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Test coverage:
• Test 2 is not cumulative of Test 1 materials.
• Topic areas covered in Test 2:
o Aggregate Production Planning
o MRP (including Scheduling)
o ERP (including Project Management)
• Test 2 covers all materials covered in the lecture slide book for the topics mentioned above
• Materials that are in the textbook but NOT in the lecture slide book will NOT be on the test.
• Therefore, you do not have to memorize everything in the textbook; in the textbook, read only
the same materials covered in the lecture slide book.
Test structure:
• Test 2 is worth 25% of your course grade
• Test 2 = total 65 marks
o Question 1 – Computational, 2 parts, total 16 marks
o Question 2 – Short answers, 1 question (conceptual, no calculation), total 9 marks
o Question 3 – Multiple choice, 40 questions (concepts and simple calculations), 1 mark each,
total 40 marks
o Formula sheet – provided on the last page of the test (the sheet is the same from Test 1)
1
A. Computational
General Tips
Recommended steps for how to prepare for computational questions in Test 2:
Rounding Reminder
• For a physical quantity (e.g., order quantity), the final answer should be an integer.
• For a dollar amount, the final answer should have two decimal points.
2
A1. Computational Questions from Old Exams
1. Wetski currently maintains a steady production level at the average demand all year around and does
not hire or fire workers. Fill all blank spaces in the following table so that it represents an aggregate
production plan based on Wetski’s current production and hiring policy. What is the total cost of this
plan?
Regular production cost = $55 per unit Production rate = 750 units/worker/quarter
Overtime production cost = $82 per unit Holding cost = $4 per unit per quarter
Subcontracting cost = $77 per unit Backorder cost = $80 per unit per quarter
Opening workforce level = 11 Hiring cost = $140 per worker
Overtime capacity = 2500 units per quarter Firing cost = $550 per worker
Subcontracting capacity = 1000 units per quarter Opening inventory = 0
Quarter Demand Total Workforce Inventory Regular Overtime Subcontract Hiring Firing
(units) Prod. Prod. Prod.
Fall 3700
Winter 4600
Spring 14500
Summer 21000
2. University Press publishes textbooks for the academic market. The relevant cost and printing
equipment-related capacity information are given below.
Regular production cost = $20 per book Regular production max. capacity = 10 000 books per quarter
Overtime production cost = $30 per book Overtime production max. capacity = 5000 books per quarter
Subcontracting cost = $35 per book Beginning inventory = 0
Holding cost = $2 per book
a) Fill all blank spaces in the following table so that it represents an aggregate production plan using a
pure level approach with average demand. What is the total cost of the initial plan?
Quarter Demand Total Workforce Inventory Regular Overtime Subcontract Hire Fire
Production Production Production
1 5000
2 10000
3 30000
4 25000
b) Fill all blank spaces in the following table so that it represents an aggregate production plan using a
pure chase approach. For this question, we will ignore workforce-related costs since the cost
information is not provided. What is the total cost of the plan? Compared to the level approach in
part a), which approach seems better? Justify your answer briefly.
Quarter Demand Total Workforce Inventory Regular Overtime Subcontract Hire Fire
Production Production Production
1 5000
2 10000
3 30000
4 25000
3
c) Based on parts a) and b), develop an improved aggregate production plan in terms of the total cost.
The plan may deviate from a pure level or a pure chase approach. Assume that no other information
or objective will be considered. Provide the total cost of the improved plan and explain briefly how
you came up with your improved plan.
