Difficulty: Moderate
Keywords: sales and operations plan, inventory
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Chapter 14 Operations Planning and Scheduling
67. Use the information in Table 14.1. If the firm is committed to the regular production and
overtime production as shown, what level of anticipation inventory would be needed at
the start of the first month to result in an ending inventory of zero after month 6?
a. 9 or fewer units
b. 10 units to 17 units
c. 18 units to 25 units
d. 25 units to 32 units
Answer: c
Reference: Sales and Operations Plans
Difficulty: Moderate
Keywords: anticipation inventory, sales and operations plan
68. Use the information in Table 14.1. According to the production plan, what is the unused
overtime capacity in the fourth period?
a. 0
b. 4
c. 9
d. 12
Answer: d
Reference: Sales and Operations Plans
Difficulty: Easy
Keywords: overtime capacity, sales and operations plan
69. Use the information in Table 14.1. Which of these changes would result in the greatest
improvement (in terms of total cost) for the production plan?
a. Increase anticipation inventory to 30 units at the start of the first month.
b. Reduce anticipation inventory to 18 units at the start of the first month.
c. Increase anticipation inventory to 40 units at the start of the first month.
d. Reduce anticipation inventory to 10 units at the start of the first month.
Answer: c
Reference: Sales and Operations Plans
Difficulty: Moderate
Keywords: anticipation inventory, sales and operations plan
70. Use the information in Table 14.1. Which of these changes would result in the greatest
improvement (in terms of total cost) for the production plan?
a. Produce an additional 12 units using overtime in the first month.
b. Produce an additional 12 units using subcontracting in the second month.
c. Produce an additional 12 units using overtime in the third month.
d. Produce an additional 12 units using subcontracting in the fourth month.
Answer: b
Reference: Sales and Operations Plans
Difficulty: Hard
Keywords: subcontracting, sales and operations plan
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Chapter 14 Operations Planning and Scheduling
71. Use the information in Table 14.1. Which of these changes would result in the greatest
improvement (in terms of total cost) for the production plan?
a. Increase anticipation inventory to 30 units at the start of the first month.
b. Produce an additional 12 units using subcontracting in the second month.
c. Produce an additional 12 units using overtime in the second and third months.
d. Reduce anticipation inventory to zero units at the start of the first month.
Answer: c
Reference: Sales and Operations Plans
Difficulty: Hard
Keywords: sales and operations plan, overtime
72. Use the information in Table 14.1. If anticipation inventory is increased to 30 units at the
start of the first month, what is the inventory holding cost over the entire planning
period?
a. $115
b. $145
c. $185
d. $215
Answer: d
Reference: Sales and Operations Plans
Difficulty: Moderate
Keywords: anticipation inventory, inventory holding cost, sales and operations plan
73. Use the information in Table 14.1. Which one of these trade-offs works to your greatest
advantage in terms of reducing costs over the entire planning period?
a. Produce units using part-time workers instead of regular-time workers.
b. Begin with a larger anticipation inventory to avoid backorders completely.
c. Use no overtime, subcontracting, or part time in favor of a level regular-capacity
plan.
d. Begin the planning period with 570 units of anticipation inventory and produce
nothing in the planning period.
Answer: b
Reference: Sales and Operations Plans
Difficulty: Moderate
Keywords: sales and operations plan, anticipation inventory, backorder
74. Use the information in Table 14.1. If anticipation inventory were 30 units at the start of
the first month, what would the backorder cost be in the fourth month?
a. $840
b. $740
c. $640
d. $540
Answer: d
Reference: Sales and Operations Plans
Difficulty: Moderate
Keywords: sales and operations plan, anticipation inventory, backorder cost
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Chapter 14 Operations Planning and Scheduling
75. Use the information in Table 14.1. What would be the total plan cost if no more than five
units each could be made each month by part-time, overtime, and subcontracted workers?
a. $4,920
b. $4,822
c. $4,775
d. $4,550
Answer: c
Reference: Sales and Operations Plans
Difficulty: Moderate
Keywords: sales and operations plan, part-time workers, overtime, subcontracting
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Chapter 14 Operations Planning and Scheduling
Table 14.2
Archie Toys is a retailer operating out of Wichita, Kansas. It experiences a seasonal demand
pattern for its services. Labor requirements over a typical six-month period follow. The
workforce requirements (expressed as number of employees) are given in the following table
for the next six periods.
Month
1 2 3 4 5 6 Total
Inputs
Forecasted demand 6 7 12 13 8 5
Workforce level
Undertime
Overtime
Productive time
Hires
Layoffs
Calculated
Productive time
Undertime
Overtime
Hires
Layoffs
Total
76. Use the information in Table 14.2. The total cost of the staffing plan, including the cost
of regular wages, hiring, and layoffs using a chase strategy with hiring and layoffs but no
overtime, is:
a. less than or equal to $42,000.
b. greater than $42,000 but less than or equal to $43,000.
c. greater than $43,000 but less than or equal to $44,000.
d. greater than $44,000.
Answer: d
Reference: Sales and Operations Plans
Difficulty: Moderate
Keywords: sales and operations plan, staffing plan, total cost, chase strategy
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Chapter 14 Operations Planning and Scheduling
77. Use the information in Table 14.2. The total cost of the staffing plan, using a level
strategy in which no overtime is allowed and the undertime paid for, is:
a. less than or equal to $60,000.
b. greater than $60,000 but less than or equal to $65,000.
c. greater than $65,000 but less than or equal to $70,000.
d. greater than $70,000.
Answer: b
Reference: Sales and Operations Plans
Difficulty: Moderate
Keywords: sales and operations plan, staffing plan, total cost, level strategy
78. Use the information in Table 14.2. Suppose that overtime is allowed up to 25% of the
regular-time capacity, and that overtime wages are 150% of the regular-time rate. The
total cost of the level strategy with overtime and undertime, which also minimizes
undertime, is:
a. less than or equal to $60,000.
b. greater than $60,000 but less than or equal to $65,000.
c. greater than $65,000 but less than or equal to $70,000.
d. greater than $70,000.
