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OM5 C13

Test Bank

21

a.

Using a level production plan, how many workers would be needed each quarter?

b.

For a level production plan, what is the beginning inventory in quarter 2?

c.

Using a level production plan, in how many quarters are the machine requirements over

capacity?

d.

Using a chase demand plan, how many workers are needed for quarter 1?

e.

How many additional workers are needed in quarter 2 under a chase demand plan?

17. A local company makes athletic clothing and they are preparing aggregate production plans

on a quarterly basis for the upcoming year for their line of women's wear. They have the

following information available to develop a level production and a chase demand plan:

Current number of employees = 25

Number of working days per quarter = 65 days

OM5 C13

Test Bank

Number of hours per day per person = 8 hours

Labor standard to produce one unit = 5 hours

Demand for four quarters respectively: 12,300, 12,500, 12,200, and 13,000 units

Cost of hiring a worker = $800

Cost of laying off a worker = $500

Inventory-carrying cost per unit per year = $60

a.

Using a level production plan, how many workers are needed each quarter?

b.

For a chase demand plan, how many workers are needed each quarter respectively?

c.

What is the average inventory-carrying cost using a level production plan?

d.

What is the total cost to hire workers under a chase demand plan?

18. Pacific Chemical Products, Inc. produces a liquid laundry detergent and is currently in the

process of developing an aggregate plan for the upcoming year. They don't know whether to use

a level production or a chase demand approach. The costs that they are concerned with are the

cost of hiring more workers, the cost of laying off workers, and the cost of carrying inventory.

Currently at Pacific there are 124 workers. It costs $200 to hire a new worker, the cost of laying

off one worker is $250, and the inventory-carrying cost per unit per quarter is $4. The company

has 65 working days per quarter and each person works only an 8 hour day. The labor standard

for each gallon of detergent is 1.5 hours, and the forecasted demand for the next four quarters is

30,000, 35,000, 47,000, and 43,000 gallons.

a.

Using a level production plan, how many workers are needed each quarter?

b.

What is the average inventory level under the level production plan?

c.

What is the total annual inventory cost under a level production plan?

d.

Under a chase demand plan, how many workers are needed in the second quarter?

e.

What is the total hiring and firing costs using a chase demand plan?

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19. The bill of materials (BOM) for end item A is shown below:

a.

If A has a gross requirement to build 250 units and an on-hand inventory for Aof 40,

determine the net requirement for D if its current on-hand inventory balance

for D is 20 (all other components have no current inventory).

b.

Determine the net requirement for F if the gross requirement for A is still 250 and current

on-hand inventory balance for A is 40, D is 20, and F is 60.

20. The bill of materials (BOM) for Product X is shown below, followed by a table of

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25

inventory data. The master production schedule quantity calls for the completion of 300 Xs in

Week 7. The lead time for the production of X is 2 weeks, and there are currently no units of X

available.

Data Category

C

D

Lot Sizing Rule

FOQ = 700

LFL

Lead Time

2 weeks

1 week

Scheduled Receipts

0

0

Beginning (On-Hand Inventory)

200

200

a.

When and what quantity will be the planned order release for Item C?

b.

Determine the week and the quantity of the planned order release for Item D.

21. Given the information below, complete the materials requirements planning (MRP) record

and explain what it tells the inventory analyst to do.

Lot Size Rule: Fixed Q = 200 units

Safety Stock: 0 units

Lead Time = 2 weeks

Current On-Hand Quantity = 100 units

Week

1

2

3

4

5

6

7

8

Gross Requirement

50

100

60

0

0

50

90

200

Scheduled Receipts

200

Projected On Hand 100

Planned Receipts

Planned Order Release

X

C

(2)

D

(3)

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22. A manufacturing company is interested in making a product structure tree for one of its

major products. They know that product A is made up of assemblies B, C, and D. Each B

assembly is made up of one raw material F and 2 E parts. Each C assembly is composed of 2 G

parts and one H subassembly. Each H subassembly is made up of 2 F raw materials, 2 I parts,

and 2 J parts.

a.

How many units of part G are needed to make one unit of product A?

b.

How many units of raw material F are needed to make up one unit of product A?

23. A company makes traffic signals for downtown streets. They are interested in developing a

product structure tree for one of their traffic signal models. Each traffic signal is composed of a

housing and bracket assembly. Each housing assembly is composed of optical and casing

subassemblies. Each bracket assembly is composed of a hanger part and a wire outlet part. The

optical subassembly is composed of 4 wire lead subassemblies, 3 lens parts, 3 bulbs, and 3

socket parts. Each casing subassembly is composed of 3 plastic molds and 3 hardware

subassemblies. Each wire lead subassembly is made up of 1 conductor part, 1 insulation part,

and 4 spade connector parts. Each hardware subassembly is made up of 4 nuts, 4 bolts, and 8

washers.

a.

