Professor Philip Vaccaro


FALL SEMESTER , 5th EXAMINATION, Chapters 12 and 13





TRUE or FALSE: ( select the one correct response )



  1.  Average inventory per cycle equals average inventory per year.


TRUE          FALSE


  1.  If lead time is zero, the reorder point ( ROP ) equals the optimal number of



TRUE          FALSE


.   16.  When using ABC analysis, class C items should be reviewed frequently.


TRUE          FALSE


  1. An inventory chase strategy matches demand during the aggregate plan-

ning horizon by varying either the workforce level or the production rate.


TRUE          FALSE


  1. The aggregate plan will specify the number and type of goods and services

to be produced on a daily and weekly basis, as consumer demand and eco-

nomic conditions change.


TRUE          FALSE


  1. Production rate change costs follow a non-linear pattern.


TRUE          FALSE


  1. Aggregate plans should be developed to minimize costs in each period.


TRUE          FALSE


  1. Each aggregate plan should specify, as a minimum, a level of inventory,

labor force, and subcontracting.


TRUE          FALSE




  1. Normally, property taxes are a non-relevant cost.


                                                     TRUE          FALSE


  1.   Today, the definition of the quasi-unit is usually determined at the corporate    



TRUE          FALSE


  1.  The graph or chart method of aggregate planning guarantees an optimal  

             minimum cost solution.


TRUE          FALSE


  1.  If desired, a planner can eliminate inventory stockouts in one or all

             generated aggregate plans.


TRUE          FALSE


  1. The lowest cost aggregate plan is usually generated by a chase strategy.


TRUE          FALSE


  1.   It is assumed today that the demand for goods and services is unalterable in

              aggregate planning.


TRUE          FALSE


  1. Good practice dictates postponement of production overtime until all

              inventories have been exhausted in the aggregate plan.


TRUE          FALSE


  1. The linear decision rule is a computer model that uses a search procedure

            to look for the minimum cost combination of values for labor force size

            and production rate.


TRUE          FALSE


  1. Normally, subcontracting costs are a ‘relevant cost’ in aggregate planning.


TRUE          FALSE





  1. Corporate policies can be embedded into aggregate plans at any time

       during their development.


TRUE         FALSE


  1. Each of the 3 pure or principal aggregate planning strategies and their

       variations require very different amounts and forms of cost data.


TRUE          FALSE


  1. When an aggregate planning problem is viewed as one of allocating

        capacity to meet forecasted demand, it can be formulated in a linear

        programming format.


TRUE          FALSE


  1. ‘Service level’ is the chance, measured in percent, that there will be

        a  stockout.


TRUE         FALSE


  1. Safety stock is ignored when computing the reorder point under

        variable demand.


TRUE         FALSE



















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