Answer: a
Reference: Sales and Operations Plans
Difficulty: Moderate
Keywords: sales and operations plan, staffing plan, total cost, level strategy, undertime
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Chapter 14 Operations Planning and Scheduling
Table 14.3
A large distribution center uses some part-time employees in its workforce. Each part-time
employee works a maximum of 80 hours per month. The workforce requirements (expressed
as the number of part-time employees working the maximum regular time of 80 hours per
month) are given in the following table for the next six periods.
Month
1 2 3 4 5 6 Total
Inputs
Forecasted demand 50 50 75 75 50 50
Workforce level
Undertime
Overtime
Derived
Utilized time
Hires
Layoffs
Costs
Utilized time
Undertime
Overtime
Hires
Layoffs
Total
79. Use the information in Table 14.3. The total cost of the staffing plan, including the cost
of regular wages, hiring, and layoffs, using a chase strategy with hiring and layoffs but no
overtime, is:
a. less than or equal to $125,000.
b. greater than $125,000 but less than or equal to $125,500.
c. greater than $125,500 but less than or equal to $126,000.
d. greater than $126,000.
Answer: d
Reference: Sales and Operations Plans
Difficulty: Moderate
Keywords: sales and operations plan, staffing plan, regular time, hiring, layoffs, chase
strategy
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Chapter 14 Operations Planning and Scheduling
80. Use the information in Table 14.4. Use a level strategy with overtime and undertime.
Minimize undertime by maximizing overtime during the peak period. If the firm does not
pay undertime, what is the total cost of the staffing plan including the cost of regular
wages, hiring, and layoffs?
a. Less than or equal to $158,000
b. Greater than $158,000 but less than or equal to $160,000
c. Greater than $160,000 but less than or equal to $162,000
d. Greater than $162,000
Answer: a
Reference: Sales and Operations Plans
Difficulty: Moderate
Keywords: sales and operations plan, staffing plan, regular time, overtime, undertime,
hiring, layoffs, chase strategy
81. Use the information in Table 14.3. Use a chase strategy with hiring and layoffs but no
overtime. How many workers will be hired in month 3?
a. Fewer than or equal to zero
b. Greater than zero but fewer than or equal to 10
c. Greater than 10 but fewer than or equal to 20
d. Greater than 20
Answer: d
Reference: Sales and Operations Plans
Difficulty: Moderate
Keywords: sales and operations plan, staffing plan, regular time, hiring, layoffs, chase
strategy
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Chapter 14 Operations Planning and Scheduling
85. Which one of the following approaches for scheduling customer demand would be
appropriate for a dentist?
a. Backlogs
b. Reservations
c. Service on demand
d. Appointments
Answer: d
Reference: Scheduling
Difficulty: Moderate
Keywords: appointment, scheduling customer demand
86. Which one of the following approaches for scheduling customer demand would be
appropriate for a fancy hotel?
a. Backlogs
b. Reservations
c. Service on demand
d. Appointments
Answer: b
Reference: Scheduling
Difficulty: Moderate
Keywords: reservations, scheduling customer demand
87. A service provider assigns a specific time for personal service to a customer with a(n):
a. backlog.
b. reservation.
c. service on demand.
d. appointment.
Answer: d
Reference: Scheduling
Difficulty: Easy
Keywords: appointment, scheduling customer demand
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88. A specific time and a hotel room are assigned to a customer by a service provider using
a(n):
a. backlog.
b. reservation.
c. service on demand.
d. appointment.
Answer: b
Reference: Scheduling
Difficulty: Easy
Keywords: reservations, scheduling customer demand
Table 14.4
Gable Express Co. provides delivery service seven days a week. The daily requirements (in
workers) are estimated as follows:
Each worker is required to work five days per week, and each must have two consecutive days
off.
90. Use the information in Table 14.4. What is the minimum number of workers required if
preference is given to the pair S-SU in case of a tie in the selection of off days?
a. Fewer than eight workers
b. Eight workers
c. Nine workers
d. Greater than nine workers
Answer: b
Reference: Scheduling
Difficulty: Moderate
Keywords: workforce schedule
91. Use the information in Table 14.4. How much total slack will be generated from the
schedule?
a. Fewer than six days
b. Six days
c. Seven days
d. Greater than seven days
Answer: c
Reference: Scheduling
Difficulty: Moderate
Keywords: workforce schedule, total slack
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Chapter 14 Operations Planning and Scheduling
Table 14.5
The daily requirements for highway patrol officers at Park City over the week are:
Each officer works five days a week and must have two consecutive days off.
92. Use the information in Table 14.5. What is the minimum number of officers required if
preference is given to the pair S-SU in case of a tie in the selection of off days?
a. 9
b. 10
c. 11
d. 12
Answer: c
Reference: Scheduling
Difficulty: Moderate
Keywords: workforce schedule
93. Use the information in Table 14.5. How much total slack is generated from the schedule?
a. Fewer than 9 days
b. 10 days
c. 11 days
d. Greater than 11 days
Answer: d
Reference: Scheduling
Difficulty: Moderate
Keywords: workforce schedule, total slack
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Chapter 14 Operations Planning and Scheduling
Table 14.6
Bluebird University provides tutoring services for undergraduate students seven days a week.
The daily requirements for tutors are:
Each tutor works five days a week and must have two consecutive days off, according to the
contract.