Quarter Demand Total Workforce Inventory Regular Overtime Subcontract Hire Fire
Production Production Production
1 5000
2 10000
3 30000
4 25000
(1) Convert “per hour” to “per unit”: “regular-time labor cost per hour” × “labor
standard per unit” = regular-time labor cost per unit = 10×6 = $60
(2) Convert “overtime labor cost per hour” to “overtime labor cost per unit” in the
same manner = 15×6 = $90
(3) Convert “time available” to “production rate”: “regular time available per period” ÷
“labor standard per unit” = production rate/worker/period = 160÷6 = 26.67
(4) Convert “overtime available per period” to production rate/worker/period in the
same manner = 32÷6 = 5.33
4
Resource Planning #1
(MRP) #2
#3
#4
Scheduling #5
#7
#8
5
B. Multiple Choice
General Tips
Recommended steps for how to prepare for multiple choice questions in Test 2:
6
5) Which of the following best describes the chase approach?
a. Production always lagging behind demand
b. Constant production capacity
c. Inventory minimization policy
d. Stable labour management cost
6) Capacity lag strategy
a. may lose some customers
b. may attract some customers from competitors
c. takes advantage of economies of scale
d. is synonym with the one-step expansion strategy
7) MRP
a. requires customer demand as input
b. is a simulation tool to determine capacity feasibility
c. is designed primarily for repetitive and continuous manufacturing
d. is useful to analyze lead time uncertainty
8) A bill of material specifies all of the following except
a. lot size and lead time of each component
b. how many of each component is needed
c. a brief description of each component in the product
d. when a component is needed in the assembly process
9) Product A is assembled from 10 units of S1 and 4 units of S2. S1 is made of 3 unit of C1, 6 units of C2,
and 2 unit of C3. S2 is made of 5 units of C2 and 7 units of C3. Assume no inventory on hand, products
take 1 day to assemble, subassemblies take 2 days, and lead time of components is 4 days. When should
an order be released for C3 if the 100 As are needed by day 9? How many C3 should be ordered?
a. Order 48 units of C3 on day 2
b. Order 48 units of C3 on day 6
c. Order 4800 units of C3 on day 1
d. Order 4800 units of C3 on day 2
10) Typical ERP modules include
a. finance and accounting
b. production and materials management
c. human resources
d. all of the above
11) EDI
a. is the exchange of all business documents
b. is the exchange of business documents in a standard format
c. consolidates purchasing orders from all suppliers
d. acts as a centralized agent to coordinate information flows
12) Typically, project teams include individuals
a. from other areas in the organization
b. selected because of their special skills
c. from the functional areas of the project
d. all of the above
13) The critical path is used for
a. showing the actual progress of different tasks
b. managing the project scope
c. assessing the impact of a task being late
d. showing which task is late
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14) Which of the following is a responsibility of the scheduling function of a production system?
a. Deciding on which machine a part will be routed for processing
b. Assigning workers to operate machines that process the parts
c. Determining in what order the parts will be processed
d. All of the above
15) Given the data below, using the SPT heuristic sequencing rule, determine the completion date and
tardiness for each job as well as the average completion time and average tardiness for all four jobs.
Which of the following statements is true?
Job A B C D
Processing time (days) 10 5 15 8
Due date (in days) 10 8 25 15
a. Jobs B and D will have no tardiness
b. The average completion time is 6.5
c. The tardiness for Job A is 12 days
d. The average tardiness is 19.75
16) What is an information system designed to integrate internal and external members of the supply
chain?
a. ERP
b. MRP
c. MPS
d. EIS
17) Each A (finished good) requires 1 of component B and 2 of component C. Each B requires 2 of part D
and 1 of part E; and each C requires 1 of part D and 1 of part F. If the demand for product A is 30 units,
and there are 10 units of B on hand and none of C, how many units of part D will be needed?
a. 60
b. 120
c. 100
d. 80
18) MPS should not be
a. a realistic plan
b. a final assembly schedule
c. an anticipated build schedule
d. all of the above
19) Which of the following is not an ERP enabler?
a. EFT
b. Shared databases
c. EDI
d. All of the above are ERP enablers
20) Which one of the following is considered a technical issue in ERP implementation?
a. Lack of management support
b. Inaccurate data
c. Expensive software
d. Employee resistance
8
C. Short Answers
General Tips
Recommended steps for how to prepare for short answer questions in Test 2:
9
C1. Textbook Discussion Questions
Topic Suggested end-of-chapter discussion questions
Aggregate Planning #3, 4, 5, 6, 7, 8, 9, 10, 11
Resource Planning (MRP, ERP) #1, 2, 3, 6, 8, 9, 10, 13, 15
10
Solutions
A1. Computational Questions from Old Exams
1.
