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Production Planning and Control V1
Assignment - A
Question 1. A small electronics company produces pocket calculators and records
the demand monthly. The following demand data are for a representative calculato
r:
November
December
January

45
57
60

Using 50 as the exponential smoothing forecast for November, and using 0.3 as th
e exponential smoothing coefficient, forecast February sales.
Question 2. ACE Computers has the following expected production capacity and dem
and for minicomputers:
Quarter Capacity
Demand
1
300
300
2
400
600
3
450
300
4
550
500
The company does not accept any backorders and wishes to fulfill demand by letti
ng inventories absorb all fluctuations. How many minicomputers must they have on
hand on January 1 to meet the forecast demand throughout the year?
Question 3. The Vice President of Koza Company has estimated the following deman
d requirements for the forthcoming periods.
Periods Forecast
1
1400
5
2
1600
6
3
1800
7
4
1800
8
The operations manager

Period Forecast
2200
2200
1800
1400
is considering the following plans:

Plan 1: Maintain a stable workforce that is capable of producing 1800 units per
period, and meet the demand by overtime at a premium of $50 per unit. Idle time
costs are equivalent to $60 per unit. Do not build to inventory.
Plan 2: Produce at a steady of 1600 units per period, and accept a limited numbe
r of backorders during periods when demand exceeds 1600 units. The stockout cost
of lost sales is $100 per unit. Inventory costs per period are $20 per unit.
Plan 3: Produce at a steady rate equal to minimum requirements of 1400 units and
subtract the additional units at a $75 per unit premium.
Plan 4: Vary the workforce level, which is currently capable of producing 1600 u
nits per period.
The cost of additional workforce per 100 units is $5000, and the cost of layoffs
per 100 units is $7500.
Plan 5: Vary inventory levels, but maintain a stable workforce level by maintain
ing a constant production rate equal to the average requirements. The company ca
n accumulate required inventory before period 1 at no additional cost. The inven

tory cost per period is $20 per unit.

Answer the following:
1. Analyse the above plans. Use graph and tables for presentation of your analys
is.
2. Discuss the merits and disadvantages of these plans.
3. Which plan will you recommend and why?
Question 4. Using the data in Table 1 below, compute weekly requirement for the
following schedule:

5. With reference to Problem 4, calculate the capacity requirements for the fina
l assembly department, ignoring lead times.
Average assembly time:
Average subassembly time:
Average fabrication time:

1.2 hours
0.8 hours
0.2 hours

The subassembly lead times are included in the assembly lead times.
Assignment - B
Question 1. Given the following BOM, MPS and inventory status, develop MRP table
s for all items (ten tables in total)

Question 2. An item has the following gross requirements and a beginning invento
ry of 40 units:

Question 3. Clark Company makes three products on three different types of equip
ment. The matrix of operating times and job setup times (in decimal hours), dema
nd per month, and economical lot sizes for manufacturing are given in Table belo
w. The machine utilisation factor is approximately 90%, and operator efficiency
of the shop is believed to be 105%.

How many of each of the machines will be needed if the plant works a 40 hour wee
k?
Case Study
Notes: Read the case study and answer the questions given at the end.
CASE I
In 1990, Jain began to make custom furniture full time in his garage. Jain's wor
k had been admired by friends and neighbours, who often asked him to make specia
l pieces for them. In 1995, he expanded his operations by leasing a used facilit
y and hiring two additional skilled workers: a woodworker and a leather speciali
st. By 1998, Jain formed a company called Good

Wood P Ltd, and had 11 employees.

Today, Good Wood serves a custom furniture market covering Delhi and surrounding
regions. Jain, the CEO, has a staff of 37 employees. Custom made furniture is t
he sole product line, and the company has prided itself on high quality and time
ly delivery services. Organisationally, Good Wood has Production, Sales, Purchas
ing, Shipping, and Design departments. Production department includes wood frami
ng, wood preparation, wood finishing, metal finishing, leather, glass, plastics,
and cloth fabrics.
This past year, 250 to 300 jobs were processed in the facility on any given day.
Although product quality remains high, on time deliveries have deteriorated. Th
e average job seems to be four to seven weeks late. Suresh, an employee since 19
95, and a special assistant to the shop manager does the shop loading. His job a
lso includes coordinating the overall shop efforts with those of the sales and d
esign departments. He recently compiled data on waiting job orders for a typical
day.
Detailed scheduling of orders has always been the responsibility of the three sh
op foremen. Joshi is foreman of the wood preparation, framing, and finishing dep
artments. Srivastava is the foreman for the leather and cloth fabrics department
s. Chatterjee is the foreman of the metal, glass and plastics departments.
Jain is concerned about job lateness. He feels deteriorating customer service mi
ght well affect future sales. He has requested George, whose primary experience
has been co-ordinating a new physical distribution system, to analyse the curren
t situation and recommend changes. George is uncertain which factors he should c
onsider and how to proceed with the problem.
Discuss
1. What is the main problem and what could be the causes of the problem?
2. Propose a production planning and control system to George which would minimi
se the above problems
Assignment - C
1. If the order winner is delivery speed to customer, then the production planni
ng and control system must focus on:
(a) Cost
(b) Lead time
(c) Quality
(d) Coordination with Marketing
2. A firm uses simple exponential smoothing to forecast demand with a = 0.2. The
forecast for the month of March was 500 units whereas the actual demand turned
out to be 460 units. What is the forecast for the month of April?
(a) 489.6
(b) 492
(c) 480
(d) 490
3. Bias as a measure of forecast error is used to determine:
(a) The total magnitude of error
(b) The direction of error
(c) Absolute value
(d) Weighted average
4. Aggregate output planning generally consists of planning a desired output ove