94. Use the information in Table 14.6. What is the minimum number of tutors required if
preference is given to the pair S-SU in case of a tie in the selection off days?
a. Fewer than seven
b. Seven
c. Eight
d. Nine
Answer: b
Reference: Scheduling
Difficulty: Moderate
Keywords: workforce schedule
95. Use the information in Table 14.6. How many days will have slack capacity?
a. Fewer than three
b. Three
c. Four
d. Greater than four
Answer: a
Reference: Scheduling
Difficulty: Moderate
Keywords: workforce schedule, total slack
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Chapter 14 Operations Planning and Scheduling
Table 14.7
The framing department has six jobs waiting to be processed. It is now time zero and all jobs
are ready to begin. Each has only one operation remaining. All jobs arrived at the same time,
and FCFS begins with job A, then B, etc.
96. Using the information in Table 14.7 and the first-come, first-served (FCFS) rule, what is
the average days past due?
a. Fewer than or equal to 6 days
b. Greater than 6 days but fewer than or equal to 10 days
c. Greater than 10 days but fewer than or equal to 14 days
d. Greater than 14 days
Answer: c
Reference: Scheduling
Difficulty: Moderate
Keywords: first-come, first-served, FCFS, average days past due
97. Using the information in Table 14.7 and the earliest due date (EDD) rule, what is the
average days past due?
a. Fewer than or equal to 5 days
b. Greater than 5 days but fewer than or equal to 9 days
c. Greater than 9 days but fewer than or equal to 13 days
d. Greater than 13 days
Answer: c
Reference: Scheduling
Difficulty: Moderate
Keywords: earliest due date, EDD, SPT, average days past due
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Chapter 14 Operations Planning and Scheduling
Table 14.8
Suppose that the following five jobs must be scheduled through a
car repair facility (all times are shown in days):
98. Use the information in Table 14.8. Which job will be the first one completed if
scheduling is done using the first-come, first-served (FCFS) rule?
a. A
b. B
c. C
d. D
Answer: a
Reference: Scheduling
Difficulty: Easy
Keywords: first-come, first-served, FCFS
99. Use the information in Table 14.8. Which job will be the first one completed if
scheduling is done using the earliest due date (EDD) rule?
a. A
b. B
c. C
d. D
Answer: c
Reference: Scheduling
Difficulty: Easy
Keywords: earliest due date, EDD
100. Use the information in Table 14.8. What is the average past due (in days) using the FCFS
rule?
a. Fewer than or equal to 2 days
b. Greater than 2 days but fewer than or equal to 3 days
c. Greater than 3 days but fewer than or equal to 4 days
d. Greater than 4 days
Answer: d
Reference: Scheduling
Difficulty: Easy
Keywords: average days past due, first-come, first-served, FCFS
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Chapter 14 Operations Planning and Scheduling
101. Use the information in Table 14.8. What is the average past due (in days) using the EDD
rule?
a. Fewer than or equal to 2 days
b. Greater than 2 days but fewer than or equal to 3 days
c. Greater than 4 days but fewer than or equal to 4 days
d. Greater than 4 days
Answer: a
Reference: Scheduling
Difficulty: Easy
Keywords: average days past due, earliest due date, EDD
102. Use the information in Table 14.8. What is the average flow time (in days) using the
FCFS rule?
a. Fewer than or equal to 8 days
b. Greater than 8 days but fewer than or equal to 12 days
c. Greater than 12 days but fewer than or equal to 16 days
d. Greater than 16 days
Answer: d
Reference: Scheduling
Difficulty: Easy
Keywords: average flow time, first-come, first-served, FCFS
103. Use the information in Table 14.8. What is the average flow time (in days) using the
EDD rule?
a. Fewer than or equal to 8 days
b. Greater than 8 days but fewer than or equal to 12 days
c. Greater than 12 days but fewer than or equal to 16 days
d. Greater than 16 days
Answer: c
Reference: Scheduling
Difficulty: Easy
Keywords: average flow time, earliest due date, EDD
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Chapter 14 Operations Planning and Scheduling
Table 14. 9
Auto Data produces custom engineering testing equipment. The
following five orders are currently in the design department
(all times are shown in weeks):
Job Time Since Arrival Process Time Due Date
A 9 5 5
B 6 6 11
C 5 7 20
D 4 5 18
E 2 3 9
104. Use the information in Table 14.9. Which job will be the first one completed if
scheduling is done using the first-come, first-served (FCFS) rule?
a. A
b. B
c. C
d. D
Answer: a
Reference: Scheduling
Difficulty: Easy
Keywords: first-come, first-served, FCFS
105. Use the information in Table 14.9. Which job will be the first one completed if
scheduling is done using the earliest due date (EDD) rule?
a. A
b. B
c. C
d. D
Answer: a
Reference: Scheduling
Difficulty: Easy
Keywords: earliest due date, EDD
106. Use the information in Table 14.9. What is the average past due (in weeks) using the
FCFS rule?
a. Fewer than or equal to 2 weeks
b. Greater than 2 weeks but fewer than or equal to 3 weeks
c. Greater than 3 weeks but fewer than or equal to 4 weeks
d. Greater than 4 weeks
Answer: d
Reference: Scheduling
Difficulty: Easy
Keywords: average days past due, first-come, first-served, FCFS
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Chapter 14 Operations Planning and Scheduling
107. Use the information in Table 14.9. What is the average past due (in weeks) using the
EDD rule?
a. Less than or equal to 1 week
b. Greater than 1 week but fewer than or equal to 3 weeks
c. Greater than 3 weeks but fewer than or equal to 5 weeks
d. Greater than 5 weeks
Answer: b
Reference: Scheduling
Difficulty: Easy
Keywords: average days past due, earliest due date, EDD
108. Use the information in Table 14.9. What is the average flow time (in weeks) using the
FCFS rule?
a. Fewer than or equal to 8 weeks
b. Greater than 8 weeks but fewer than or equal to 16 weeks
c. Greater than 16 weeks but fewer than or equal to 24 weeks
d. Greater than 24 weeks
Answer: c
Reference: Scheduling
Difficulty: Easy
Keywords: average flow time, first-come, first-served, FCFS
109. Use the information in Table 14.9. What is the average flow time (in weeks) using the
EDD rule?