Quarter Demand Total Workforce Inventory Regular Overtime Subcontract Hiring Firing
(units) Prod. Prod. Prod.
Fall 3700 10950 11 7250 8250 1700 1000 0 0
Winter 4600 10950 11 13600 8250 1700 1000 0 0
Spring 14500 10950 11 10050 8250 1700 1000 0 0
Summer 21000 10950 11 0 8250 1700 1000 0 0
2. a)
Quarter Demand Total Workforce Inventory Regular Overtime Subcontract Hire Fire
Production Production Production
1 5000 17500 0 12500 10000 5000 2500 0 0
2 10000 17500 0 20000 10000 5000 2500 0 0
3 30000 17500 0 7500 10000 5000 2500 0 0
4 25000 17500 0 0 10000 5000 2500 0 0
b)
Quarter Demand Total Workforce Inventory Regular Overtime Subcontract Hire Fire
Production Production Production
1 5000 5000 0 0 5000 0 0 0 0
2 10000 10000 0 0 10000 0 0 0 0
3 30000 30000 0 0 10000 5000 15000 0 0
4 25000 25000 0 0 10000 5000 10000 0 0
The level approach seems better because the chase approach costs more than the level approach
even without workforce-related costs.
c) In any aggregate plan, there are 3 general components to the total cost: production, inventory, and
workforce. Hence, if you want to reduce the total cost, look at the 3 components to see which
one can be reduced.
11
From part a), we can see that the level approach has zero workforce cost. From part b), we can see
that the chase approach has zero workforce cost and zero inventory cost. Hence, if you start with
the chase plan, then you can focus only on reducing production cost → production cost consists of
regular-time + overtime + subcontracting → subcontracting is most expensive → try to reduce
subcontracting cost in the first three quarters of the chase plan (in b) by using cheaper regular and
overtime production.
Quarter Demand Total Workforce Inventory Regular Overtime Subcontract Hire Fire
Production Production Production
1 5000 15000 0 10000 10000 5000 0 0 0
2 10000 15000 0 15000 10000 5000 0 0 0
3 30000 15000 0 0 10000 5000 0 0 0
4 25000 25000 0 0 10000 5000 10000 0 0
12
Agg, #3 Appendix A (look for chapter 5 answers)
Agg, #4 (a) Solution in the lecture note format:
Agg, #6 (a) regular-time production units possible in each period given a workforce of 195 =
(160 hours/employee/period)/(6 hours/unit)×(195 employees) = 5200 units/period
(b) Solution in the lecture note format:
13
Agg, #8 Average weekly demand = 43.3 clients; workforce needed = 43.3×(12hrs/client)/(40
hrs/employee) ≅ 13
Agg, #9 Appendix A (look for chapter 5 answers)
(a) Solution in the lecture note format:
14
Sched, #5 Appendix A (look for chapter 7 answers)
Sched, #7 Appendix A (look for chapter 7 answers)
Sched, #8 (a) ABCDEF
(b) make span = 45 days, mean job flow time = (9+14+22+32+39+45)/6 = 26.83 days,
average number of jobs in the system = 161/45 = 3.58 jobs, average job lateness = 16/6 =
2.67 days, average job tardiness = 47/6 = 7.83 days, maximum tardiness = 30 days
Examples of possible solutions: explain what ERP is, what it does, and why it is needed; provide
adequate training; increase involvement by all; set up a project team including all functions
3. Examples: to provide useful information, to determine MPS feasibility, to compare different solutions
for dealing with MRP shortage problems
4. Active strategy examples: incentives and promotions, such as 2 for 1 deal and coupons
Reactive strategy examples: staff overtime and undertime (being sent home early), hiring/firing
During the summer, active strategies may be better for Wave because it is critical to bring in more
customers from a non-student population (otherwise, the restaurant may have to be closed for not
having enough business)
5. Discuss main differences between MRP II and ERP; based on MRP II and ERP characteristics, explain
what kind of companies would benefit from MRP II or ERP
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