CH 8 - Sales and Operations Planning

Question 1

A process that helps firms provide better customer service, lower inventory, shorten customer lead times, stabilize production rates, and give top management a handle on the business. This is called?

Answer 1

Sales and Operations Planning process

Question 2

What’s the end goal of a Sales and Operations planning process?

Answer 2

The end goal is an agreement between various departments on the best course of action to achieve the optimal balance between supply and demand.

Question 3

The Supply and Demand balance must occur at an _____ level

Answer 3

Aggregate

Question 4

What does aggregate mean?

Answer 4

It means at a level of major groups of products

Question 5

What does Sales and Operations Planning refer to?

Answer 5

The process that helps firms keep supply and demand in balance

Question 6

Who is involved in Sales and Operations planning?

Answer 6

Sales, distribution and logistics, operations, finance, and product development

Question 7

Marketing develops a sales plan that extends through ?

Answer 7

The next 3 - 18 months

Question 8

Aggregation on the supply side is done by ___ ___ and on the demand side, it is done by groups of ____

Answer 8

Product families, Customers

Question 9

Generally done annually, focusing on a horizon greater than one year

Answer 9

Long Range Planning

Question 10

Usually covers a period from 3 to 18 months, with time increments of weekly, monthly, and quarterly

Answer 10

Intermediate Range Planning

Question 11

Covers a period from one day to six months, with daily or weekly time increments

Answer 11

Short Range Planning

Question 12

What major areas does Long Range Planning activities occur?

Answer 12

1. Design of manufacturing and service processes that produce the product
2. Design of the logistics activities that deliver products to customers

Question 13

What deals with determining the specific technologies and procedures required to produce a product/service?

Answer 13

Process Planning

Question 14

What deals with determining the long-term capabilities (such as size and scope) of the production systems?

Answer 14

Strategic Capacity Planning

Question 15

What are some intermediate-term activities?

Answer 15

Forecasting and demand management &

sales and operations planning

Question 16

Designed to generate detailed schedules that indicate when parts are needed for manufacturing activities

Answer 16

Master scheduling and material requirements planning

Question 17

Short term details are focused mostly on?

Answer 17

Scheduling production and shipment orders

Question 18

What type of plan is concerned with setting production rates by product group or other broad categories for intermediate term (3 to 18 months)?

Answer 18

Aggregate Operations Plan

Question 19

What’s the main purpose of the aggregate plan?

Answer 19

To get the optimal combination of production rate, workforce level, and inventory on hand.

Question 20

Refers to the number of units completed per unit of time

Answer 20

Production rate

Question 21

Number of workers needed for production

Answer 21

Workforce Level

Question 22

Unused inventory carried over from the previous period

Answer 22

Inventory on hand

Question 23

What are the three production planning strategies?

Answer 23

1. Chase Strategy
2. Stable workforce - variable work hours
3. Level strategy

Question 24

Match the production rate to the order rate by hiring and laying off employees as the order rate varies

Answer 24

Chase Strategy

Question 25

What is the Chase Strategy?

Answer 25

Matching production rate to the order rate by hiring or laying off employees

Question 26

Vary the output by varying the number of hours worked through flexible work schedules or overtime.

Answer 26

Stable Workforce - Variable Work Hours

Question 27

Maintain a stable workforce working at a constant output rate

Answer 27

Level Strategy

Question 28

A simple strategy that uses just one option, such as hiring or firing workers, for meeting demand

Answer 28

Pure Strategy

Question 29

A more complex strategy that combines options for meeting demand, also more widely applied in industry.

Answer 29

Mixed Strategy

Question 30

Similar to chase strategy but subcontracting and not subcontracting

Answer 30

Subcontracting

Question 31

What are the four relevant costs in an aggregate production plan?

Answer 31

1. Basic Production Costs
2. Costs associated with changes in the production rate
3. Inventory Holding Costs
4. Backordering costs

Question 32

Fixed and variable costs incurred in producing a given product type in a given time period are known as?

Answer 32

Basic Production Costs

Question 33

Typical costs in hiring, training, and laying off individuals are known as?

Answer 33

Costs associated with changes in the production rate

Question 34

A major component is the cost of capital tied up in inventory. This cost is known as?

Answer 34

Inventory holding costs

Question 35

A cost that is hard to measure and usually results from costs of expediting, loss of customer goodwill, and loss of sales revenue

Answer 35

Backordering Costs

Question 36

Accurate medium range planning increases the likelihood of?

Answer 36

1. Receiving the requested budget

2. Operating within the limits of the budget

Question 37

Involves costing out various production planning alternatives and selecting the best one

Answer 37

A Cut and Try Approach

Question 38

Buffer inventory that is established to decrease the chances of stockouts

Answer 38

Safety Stock

Question 39

Does the cut and try approach guarantee finding minimum cost solutions?

Answer 39

No it does not.

Question 40

The process of allocating the right type of capacity to the right type of customer at the right price and time to maximize revenue or yield.

Answer 40

Yield Management

Question 41

What approach is powerful in predicting demand?

Answer 41

Yield Management

Question 42

From an operational perspective, yield management is most effective when…? (Name 5)

Answer 42

1. Demand can be segmented by customer
2. Fixed costs are high and variable costs are low
3. Inventory is perishable
4. Product can be sold in advanced
5. Demand is highly variable

Question 43

One issue in managing yield is?

Answer 43

Pricing structures must be seen as logical to the customer and can justify the different prices

Question 44

Pricing structures must appear logical to the customer and justify the different prices. This justification is also known as?

Answer 44

Rate Fences

Question 45

Rates Fences may have a ____ basis or a ____ basis

Answer 45

Physical, non physical

Question 46

Second issue is handling variability in arrival or starting times, duration, and time between customers. This issue is related to?

Answer 46

Yield Management

Question 47

The most critical issue is training workers and managers to work in an environment where overbooking and price changes are standard occurrences that directly impact the customer. This issue is related to?

Answer 47

Yield Management