a. Fewer than or equal to 10 weeks
b. Greater than 10 weeks but fewer than or equal to 15 weeks
c. Greater than 15 weeks but fewer than or equal to 20 weeks
d. Greater than 20 weeks
Answer: c
Reference: Scheduling
Difficulty: Easy
Keywords: average flow time, earliest due date, EDD
Table 14.10
A work center has the following six jobs waiting to be processed
(all times are shown in days):
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110. Use the information in Table 14.10. Which job will be the first one completed if
scheduling is done using the first-come, first-served (FCFS) rule?
a. A
b. B
c. C
d. D
Answer: a
Reference: Scheduling
Difficulty: Easy
Keywords: first-come, first-served, FCFS
111. Use the information in Table 14.10. Which job will be the first one completed if
scheduling is done using the earliest due date (EDD) rule?
a. B
b. C
c. D
d. E
Answer: d
Reference: Scheduling
Difficulty: Easy
Keywords: earliest due date, EDD
112. Use the information in Table 14.10. What is the average past due (in days) using the
FCFS rule?
a. Fewer than or equal to 2 days
b. Greater than 2 days but fewer than or equal to 3 days
c. Greater than 3 days but fewer than or equal to 4 days
d. Greater than 4 days
Answer: d
Reference: Scheduling
Difficulty: Easy
Keywords: average days past due, first-come, first-served, FCFS
113. Use the information in Table 14.10. What is the average past due (in days) using the EDD
rule?
a. Fewer than or equal to 2 days
b. Greater than 2 days but fewer than or equal to 3 days
c. Greater than 3 days but fewer than or equal to 4 days
d. Greater than 4 days
Answer: a
Reference: Scheduling
Difficulty: Easy
Keywords: average days past due, earliest due date, EDD
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Chapter 14 Operations Planning and Scheduling
114. Use the information in Table 14.10. What is the average flow time (in days) using the
FCFS rule?
a. Fewer than or equal to 10 days
b. Greater than 10 days but fewer than or equal to 20 days
c. Greater than 20 days but fewer than or equal to 30 days
d. Greater than 30 days
Answer: c
Reference: Scheduling
Difficulty: Easy
Keywords: average flow time, first-come, first-served, FCFS
115. Use the information in Table 14.10. What is the average flow time (in days) using the
EDD rule?
a. Fewer than or equal to 10 days
b. Greater than 10 days but fewer than or equal to 20 days
c. Greater than 20 days but fewer than or equal to 30 days
d. Greater than 30 days
Answer: c
Reference: Scheduling
Difficulty: Easy
Keywords: average flow time, earliest due date, EDD
116. A service firm’s sales and operations plan, called a(n) ____________, centers on staffing
and other labor-related factors.
Answer: staffing plan
Reference: Introduction
Difficulty: Easy
Keywords: service firm, staffing plan
117. A(n) ____________ is a statement of production rates, workforce levels, and inventory
holdings based on estimates of customer requirements and capacity limitations.
Answer: sales and operations plan
Reference: Operations Planning and scheduling Across the Organization
Difficulty: Easy
Keywords: sales and operations plan
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Chapter 14 Operations Planning and Scheduling
119. A group of customers, services, or products that have similar demand requirements and
common process, labor, and materials requirements is called a(n) ____________.
Answer: product family
Reference: Stages in Operations Planning and Scheduling
Difficulty: Moderate
Keywords: product family, product group, common processes, labor, materials
120. The ____________ is the length of time covered by a sales and operations plan.
Answer: planning horizon
Reference: Stages in Operations Planning and Scheduling
Difficulty: Moderate
Keywords: planning horizon
122. The ____________ is a schedule that specifies the timing and size of production
quantities for each product in the product family.
Answer: master production schedule
Reference: Stages in Operations Planning and Scheduling
Difficulty: Moderate
Keywords: master production schedule
123. The ____________ translates the staffing plan into specific workdays for each employee.
Answer: workforce schedule
Reference: Stages in Operations Planning and Scheduling
Difficulty: Moderate
Keywords: workforce schedule
124. The ____________ takes the master production schedule and derives plans for
components, purchased materials and workstations.
Answer: material requirements plan
Reference: Stages in Operations Planning and Scheduling
Difficulty: Moderate
Keywords: master production schedule, material requirements plan
125. ____________ are actions that attempt to modify demand and, consequently, resource
requirements.
Answer: Demand options
Reference: Managing Demand
Difficulty: Moderate
Keywords: demand options
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Chapter 14 Operations Planning and Scheduling
126. The three methods commonly used to schedule customer demand are ____________,
____________, and ____________.
Answer: appointments, reservations, backlogs
Reference: Managing Demand
Difficulty: Moderate
Keywords: scheduling customer demand, appointment, reservation, backlog
127. ____________ is the accumulation of customer orders that have been promised for
delivery at some future date.
Answer: Backlog
Reference: Managing Demand
Difficulty: Moderate
Keywords: backlog, customer order
128. A(n) ____________ is an order that cannot be satisfied when demanded and causes the
customer to go elsewhere.
Answer: stockout
Reference: Managing Demand
Difficulty: Moderate
Keywords: stockout, lost order
129. ____________ are products or services having similar resource requirements but
different demand cycles.
Answer: Complementary products
Reference: Managing Demand
Difficulty: Moderate
Keywords: complementary products, resource requirements, demand cycle
130. Incentives such as two-for-one promotions or charging less for off-peak use of production
or service facilities is an example of ____________.
Answer: promotional pricing
Reference: Managing Demand
Difficulty: Moderate
Keywords: promotional pricing, promotion
131. ____________ is the process of varying pricing at the right time for different customer
segments to maximize revenue generated from existing supply capacity.
