review for exam ii mar 20 2002 l.
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Review for Exam II—Mar 20, 2002. Dr. Burns. Exam Format. 45-55 multiple choice 3 problems Closed-book Closed-notes Closed-neighbor BRING---pencil, calculator, scantron. Exam Coverage. Chapters 11, 12, 13, 14 NO CHAPTER SUPPLEMENTS No linear programming No simulation.

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exam format
Exam Format
  • 45-55 multiple choice
  • 3 problems
  • Closed-book
  • Closed-notes
  • Closed-neighbor
  • BRING---pencil, calculator, scantron
exam coverage
Exam Coverage
  • Chapters 11, 12, 13, 14
    • No linear programming
    • No simulation
typical problems see practice exam ii
Typical problems—see Practice Exam II
  • Aggregate production planning
  • Inventory with Independent Demand
  • Material Requirements Planning
  • Capacity Requirements Planning
chapter 11 capacity planning and aggregate production planning
Chapter 11 -- Capacity Planning and Aggregate Production Planning
  • Long Range Planning
  • Medium Range Planning
  • Aggregate Production Planning
what are the inputs to the aggregate planning system
What are the inputs to the aggregate planning system??
  • Demand forecasts
  • Capacity constraints
  • Strategic objectives
  • Company policies
  • Financial constraints
  • NOT
  • Size of workforce
  • Inventory levels
  • Units subcontracted
capacity planning is
Capacity planning is….
  • Long-term strategic decision-making
  • NOT
  • Capacity requirements planning
when doing capacity planning which of the following steps is accomplished first
When doing capacity planning, which of the following steps is accomplished first?
  • a.Resource requirements plan
  • b.Rough-cut capacity plan
  • c.Capacity requirements plan
  • d.Input/output control
aggregate production planning strategies are
Aggregate Production Planning Strategies are….
  • Pure (Trial-and-error)
    • Chase Demand
    • Level production
  • Mixed (optimal)
    • Linear programming
    • Simulation
which of the following strategies matches production to demand by hiring and firing workers
Which of the following strategies matches production to demand by hiring and firing workers?
  • Chase demand strategies
  • Level production strategies
  • Strategies the use subcontracting and overtime
which of the following is not a strategy for managing demand
Which of the following is not a strategy for managing demand
  • Shifting demand into other time periods with incentives, sales promotions and advertising campaigns
  • Offering products or services with countercyclical demand patterns
  • Partnering with suppliers to reduce information distortion along the supply chain
  • Increasing inventories and laying off workers when demand is soft
Aggregate production planning

Best operating level

Capacity planning

Capacity cushion

Chase demand Pure strategy

Level production Pure strategy

Mixed strategy


Diseconomies of scale

Yield management

chapter 12 inventory management
Chapter 12 – Inventory Management
  • Inventory for Independent demand
carrying costs
Carrying costs
  • Rent
  • Lighting/heating
  • Security
  • Interest
  • Taxes

Can also be expressed as a % of product cost

A rule of thumb is 30%

ordering costs costs related to
Ordering costs—costs related to





abc classification what is the point
ABC Classification—what is the point??
  • To concentrate, focus on the those items in inventory that constitute the highest dollar value to the firm
    • Class A items constitute 5-15% of the items and 70 to 80% of the total dollar value to the firm
    • Class B items constitute 30% of the inventory items but only 15% of the dollar value
    • Class C items constitute 50 to 60% of the items but only 5 to 10% of the dollar value
abc classification
ABC Classification..
  • Class A items are tightly controlled
  • Class B items less so
  • Class C items not at all
  • Dollar values are computed by multiplying the dollar cost by the annual demand for the item
  • This technique is used in all auto parts inventory control systems and have been for 15 years
periodic inventory systems are
Periodic inventory systems are….
  • Fixed Time period systems
  • NOT
  • EOQ Models
eoq models have
EOQ models have
  • A fixed order quantity
  • Deterministic demand
  • No shortages
  • Constant lead time
  • Instantaneous or finite replenishment
  • EOQ models minimize ordering and holding costs
which gives you lowest holding cost
Which gives you lowest holding cost?
  • Instantaneous replenishment
  • Finite replenishment
  • Quantity discounts
ABC system

Carrying costs

Continuous inventory system

Dependent demand


Fixed-order quantity system

Fixed time period system

Independent demand


In-process inventory

Noninstantaneous receipt

Order cycle

Quantity discount


Service level

chapter 13 material requirements planning
Chapter 13 – Material Requirements Planning
  • Inventory for Dependent Demand
mrp is applied mostly to
MRP is applied mostly to
  • Project operations
  • Batch operations
  • Assembly line operations
  • Continuous operations
material requirements planning is a system for
Material requirements planning is a system for
  • Computing EOQ’s
  • Determining when to release orders
  • Computing safety stocks
  • Determining service levels


formulas rules
  • Projected on-hand = prev projected on-hand + scheduled receipts + planned order receipts – gross requirements
    • Is really the on-hand amount at the end of the period
  • Net requirements = gross requirements – previous projected on-hand
    • If less than zero, set to zero
  • Planned order receipts must be sufficient to accommodate the net requirements
  • Planned order releases are the same in amount as planned order receipts, just offset one or more periods by the lead time
mrp led to
MRP led to…..

MRP II, which led to….

???, which is where we are today

  • Large caps have been there and done that
  • Mid and small caps are getting there
  • Read the book NECESSARY BUT NOT SUFFICIENT by Eli Goldratt if interested
more erp
More ERP
  • Based on an N-tier distributed architecture
  • Not on mainframe glasshouse
advantages of n tier architecture
Advantages of N-tier architecture
  • Data integration
  • Better usage of MIPS on both PCs and servers
  • Solves the 36 month backlog of the centralized MIS shop
    • Leads to the decentralization of MIS
erp modules
Sales & distribution

Production & Materials Management

Quality management

Human resource management

Project management

Accounting and controlling

ERP Modules


Bill of Material

Product structure File

Master Production File




more terms
Load profile




Modular BOM


Time bucket

Time fence

Order splitting

More terms
chapter 14 detailed scheduling
Chapter 14 – Detailed Scheduling
  • Scheduling = assignment and sequencing
  • Assignment algorithm – won’t test you on this
  • Sequencing – must know EDD, SPT, FCFS, LCLS, etc.
sequencing rules
Sequencing rules

FCFS 18.60 9.6 3 23

DDATE 15.00 5.6 3 16

SLACK 16.40 6.8 4 16

CR 20.80 11.2 4 26

SPT 14.80 6.0 3 16

* best values

Average Average No. of Maximum

Rule Completion Time Tardiness Jobs Tardy Tardiness









© 2000 by Prentice-Hall Inc

Russell/Taylor Oper Mgt 3/e

Ch 14 - 24