r a
(a)
(b)
(c)
(d)

period of:
one week
five years
daily
three months to 1 year

5. Optimum inventory level as per EOQ system will increase:

(a) in direct proportion to increase in holding cost
(b) inversely with setup cost
(c) in proportion to square root of demand for the year
(d) in direct proportion to square root of holding cost
6. Product structure tree is:
(a) a diagram explaining the features of a product
(b) used to display the total makeup of a particular product
(c) is representation of a tree
(d) identical to decision tree
7. Kit numbers are used in MPS:
(a) when there are many small, loose parts - such as fasteners, nuts and bolts at level 1 in the product structure
(b) to identify related items
(c) to add complexity to planning
(d) as a quick aid to forecasting
8. MRP takes the output from the master schedule, combines that with information
from inventory records and product structure records and determines:
(a) the volume of production in each period
(b) the schedule of timing and quantities for each item to get the right materia
ls to the right place at the right time
(c) closing inventory
(d) whether customer demand can be met
9. Manufacturing Resource Planning is:
(a) the planning of resources in the manufacturing environment using the closed
loop system
(b) another term for rough cut capacity planning
(c) is also known as MRP I or little
(d) is a quicker way to MRP
10. A classification system has been devised to determine how well an MRP system
has been implemented. Class C company is:
(a) one which has MRP II in full use and the closed loop is working
(b) one in which MRP system is working only in the computing department
(c) one which may have MRP, capacity planning and shop floor controls working
(d) one which uses MRP for inventory ordering but not for scheduling
11.
(a)
(b)
(c)
(d)

MRP
Net
Net
Net
Net

logic uses the

requirements =
requirements =
requirements =
requirements =

following relationships:
total requirements - available inventory
scheduled receipts + inventory on hand
gross requirements - allocations
gross requirements - on hand inventory

12.
(a)
(b)
(c)
(d)

Lot-for-Lot technique in MRP yields:

high holding cost
low setup cost
zero holding cost
zero setup cost

13. The simulation studies on many of the lot sizing rules show:

(a)
(b)
(c)
(d)

good
good
poor
poor

performance
performance
performance
performance

of
of
of
of

L-4-L rule
EOQ rule
PPB, GR and MCP rules
L-4-L and EOQ rules

14. Time fence is a designated length of time

(a) to create system nervousness in MRP system
(b) that is the longest lead time from raw material to finished production for a
n end item
(c) that must pass without changing the MPS, to stabilise the MRP system; afterw
ard the MPS is allowed to change
(d) around which the system is upgraded
15.
(a)
(b)
(c)
(d)

Pegging is used in MRP system for:

identifying which components are affected by disruptions in material plans
pausing the system
showing old records
showing current records with updated status

16. Route sheet used in production planning and control is:

(a) used to indicate the location of each department
(b) a document to show the routing of a component, including the work centers an
d operation times, through its production processes
(c) a flow process chart used for process change
(d) a document showing the daily production schedule
17.
(a)
and
(b)
(c)
(d)

The Master Production Schedule (MPS) is a schedule of:

weekly production plan for each product according to customer orders and dem
forecasts
aggregate production plan in product groups
daily production plan for shop floor control
business activity expressed in money value

18.
(a)
(b)
(c)
(d)

A good strategy to meet short term overload for a month can be:
buy a new equipment
invest in a new project
subcontract work
telling marketing that the job cannot be done

19.
(a)
y
(b)
(c)
(d)

Infinite loading is:

assigning jobs to work centers without considering the work center's capacit

20.
(a)
(b)
(c)
(d)

Final Assembly Schedule can serve as MPS:

when the number of end products manufactured is small
when the number of end products is large
when there is a need to disaggregate
when M-bills have to be used

using Gantt chart for loading

using visual load profile for showing load
considering loading of planned orders only