Answer: Revenue management
Reference: Managing Demand
Difficulty: Easy
Keywords: revenue management, pricing, revenue, capacity
132. ____________ takes advantage of the tangible nature of manufactured goods to absorb
uneven rates of supply and demand.
Answer: Anticipation inventory
Reference: Sales and Operations Plans
Difficulty: Moderate
Keywords: anticipation inventory
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133. ____________ is the situation that occurs when employees work longer than the regular
workday or workweek.
Answer: Overtime
Reference: Sales and Operations Plans
Difficulty: Moderate
Keywords: overtime, regular time
134. A(n) ____________ strategy involves hiring and laying off employees to match the
demand forecast over the planning horizon.
Answer: chase
Reference: Sales and Operations Plans
Difficulty: Moderate
Keywords: chase strategy
135. The level strategy maintains a constant ____________ level or ____________ level
during the planning horizon.
Answer: workforce, output
Reference: Sales and Operations Plans
Difficulty: Moderate
Keywords: level workforce, output level
136. A(n) ____________ is a strategy that considers and implements a fuller range of supply
options than a pure chase or level strategy.
Answer: mixed strategy
Reference: Sales and Operations Plans
Difficulty: Moderate
Keywords: mixed strategy, level strategy, chase strategy
137. ____________ takes the operations and scheduling process from planning to execution.
Answer: Scheduling
Reference: Scheduling
Difficulty: Easy
Keywords: scheduling, resources
139. ____________ is the amount of time a job spends in the service or manufacturing system.
Answer: Flow time
Reference: Scheduling
Difficulty: Moderate
Keywords: job flow
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140. ____________ is the amount of time by which a job missed its due date.
Answer: Past due, Tardiness
Reference: Scheduling
Difficulty: Moderate
Keywords: past due, tardiness
141. A(n) ____________ graphically displays the current status of each job or activity relative
to its scheduled completion date.
Answer: Gantt progress chart
Reference: Scheduling
Difficulty: Moderate
Keywords: Gantt progress chart
142. A(n) ____________ schedule calls for each employee to work the same days and hours
each week.
Answer: fixed
Reference: Scheduling
Difficulty: Moderate
Keywords: fixed schedule
143. A hospital must have a skeleton crew on hand during the undesirable work period from
midnight to 8 o’clock. One way to make sure that all employees have the opportunity to
work this shift is by adopting a(n) ____________.
Answer: rotating schedule
Reference: Scheduling
Difficulty: Moderate
Keywords: rotating schedule
144. ____________ specify the job processing sequence when several jobs are waiting in line
at a workstation.
Answer: Priority sequencing rules
Reference: Scheduling
Difficulty: Moderate
Keywords: priority sequence, priority sequence rules
145. ____________ is a priority sequencing rule that sequences jobs on the basis of their due
dates.
Answer: Earliest due date, EDD
Reference: Scheduling
Difficulty: Moderate
Keywords: EDD, earliest due date
146. ____________ is a priority sequencing rule that specifies that the job that arrived at the
workstation first is given the highest priority.
Answer: First come, first served, FCFS
Reference: Scheduling
Difficulty: Moderate
Keywords: first, come, first served, FCFS, priority sequence rules
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Chapter 14 Operations Planning and Scheduling
147. A(n) ____________ seeks to optimize resources across the supply chain and align daily
operations with strategic goals.
Answer: advanced planning system, APS
Reference: Scheduling
Difficulty: Moderate
Keywords: APS, advanced planning system
SHORT ANSWERS
148. What is the impact of the sales and operations plan on the human resources and finance
functions of a firm?
Answer: A sales and operations plan specifies how the company will work for the next
year or so toward its broad, long-term goals. From these medium-range plans, managers
prepare detailed operating plans. One facet of the sales and operations plan is how the
labor resources of a firm will be managed, what mix of skills will be required, and how
much labor is needed. Human Resources is aware of labor-market conditions and
training capacities that might impact a firm’s ability to hire, train, and produce. The
financial function seeks ways to minimize expenses and finance cash flows created by
the sales and operations plan.
Reference: Stages in Operations Planning and Scheduling
Difficulty: Moderate
Keywords: sales and operations plan, finance, human resources
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Chapter 14 Operations Planning and Scheduling
151. The Acme Company is a cosmetics manufacturing company with corporate offices in
Indianapolis. Explain how corporate goals and objectives developed as a business plan in
Indianapolis become the tangible plans and steps that are actually implemented in
Acme’s remote production plants located in Virginia, Ohio and Arizona.
Answer: The Sales and operations Plan is the vehicle that takes corporate goals and
objectives and translates them into actionable steps at an outlying plant. Discussions
may vary, but should consider the various levels shown in Figure 14.1 on page 506 of
the text. The business plan and operations strategy developed at high levels in the
organization are inputs to the Sales and Operations Plan. Acme’s Indianapolis
management works with management at the remote plants, and helps them establish
goals in the areas of workforce capacity and resource planning to satisfy the Sales and
Operations Plan and, in turn, the corporate business plan.
Reference: Stages in Operations Planning and Scheduling
Difficulty: Moderate
Keywords: sales and operations plan, business plan, operations strategy, workforce,
resource planning
152. Briefly describe the difference between supply options and demand options.
Answer: Supply options are actions that respond to given demand patterns, whereas
demand options are actions that adjust demand patterns.
Reference: Managing Demand
Difficulty: Moderate
Keywords: supply options, demand options
153. How can a service provider schedule operations for the benefit of their customers and
their own utilization? What types of service processes (or customers) are well suited for
each of the common methods for scheduling service operations? What types are poorly
suited for each of the common methods for scheduling service operations?
