Chapter 8 Aggregate Planning in a Supply Chain

8.2 Multiple Choice Questions

1) The process by which a company determines levels of capacity, production,
subcontracting, inventory, stockouts, and even pricing over a specified time horizon is
A) aggregate planning. B) detail planning.
C) inventory planning. D) sales planning.
2) The goal of aggregate planning is to
A) dissatisfy customers in a way that maximizes profit.
B) dissatisfy customers in a way that minimizes profit.
C) satisfy demand in a way that maximizes profit.
D) satisfy demand in a way that minimizes profit.
3) Aggregate planning solves problems involving
A) aggregate decisions and stock keeping unit (SKU) level decisions.
B) aggregate decisions or stock keeping unit (SKU) level decisions.
C) aggregate decisions rather than stock keeping unit (SKU) level decisions.
D) stock keeping unit (SKU) level decisions rather than aggregate decisions.
4) Aggregate planning, to be effective, requires inputs from
A) all customers. B) all departments.
C) all suppliers. D) throughout the supply chain.
5) Much of aggregate planning has traditionally been focused
A) on short-term production scheduling. B) on customer relationship management.
C) within an enterprise. D) beyond enterprise boundaries.
6) The operational parameter concerned with the number of units completed per unit
time (such as per week or per month) is
A) production rate. B) workforce. C) overtime. D) backlog.
7) The operational parameter concerned with the number of workers/units of capacity
needed for production is
A) production rate. B) workforce. C) overtime. D) backlog.

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8) The operational parameter concerned with the planned inventory carried over the
various periods in the planning horizon is
A) production rate. B) overtime. C) backlog. D) inventory on hand.
9) Aggregate planning is concerned with determining
A) the production level, sales level, and capacity for each period.
B) the demand level, inventory level, and capacity for each period.
C) the production level, inventory level, and capacity for each period.
D) the production level, staffing level, and capacity for each period.
10) The planning horizon is
A) the time period over which the aggregate plan is to produce a solution.
B) the duration of each time period in the aggregate plan.
C) the length of time required to produce the aggregate plan.
D) the solution to the aggregate plan.
11) The length of the planning horizon is usually between
A) one and three months. B) three and eighteen months.
C) one and three years. D) three and five years.
12) An aggregate planner requires information on constraints. Which of the following is
one of the typical constraints for an aggregate planner?
A) Inventory holding cost B) Labor/machine hours required per unit
C) Stockout or backlog cost D) Limits on overtime
13) ________ is used to determine customer service levels.
A) Inventory held B) Backlog/stockout quantity
C) Workforce hired/laid off D) Machine capacity increase/decrease
14) A poor aggregate plan can result in
A) appropriate inventory levels. B) efficient use of capacity.
C) better sales and lost profits. D) lost sales and lost profits.
15) Aggregate planning should consider information from

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A) only the enterprise as its breadth of scope. B) downstream partners to produce forecasts.
C) upstream partners to determine constraints. D) all of the above
16) The fundamental trade-offs available to an aggregate planner are between
A) capability, inventory, and backlog costs. B) capability, inventory, and sales costs.
C) capacity, inventory, and backlog costs. D) capacity, inventory, and sales costs.
17) The strategy where the production rate is synchronized with the demand rate by
varying machine capacity or hiring and laying off employees as the demand rate varies is
the
A) adjustable strategy. B) chase strategy.
C) level strategy. D) mixed strategy.
18) The strategy where workforce (capacity) is kept stable but the number of hours
worked is varied over time in an effort to synchronize production with demand is the
A) flexibility strategy. B) chase strategy.
C) level strategy. D) mixed strategy.
19) The strategy where a stable machine capacity and workforce are maintained with a
constant output rate, with inventory levels fluctuating over time, is the
A) adjustable strategy. B) chase strategy.
C) level strategy. D) mixed strategy.
20) Demand is forecast for the next five months as 200, 300, 500, 300, 200. The
production planner decides to adopt a level strategy, so over the next five months they
should produce
A) 200, 300, 500, 300, 200. B) 500, 400, 300, 200, 100.
C) 100, 200, 300, 400, 500. D) 300, 300, 300, 300, 300.
21) Demand is forecast for the next five months as 200, 300, 500, 300, 200. The
production planner decides to adopt a chase strategy, so over the next five months they
should produce
A) 200, 300, 500, 300, 200. B) 500, 400, 300, 200, 100.
C) 100, 200, 300, 400, 500. D) 300, 300, 300, 300, 300.
22) Most strategies that an aggregate planner actually uses are in combination and are
referred to as the

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A) adjustable strategy. B) chase strategy.
C) level strategy. D) mixed strategy.
23) A highly effective tool for a company to use when it tries to maximize profits while
being subjected to a series of constraints is
A) aggregate programming. B) distribution programming.
C) production programming. D) linear programming.
35) When formulating aggregate plans,
A) forecast errors have no impact. B) forecast errors must be taken into account.
C) forecast accuracy is assumed. D) forecast accuracy is not a factor.
36) Forecasting errors are dealt with using
A) safety backlog. B) safety capacity.
C) safety inventory. D) B and C only
37) Inventory held to satisfy demand that is higher than forecasted is
A) safety backlog. B) safety capacity.
C) safety inventory. D) safety sales.
38) Capacity used to satisfy demand that is higher than forecasted is
A) safety backlog. B) safety capacity.
C) safety inventory. D) safety sales.
39) Which of the following is an approach a company can use to create a buffer for
forecast error using safety inventory?
A) Overtime B) Carry extra workforce permanently
C) Build and carry extra inventories D) Subcontracting
40) What is the name of the plan that breaks apart the aggregate plan into distinct
product families?
A) Master production schedule B) Rough cut capacity plan
C) SKU aggregate plan D) Process plan
41) What information does a master production schedule provide that an aggregate plan
does not?

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A) Expense information for the planning period
B) Revenue information for the planning period
C) Specific product family production information
D) A specific machine schedule for each order
42) The earliest IT supply chain products were
A) aggregate planning modules. B) cloud-based.
C) SaaS (software as a service). D) enterprise resource planning modules.
43) Advanced planning systems for aggregate planning rely heavily on ________ to
deliver their full potential.
A) forecasting B) the supply chain C) constraints D) data accuracy
44) Which of these software vendors offer advanced planning systems?
A) SAP B) Solver C) Excel D) Google
45) The quality of the aggregate plan can be improved by using information from
A) only the local firm. B) only downstream partners.
C) only upstream partners. D) all parts of the supply chain.
46) The quality of the forecast can be improved by using information from
A) the focal firm. B) downstream partners.
C) upstream partners. D) competing supply chains.
47) The aggregate plan should be communicated to
A) only the local firm. B) only downstream partners.
C) only upstream partners. D) all supply chain partners who will be affected by it.
48) The aggregate plan needs to
A) be a final product because changes are disruptive to the supply chain.
B) be considered fixed because forecasts are usually accurate.
C) have some flexibility built into it because forecasts are always wrong.
D) have some flexibility built into it because forecasts are usually right.
49) How frequently should the aggregate plan be rerun?

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A) Weekly B) Monthly
C) Every 3 to 8 months D) As inputs to the aggregate plan change
50) As capacity utilization increases,
A) it becomes less important to perform aggregate planning.
B) it becomes more important to perform aggregate planning.
C) it does not affect the importance of performing aggregate planning.
D) it lessens the importance of aggregate planning.