Operations Management: Processes and Supply Chains, 12e (Krajewski)
Chapter 10 Operations Planning and Scheduling
1) Operations planning and scheduling is the process of making sure demand and supply plans are in
balance.
2) The terms “aggregate plan” and “sales and operations plan” are synonymous.
3) When performing sales and operations planning, companies can aggregate products or services but not
members of their workforce.
4) A product family is a group of customers, services, or products that have similar demand requirements
and common processes, labor, and materials requirements.
5) For the student advisement service at a university, business majors and education majors would
constitute two different product families.
6) The sales and operations plan typically has a one-year planning horizon.
7) A manufacturing firm’s sales and operations plan generates both a production plan and a staffing plan.
8) A services firm’s sales and operations plan generates both a production plan and a staffing plan.
9) A master production schedule is a schedule that specifies the timing, size, and sequence of production
for aggregated product families.
10) A sales and operations plan for a service firm is:
A) a staffing plan.
B) a process plan.
C) a marketing plan.
D) a production plan.
11) 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) a marketing plan.
D) a process plan.
12) 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.
13) The employees of Global Bike Incorporated specialized in either their mountain bike or touring bike
line, but there were a few workers that were equally adept at assembling either product. For sales and
operations planning purposes, the latter group could be:
A) aggregated.
B) reassigned.
C) subcontracted.
D) overtimed.
14) 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.
15) 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.
16) Companies perform aggregation along the three dimensions of:
A) products, labor, customers.
B) time, suppliers, services.
C) products / services, labor, time.
D) time, products, customers.
17) 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 – 60 months.
18) 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.
19) 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.
20) The intermediate link between the business plan and the MPS is the:
A) annual plan.
B) production plan.
C) financial plan.
D) workforce schedule.
21) The lowest planning level in a sales and operations plan is:
A) resource planning.
B) forecasting.
C) scheduling.
D) sales and operations planning.
22) 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.
23) 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.
24) A service firm‘s sales and operations plan, called a(n) ________, centers on staffing and other labor–
related factors.
25) A sales and operations plan is sometimes called a(n) ________.
26) A group of customers, services, or products that have similar demand requirements and common
process, labor, and materials requirements is called a(n) ________.
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27) The ________ is the length of time covered by a sales and operations plan.
28) The ________ is a schedule that specifies the timing and size of production quantities for each product
in the product family.
29) The ________ takes the master production schedule and derives plans for components, purchased
materials and workstations.
30) 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.
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31) How can the workforce be aggregated?
32) What is a product family?
33) 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
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10.2 S&OP Supply Options
1) Some ways to manage demand include building anticipation inventories of goods and hiring or laying
off employees.
2) Firms that are most likely to use backlogs tend to have a make–to-order strategy.
3) Anticipation inventory is used to absorb uneven rates of demand or supply.
4) One distinction between manufacturing and services that affects sales and operations plans is that
services have difficulty creating inventories in anticipation of uneven demand.
5) Undertime is the situation that occurs when employees do not have enough productive work for the
regular-time workday or workweek.
6) Jake reports to the courier department Monday through Friday and stays from 9 am to 5 pm but many
times does not have enough work to keep him busy. Regardless, he is paid for a full eight hours even on
those days when he spends more time on social media than delivering supplies. This is an example of
undertime.
7) 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
8) Acme expected demand for rocket-powered roller skates to pick up during Roadrunner Season, so they
built hundreds of extra pairs and stored them out of season. The excess production is:
A) buffer stock.
B) throughput.
C) lagniappe.
D) anticipation inventory.
9) The meaning of undertime is:
A) employees work as usual, but they are paid at a lower rate.
B) employees don’t have enough productive work for the number of hours that they normally work.
C) employees work more than normal hours, but they are not compensated.
D) the workweek of some employees is permanently reduced.
10) The time that employees work that is longer than the regular workday or workweek for which they
receive additional pay is:
A) slack time.
B) premium.
C) overtime.
D) the workweek.
11) 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.
12) 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
13) 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.
14) The university housekeeping and maintenance staff was cut by 50% during late December and early
January when students were home breaking things and trashing their parents‘ houses instead of
university property. This type of schedule for housekeeping and maintenance workers is a(n):
A) vacation schedule.
B) part time schedule.
C) undertime schedule.
D) seasonal schedule.
15) ________ takes advantage of the tangible nature of manufactured goods to absorb uneven rates of
supply and demand.
16) ________ is the situation that occurs when employees work longer than the regular workday or
workweek.
17) ________ is the situation that occurs when employees do not have enough work for the regular
workday or workweek.
18) A company can meet short-term capacity shortages by arranging with ________ outside of their
normal workforce to provide necessary services.
19) Pick any manufacturing organization and describe some supply options at their disposal.
20) What is anticipation inventory and what are the benefits and drawbacks of having it?
10.3 S&OP Strategies
1) A level strategy matches demand during the planning horizon by varying either the workforce level or
the output rate.
2) One type of cost considered when preparing a sales and operations plan is inventory holding cost.
3) Investment return that is unrealized by stocking raw materials and finished goods can be classified as
holding cost.
4) Once a demand forecast has been entered into a sales and operations plan, it cannot be updated since it
would skew the process results.
5) As October came to a close, Geoff updated the sales and operations plan with figures for actual sales,
production, inventory, costs, and constraints before turning the production staff’s attention to November,
a process known as:
A) planning.
B) rolling.
C) closing out.
D) pencil whipping.
6) 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.
7) A customer is given a due date for their product order with:
A) backlog.
B) reservation.
C) service on demand.
D) appointment.
8) 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
9) 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.
10) 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.
11) Which one of the following actions applies to a level strategy?
A) Hire workers to increase production output to match increases in demand requirements.
B) Build anticipation inventory to meet the variability in demand.
C) Decrease production output to match any decreases in demand requirements.
D) Use promotional campaigns to boost demand.
12) 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
13) 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.
14) Which of these sales and operations planning levers is associated with interviews, training, and
severance pay?
A) backorders and stockouts
B) hiring and layoffs
C) use of overtime
D) holding inventory
15) Backorders and stockouts are most likely to cause expenses for:
A) advertising costs.
B) lost productivity.
C) cost of capital.
D) lost sales.
16) 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
17) Pilferage, obsolescence, and insurance costs are all elements of this cost category.
A) staffing
B) backorder and stockout
C) production
D) inventory holding
18) ________ is the accumulation of customer orders that have been promised for delivery at some future
date.
19) A(n) ________ is an order that cannot be satisfied when demanded and causes the customer to go
elsewhere.
20) A(n) ________ strategy involves hiring and laying off employees to match the demand forecast over
the planning horizon.
21) A(n) ________ strategy involves keeping the workforce constant and varying utilization.
22) The level strategy maintains a constant ________ level or ________ level during the planning horizon.
23) A(n) ________ is a strategy that considers and implements a fuller range of supply options than a pure
chase or level strategy.
24) 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
25) Choose any service and provide examples of how they can use a chase strategy for sales and
operations planning.