Answer: Capacity, which can be in the form of employees or equipment, is crucial for
service providers as well as for manufacturers. One way to manage capacity is to
schedule customers for definite periods of order fulfillment. The three most commonly
used methods are appointments, reservations, and backlogs. Appointments and
reservations are well-suited when service demand can be anticipated, i.e. when non-
emergency services are required. Backlogs work well when service demand is
unanticipated and is non-emergency.
Reference: Managing Demand
Difficulty: Moderate
Keywords: service schedule, backlog, appointment, reservation
154. Briefly describe the similarities and differences between appointments and reservations.
Answer: Appointments are used by service providers to level demand by assigning
specific times for service to customers. Appointments offer the advantage to the service
provider of being able to set aside portions of their work day for administrative
activities. Reservations, which also level demand, are similar to appointments, except
that the customer actually occupies specific facilities associated with the service (e.g.,
airline seat, hotel room, restaurant table).
Reference: Managing Demand
Difficulty: Moderate
Keywords: demand options, appointments, reservations
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156. How is the sales and operations planning process similar to the forecasting process?
Answer: Sales and operations planning is presented as a six-step cyclical process
consisting of gathering data, demand planning, updating S&OP spreadsheets, consensus
meetings, executive S&OP meeting, and finalize and communicate, with this sixth step
feeding back into the first (data gathering) step. The process is cyclical because S&OP
is done with a time horizon that permits refinement of plans as time progresses Demand
forecasts, customer orders, capacity, and materials prices and availability that have been
projected several months in advance may change over time and in time for the
production planners to take action. The forecasting process discussed in chapter 13 is
also cyclical; forecasts for several months in the future can be refined as the target time
period draws near and more is learned about the forecasting arena. Both processes are
data driven and quantitative in nature, with the output subject to adjustment by the
manager/decision-maker responsible for implementation.
Reference: Sales and Operations Plans
Difficulty: Moderate
Keywords: supply options, demand options
157. What are the supply options for sales and operations plans?
Answer: Supply options include workforce adjustment, anticipation inventory,
workforce utilization, vacation schedules, subcontractors, backlogs, backorders, and
stockouts.
Reference: Sales and Operations Plans
Difficulty: Moderate
Keywords: supply options
158. What is anticipation inventory and what are the benefits and drawbacks of having it?
Answer: Anticipation inventory is inventory used to absorb uneven rates of supply or
demand. A plant facing seasonal demand can produce at a constant rate year-round and
merely store the production during the down phase of demand. A constant level of plant
utilization is easier to manage. Anticipation inventory can be costly to hold depending
on storage and spoilage rates and the company’s cost of capital.
Reference: Sales and Operations Plans
Difficulty: Moderate
Keywords: anticipation inventory
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Chapter 14 Operations Planning and Scheduling
159. Choose any service and provide examples of how they can use a chase strategy for sales
and operations planning.
Answer: Student examples will vary, but a service typically hires temporary or
seasonal workers or uses overtime to handle fluctuations in demand. Examples include
universities’ use of adjunct faculty, agriculture’s use of migrant workers, and so on.
Reference: Sales and Operations Plans
Difficulty: Moderate
Keywords: service, chase strategy
162. What does an advanced planning system do and what are the functions of the major
components?
Answer: An advanced planning system (APS) optimizes resources across the supply
chain and aligns daily operations with strategic goals. The systems typically have these
components: demand planning, supply network planning, available-to-promise, and
manufacturing scheduling. The demand-planning module enables companies in a
supply chain to share demand forecasts. The supply-network planner contains
optimization models based on linear programming to make long-term decisions such as
the number and location of plants and distribution centers. The available-to-promise
module checks the availability of components and materials, enabling the firm to
promise delivery. The manufacturing scheduling component determines an optimal
grouping and sequencing of manufacturing orders.
Reference: Scheduling Operations
Difficulty: Moderate
Keyword: advanced planning system, APS
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Chapter 14 Operations Planning and Scheduling
PROBLEMS
Total Cost
Answer:
Quantities appear in the upper section of the spreadsheet; costs are totaled at the bottom of
each column.
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164. A retailer experiences a seasonal demand pattern for its services. Labor requirements
over a typical six-month period follow.
Period 1 2 3 4 5 6
Requirement 7 8 9 11 12 7
Costs associated with operations are as follows:
Wages = $2,000 per worker per month
Hiring cost = $1,000 per worker
Layoff cost = $1,500 per worker
The current workforce level is 10 workers. Use the spreadsheet approach and
the preceding data to answer the following questions:
a. What is the total cost of the staffing plan, including the cost of regular wages, hiring, and
layoffs using a chase strategy with hiring and layoffs, but no overtime?
b. What is the total cost of the staffing plan, using a level strategy in which no overtime is
allowed, and the undertime paid for?
c. Suppose that overtime is allowed up to 25% of the regular-time capacity, and that overtime
wages are 150% of the regular-time rate. What is the total cost of the level strategy with
overtime and undertime, which also minimizes undertime?
Answer: a.
1 2 3 4 5 6 Total
Inputs
Forecasted demand 7 8 9 11 12 7 54
Workforce level 7 8 9 11 12 7 54
Undertime 0
Overtime 0
Vacation time 0
Subcontracting time 0
Backorders 0
Derived
Utilized time 7 8 9 11 12 7 54
Inventory 0 0 0 0 0 0 0
Hires 0 1 1 2 1 0 5
Layoffs 3 0 0 0 0 5 8
Calculated
Utilized time cost $14,000 16,000 18,000 22,000 24,000 14,000 $108,000
Undertime cost $0 0 0 0 0 0 $0
Overtime cost $0 0 0 0 0 0 $0
Vacation time cost $0 0 0 0 0 0 $0
Inventory holding cost $0 0 0 0 0 0 $0
Backorders cost $0 0 0 0 0 0 $0
Hiring cost $0 1,000 1,000 2,000 1,000 0 $5,000
Layoff cost $4,500 0 0 0 0 7,500 $12,000
Subcontracting cost $0 0 0 0 0 0 $0
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Chapter 14 Operations Planning and Scheduling
b.