How many spade connectors are needed to make one traffic signal?

b.

How many bolts are needed to make one traffic signal?

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24. A hardware company is interested in developing a net requirement schedule for one of its

products, a claw hammer. The beginning inventory for the product is 1500 units, and the safety

stock is 300 units. The weekly demand over a six-week planning horizon is 400, 850, 560, 900,

600, and 700 units.

a.

What would the net requirements be for Week 2?

b.

What is the ending inventory in Week 4?

25. The Eugene plant of Basic Computers Inc. (BCI) wants to develop a net requirements

schedule for one model of microcomputers. The beginning inventory is 500 units, and they like

to carry 50 units as safety stock. The estimated demand for the next 6 weeks is 200, 250, 300,

375, 400, and 600 units.

a.

What would the net requirements be for Week 3?

b.

What is the beginning inventory in Week 5?

26. An electronics company wants to develop an MRP schedule for one of its key components,

a specialized chip. The lot size is 600, the lead time is 2 weeks, there are 900 units on hand with

1.

a.

What is the number of units available in Week 3?

b.

What is the planned order receipt for Week 5?

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27. A company that makes inkjet printers is trying to determine a MRP schedule for the print

cartridges it needs in its newest model of printer. They have gross requirements of 1000 units in

week 2 and 900 units in week 4. The minimum lot size is 500 units and the lead time is 1 week.

They currently have 300 units on hand that includes a safety stock of 150 and another 100 units

already allocated. They have 500 units scheduled for receipt in week 1.

a.

What is the number of units available in Week 1?

b.

What is the planned order release in Week 3?

28. A manufacturing company is trying to determine the best lot sizing approach to take when

developing a market requirements planning (MRP) schedule: lot-for-lot (LFL), fixed-order

quantity (FOQ) using the economic order quantity (EOQ), or periodic-order quantity (POQ). The

ordering cost is $504 per order, the inventory-carrying cost is $1 per week per unit, and the

annual demand for the product is 15,000 units. They are using a work schedule for a 50-week

work year. They are disregarding the effects of initial inventory and safety stock at the present

time. The estimated net requirements for their product for the next six weeks are:

Week

1

2

3

4

5

6

Net Requirements

100

400

200

350

600

50

a.

Using LFL, what is the size of the production lot in week 3?

b.

Using LFL, what is the total cost for this method?

c.

What is the EOQ needed?

d.

What is the beginning inventory in week 4 using the FOQ method?

e.

What is the total cost for using the FOQ approach?

f.

What is the POQ size for production lots?

g.

What is the ending inventory for week 5 using the POQ method?

h.

What is the total cost using the POQ approach?

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29. A company that makes construction equipment is exploring different lot sizing approaches to

its master requirement planning (MRP) schedule: lot-for-lot (LFL), fixed-order quantity (FOQ)

OM5 C13

Test Bank

using the EOQ, and periodic-order quantity (POQ). It costs $100 to set up the production line to

produce hydraulic jacks, and the carrying cost per unit per week is $1. Annual demand is

expected to be 1550 jacks. For planning purposes, the company uses a 50-week work year and

disregards the effects of initial inventory and safety stock. The net requirements for hydraulic

jacks for the next six weeks are:

Week

1

2

3

4

5

6

Net Requirements

35

30

40

10

40

30

a

.

Using a LFL approach, what is the lot size in week 3?

b

.

What is the total cost for the LFL method?

c

.

What is the fixed-order quantity (FOQ) using the EOQ approach?

d

.

What is the beginning inventory for week 5 using the FOQ approach?

e

.

What is the total cost using the FOQ method?

f

.

What is the periodic-order quantity?

g

.

What is the ending inventory for week 4 using the POQ method?

h

.

What is the total cost using the POQ approach?

OM5 C13

Test Bank

30. A company assembles microcomputers for sale to computer stores. They are trying to

decide which lot sizing approach to use for developing their MRP schedules: lot-for-lot (LFL),

fixed-order quantity (FOQ) using the EOQ approach, or periodic-order quantity (POQ). The

setup cost is $1000 per order, the inventory-carrying cost is $2.50 per week per unit, and the

annual demand for the computers is 10,000 units. The company is using a 50-week work year

and disregarding the effects of initial inventory and safety stock. The estimated net requirements

the microcomputers for the next six weeks are:

Week

1

2

3

4

5

6

Net Requirements

150

200

50

300

250

100

a.

Using the LFL method, what is the size of the production lot for Week 2?

b.

What is the total cost using the LFL method?

c.

What is the economic order quantity (EOQ)?

d.

What is the ending inventory in Week 3 using the EOQ approach?

e.

What is the total cost using the EOQ method?

f.

What is the periodic-order quantity (POQ)?

g.

What is the beginning inventory in Week 4 using the POQ approach?

h.

What is the total cost using the POQ method?

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