Question 16. Which lot sizing rule might base the order quantity on a standard-size container or pallet load? a. Lot-for-Lot (LFL) b. Fixed order quantity (FOQ) c. Periodic order quantity (POQ) d. Gross Requirements (GR)

16. Which lot sizing rule might base the order quantity on a standard-size container or pallet load?

17. Which lot sizing rule is best when inventory carrying costs are high and setup/order costs are low?

18. Which lot sizing rule might use the EOQ calculation?

19. Capacity requirements are computed by multiplying the number of units scheduled for production at a work center by

20. If a work center load report indicates insufficient capacity, options for correcting the problem include all of the following except

SHORT ANSWER

1. Define resource management and list its key objectives.

2. Explain the three levels of resource planning.

3. Describe the options that managers have for developing aggregate plans to respond to fluctuating demand.

4. Differentiate between a level production strategy and a chase demand strategy.

5. Define a Master Production Schedule (MPS) and explain how it differs from a final assembly schedule.

6. Define Material Requirements Planning (MRP) and how it can benefit an organization.

7. Explain a bill of materials (BOM), bill of labor (BOL), and bill of resources (BOR) relate.

8. What are the components of an MRP record?

9. Explain the three lot-sizing methods, and under what circumstances each work best:

10. What is capacity requirements planning (CRP)?

PROBLEM

1. A company currently has no items in inventory. The demand for the next four months is 200, 400, 250 and 350 units. Determine the level production rate if a level strategy is selected with the goal of ending Period 4 with 100 units in inventory.

2. A company currently has no items in inventory. The demand for the next four months is 200, 400, 250 and 350 units. Assuming a level production rate of 250 units per month, determine the month in which a backorder will materialize.

3. The Academic Company mixes and bottles a high-energy beverage in various container types and sizes for college students. The aggregate forecast for the next four quarters (1 year) in thousands of gallons is as follows:

Academic’s management makes the following assumptions:

a. Determine how many employees would be needed to meet the peak required in Quarter 3.

b. Determine the annual inventory holding cost if Academic decides to use a level production rate of 650 units per quarter.

c. Using a level schedule of 650 units per quarter, what will be the annual employee costs?

d. Using a level schedule of 650 units per quarter, what will be the annual employee costs if only 30 employees are available and overtime is used?

e. If management decides on a chase demand strategy, with production last quarter of 600 units and a rate change cost of $3.00/1000 gallons, determine the total rate change cost.

4. A paint company has the following aggregate demand requirements and cost data for the upcoming year by quarter.

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