1 2 3 4 5 6 Total
Inputs
Forecasted demand 7 8 9 11 12 7 54
Workforce level 12 12 12 12 12 12 72
Undertime 5 4 3 1 0 5 18
Overtime 0
Vacation time 0
Subcontracting time 0
Backorders 0
Derived
Utilized time 7 8 9 11 12 7 54
Inventory 0 0 0 0 0 0 0
Hires 2 0 0 0 0 0 2
Layoffs 0 0 0 0 0 0 0
Costs
Utilized time cost $14,000 16,000 18,000 22,000 24,000 14,000 $108,000
Undertime cost $10,000 8,000 6,000 2,000 0 10,000 $36,000
Overtime cost $0 0 0 0 0 0 $0
Vacation time cost $0 0 0 0 0 0 $0
Inventory holding cost $0 0 0 0 0 0 $0
Backorder cost $0 0 0 0 0 0 $0
Hiring cost $2,000 0 0 0 0 0 $2,000
Layoff cost $0 0 0 0 0 0 $0
Subcontracting cost $0 0 0 0 0 0 $0
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Chapter 14 Operations Planning and Scheduling
c. To minimize undertime, take maximum requirements divided by the quantity one plus the
percent of overtime allowed. In this case, 12/1.25 = 9.6, so use a plan with 10 workers.
1 2 3 4 5 6 Total
Inputs
Forecasted demand 7 8 9 11 12 7 54
Workforce level 10 10 10 10 10 10 60
Undertime 3 2 1 0 0 3 9
Overtime 1 2 3
Vacation time 0
Subcontracting time 0
Backorders 0
Derived
Utilized time 7 8 9 10 10 7 51
Inventory 0 0 0 0 0 0 0
Hires 0 0 0 0 0 0 0
Layoffs 0 0 0 0 0 0 0
Calculated
Utilized time cost $14,00016,000 18,000 20,000 20,000 14,000 $102,000
Undertime cost $6,000 4,000 2,000 0 0 6,000 $18,000
Overtime cost $0 0 0 3,000 6,000 0 $9,000
Vacation time cost $0 0 0 0 0 0 $0
Inventory holding cost $0 0 0 0 0 0 $0
Backorder cost $0 0 0 0 0 0 $0
Hiring cost $0 0 0 0 0 0 $0
Layoff cost $0 0 0 0 0 0 $0
Subcontracting cost $0 0 0 0 0 0 $0
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Chapter 14 Operations Planning and Scheduling
165. A retailer experiences a seasonal demand pattern for its services. Labor requirements
over a typical six-month period follow.
Period 1 2 3 4 5 6
Requirement 12 10 12 8 9 8
Costs associated with operations are as follows:
Wages = $1,500 per worker per month
Hiring cost = $1,500 per worker
Layoff cost = $1,500 per worker
The current workforce level is 11 workers. Use the spreadsheet approach and the preceding
data to answer the following questions.
a. What is the total cost of the staffing plan, including the cost of regular wages, hiring, and
layoffs using a chase strategy with hiring and layoffs, but no overtime?
b. What is the total cost of the staffing plan, using a level strategy in which no overtime is
allowed, and the undertime paid for?
c. Suppose that overtime is allowed up to 25% of the regular-time capacity, and that overtime
wages are 150% of the regular-time rate. What is the total cost of the level strategy with
overtime and undertime that also minimizes undertime?
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Chapter 14 Operations Planning and Scheduling
Answer:
a.
1 2 3 4 5 6 Total
Inputs
Forecasted demand 12 10 12 8 9 8 59
Workforce level 12 10 12 8 9 8 59
Undertime 0 0 0 0 0 0 0
Overtime 0 0 0
Vacation time 0
Subcontracting time 0
Backorders 0
Derived
Utilized time 12 10 12 8 9 8 59
Inventory 0 0 0 0 0 0 0
Hires 1 0 2 0 1 0 4
Layoffs 0 2 0 4 0 1 7
Costs b b b b b b Totals
Utilized time cost $18,000 15,000 18,000 12,000 13,500 12,000 $88,500
Undertime cost $0 0 0 0 0 0 $0
Overtime cost $0 0 0 0 0 0 $0
Vacation time cost $0 0 0 0 0 0 $0
Inventory holding cost $0 0 0 0 0 0 $0
Backorder cost $0 0 0 0 0 0 $0
Hiring cost $1,500 0 3,000 0 1,500 0 $6,000
Layoff cost $0 3,000 0 6,000 0 1,500 $10,500
Subcontracting cost $0 0 0 0 0 0 $0
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Chapter 14 Operations Planning and Scheduling
b.
1 2 3 4 5 6 Total
Inputs
Forecasted demand 12 10 12 8 9 8 59
Workforce level 12 12 12 12 12 12 72
Undertime 0 2 0 4 3 4 13
Overtime 0
Vacation time 0
Subcontracting time 0
Backorders 0
Derived
Utilized time 12 10 12 8 9 8 59
Inventory 0 0 0 0 0 0 0
Hires 1 0 0 0 0 0 1
Layoffs 0 0 0 0 0 0 0
Calculated
Utilized time cost $18,000 15,000 18,000 12,000 13,500 12,000 $88,500
Undertime cost $0 3,000 0 6,000 4,500 6,000 $19,500
Overtime cost $0 0 0 0 0 0 $0
Vacation time cost $0 0 0 0 0 0 $0
Inventory holding cost $0 0 0 0 0 0 $0
Backorder cost $0 0 0 0 0 0 $0
Hiring cost $1,500 0 0 0 0 0 $1,500
Layoff cost $0 0 0 0 0 0 $0
Subcontracting cost $0 0 0 0 0 0 $0
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Chapter 14 Operations Planning and Scheduling
c . To minimize undertime, take maximum requirements divided by the quantity one plus
the percent of overtime allowed. In this case, 12/1.25 = 9.6, so use a plan with 10 workers.