21. An aluminium extruder forecasted the demand for pipe extrusions to be 500 un
its per month for each of three months. The actual demands turned out to be 400,
560 and 700. The forecast error in terms of MAD(Mean Absolute Deviation) is:
(a) -50 units
(b) 125 units
(c) 120 units
(d) 53 units

22. Frigerware has experienced demand for ice coolers at 400 units for April, 50
0 units for May and
600 units for June. The forecast of demand for July using a three period model w
ith the most recent period's demand weighted twice as heavily as each of the pre
vious two period's demand is:
(a) 425
(b) 525
(c) 625
(d) 400
23. In the regression model for forecasting, the forecast of the period's demand
F is expressed as
F = a + bX, where:
(a) F is the independent variable
(b) X is the dependent variable
(c) X is the independent variable
(d) a is the slope of the line
24.
of:
(a)
(b)
(c)
(d)

Capacity is a facility's productive capability, usually expressed as volume

input in case of automobiles
output in case of steel producer
likely business as per marketing
output in case of hospital

25. For short term periods of up to one year, fundamental capacity is fixed. How
ever, short term adjustments of capacity are possible by:
(a) building inventories during slack periods to meet later demand
(b) subcontracting during slack periods
(c) building inventories during peak periods to meet demand in slack periods
(d) wishing that some customers may cancel the order
26.
(a)
(b)
(c)
(d)

Steel manufacturing is an example of :

Job manufacturing process
Continuous manufacturing flow process
Assembly line process
None of the above

27.
(a)
(b)
(c)
(d)

Visual Load profile is:

a graph comparing work loads and capacities on a time scale
identical to Gantt load chart
used for forward scheduling process
used for job sequencing

28.
(a)
(b)
(c)
(d)

SPT rule in scheduling:

assigns highest priority to the slowest job
prioritises on basis of setup time
prioritises on basis of delivery times
assigns highest priority to the job order whose processing time is shortest

29.
(a)
(b)
(c)
(d)

Which sequencing rule will you prefer for minimising average job lateness:
Shortest processing time rule
Longest processing time rule
Earliest Due Date rule
First cum first served rule

30. For scheduling N jobs through two machine centers in series, you will use:
(a) Johnson rule to decide the sequence and then schedule on a Gantt chart
(b) McLaren's Order Moment

(c) Groff's Algorithm

(d) None of the above
31. If a machining center has a machine utilisation of 95% and operator efficien
cy of 80%, what is the effective work centre capacity in July assuming 26 workin
g days and 3 shifts running each day:
(a) 472.24 hours
(b) 472 hours
(c) 158.08 hours
(d) 59.28 hours
32.
(a)
(b)
(c)
(d)

Critical Ratio used in Capacity Planning and Control is:

Time to due date divided by required time for remaining operations
Time for first job divided by time for second job
Capacity consumed by the job divided by total capacity of the plant
Capacity of output divided by capacity of input

33. Job A and B are waiting to be released. Both will go to work center 1. Then
A will continue on to work center 3 while B will go to work center 4. Suppose th
at A has high priority on the first work center and center 4 is backlogged and c
enter 4 is idle. Which order should be released first?
(a) Job A
(b) Job B
(c) Both Job A and Job B together
(d) Toss a coin and if its heads, go for Job A otherwise Job B.
34.
(a)
(b)
(c)
(d)

Cycle time as used in assembly line manufacturing is:

the time taken in last work station
the productive time divided by demand
the time taken by the bottleneck operation
both b) and c) are considered and the higher value taken

35. In an assembly line the total processing time per, unit is 380 seconds. and
the cycle time for the line is 90 seconds. What is the minimum number of worksta
tions required in the assembly line?
(a) 4 stations
(b) 4.22 stations
(c) 5 stations
(d) 4.2 stations
36.
(a)
(b)
tem
(c)
(d)

Runout Time (ROT) used in batch processing is:

the time taken to complete the batch
the current inventory of an item divided by the demand per period for that i

37.
(a)
(b)
ste
(c)
(d)

JIT is:
another management jargon
a philosophy of waste reduction and techniques for reducing inventory and wa

the demand for the item divided by the opening inventory level
time for setup plus processing time

applicable only to job shop units

none of the above

38. If the setup cost is Rs 10,000 per setup, annual demand is 100,000 units and
holding cost is Rs. 200 per unit per year the optimal batch quantity in product
ion should be (rounded off):
(a) 3162
(b) 316
(c) 31623

(d) 3000
39.
(a)
(b)
(c)
(d)

Kanban is:
a push production system
another word for MRP system
a pull system based on a 'visible record' or 'card'
input output system

40. If D is the demand per unit of time, L is the lead time, A is the container
capacity and S the safety stock factor,the number of Kanbans N will be :
(a) DL(1+S)/A
(b) A(1+S)/D
(c) LAS(1+D)/24
(d) (D/A)+L+S

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