1 2 3 4 5 6 Total
Inputs
Forecasted demand 12 10 12 8 9 8 59
Workforce level 10 10 10 10 10 10 60
Undertime 0 0 0 2 1 2 5
Overtime 2 2 4
Vacation time 0
Subcontracting time 0
Backorders 0
Derived
Utilized time 10 10 10 8 9 8 55
Inventory 0 0 0 0 0 0 0
Hires 0 0 0 0 0 0 0
Layoffs 1 0 0 0 0 0 1
Costs
Utilized time cost $15,000 15,000 15,000 12,000 13,500 12,000 $82,500
Undertime cost $0 0 0 3,000 1,500 3,000 $7,500
Overtime cost $4,500 0 4,500 0 0 0 $9,000
Vacation time cost $0 0 0 0 0 0 $0
Inventory holding cost $0 0 0 0 0 0 $0
Backorder cost $0 0 0 0 0 0 $0
Hiring cost $0 0 0 0 0 0 $0
Layoff cost $1,500 0 0 0 0 0 $1,500
Subcontracting cost $0 0 0 0 0 0 $0
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Chapter 14 Operations Planning and Scheduling
166. The demand forecast for the next four periods is 90, 100, 120, and 140 units respectively.
The plant has a regular capacity of 100 units per period, an overtime capacity of 10 units
per period, and a subcontractor capacity of 5 units per period. There is a $5 per unit
charge for regular production, an $8 per unit charge for overtime production, and a $9 per
unit charge for subcontracting. The holding cost is $3 per unit per period, no shortages
are allowed and the company has 5 units in inventory at the start of the planning period.
a. How many units should be produced using overtime?
b. How many units should be produced using subcontracting?
c. What is the total inventory holding cost?
d. What is the lowest total plan cost?
e. Fill out this table showing the number of units made by period using each type of
production and the resulting inventory at the end of each period.
Answer:
a. 30 units made using overtime
b. 15 units made using subcontracting
c. $210 total holding cost (70 unit-periods)
d. $2585 total plan cost
e. table appears below:
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Chapter 14 Operations Planning and Scheduling
167. Jim’s Restaurant operates seven days a week. The daily requirements (in workers) are
estimated as follows:
M T W Th F S Su
Base
Requirements 3 4 4 5 7 7 5
Each worker is required to work five days per week, and each must have two consecutive
days off. What is the minimum number of workers needed? Provide the days off that
each worker receives.
Answer:
M T W Th F S Su
Base
Requirements 3 4 4 5 7 7 5
168. Wally’s Bar operates seven days a week. The daily requirements (in workers) are
estimated as follows:
M T W Th F S Su
Base
Requirements 2 3 5 4 5 4 4
Each worker is required to work five days per week, and each must have two consecutive
days off. What is the minimum number of workers needed? Provide the days off that
each worker receives.
Answer:
M T W Th F S Su
Base
Requirements 2 3 5 4 5 4 4
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Chapter 14 Operations Planning and Scheduling
Difficulty: Moderate
Keywords: workforce scheduling
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Chapter 14 Operations Planning and Scheduling
169.
Use the information in the preceding table and sequence the six jobs using FCFS and EDD.
The jobs are listed in the order of their arrival. Calculate the average flow time and average
past due. It is now time zero.
FCFS
Job Start Process Finish Due Days Past Due (Finish Days Since Flow Time (Finish Time
Time Time Time Time Time – Due time) Arrival + Days Since Arrival)
A 0 2 2 7 0 12 14
B 2 8 10 16 0 9 19
C 10 4 14 4 10 8 22
D 14 10 24 17 7 5 29
E 24 5 29 15 14 3 32
F 29 12 41 18 23 2 43
54 159
Answer:
EDD
Job Start Process Finish Due Days Past Due (Finish Days Since Flow Time (Finish Time
Time Time Time Time Time – Due time) Arrival + Days Since Arrival)
C 0 4 4 4 0 8 12
A 4 2 6 7 0 12 18
E 6 5 11 15 0 3 14
B 11 8 19 16 3 9 25
D 19 10 29 17 12 5 34
F 29 12 41 18 23 2 43
38 146
Reference: Scheduling
Difficulty: Moderate
Keywords: first come, first served, FCFS, earliest due date, EDD, average flow time,
average days past due
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Chapter 14 Operations Planning and Scheduling
170.
Days
Process Due Since
Job Time Date Arrival
A 5 7 11
B 9 5 9
C 7 9 9
D 2 3 7
E 3 4 5
F 8 8 2
Use the information in the preceding table and sequence the six jobs using first come, first
served (FCFS) and earliest due date (EDD). Calculate the average flow time and average
past due. It is now time zero.
Answer:
FCFS
Job Start Process Finish Due Days Past Due (Finish Days Since Flow Time (Finish Time
Time Time Time Time Time – Due time) Arrival + Days Since Arrival)
A 0 5 5 7 0 11 16
B 5 9 14 5 9 9 23
C 14 7 21 9 12 9 30
D 21 2 23 3 20 7 30
E 23 3 26 4 22 5 31
F 26 8 34 8 26 2 36
89 166
EDD
Job Start Process Finish Due Days Past Due (Finish Days Since Flow Time (Finish Time
Time Time Time Time Time – Due time) Arrival + Days Since Arrival)
D 0 2 2 3 0 7 9
E 2 3 5 4 1 5 10
B 5 9 14 5 9 9 23
A 14 5 19 7 12 11 30
F 19 8 27 8 19 2 29
C 27 7 34 9 25 9 43
66 144
Reference: Scheduling
Difficulty: Moderate
Keywords: first come, first served, FCFS, earliest due date, EDD, average flow time,
average days past due
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