First Set Currency


Production planning and Control-1


SKU: AMSEQ-218 Category:

Assignment – A

Question 1. A small electronics company produces pocket calculators and records the demand monthly. The following demand data are for a representative calculator:

November   45
December   57
January       60

Using 50 as the exponential smoothing forecast for November, and using 0.3 as the exponential smoothing coefficient, forecast February sales.

Question 2. ACE Computers has the following expected production capacity and demand for minicomputers:

Quarter Capacity Demand
1 300 300
2 400 600
3 450 300
4 550 500

The company does not accept any backorders and wishes to fulfill demand by letting inventories absorb all fluctuations. How many minicomputers must they have on hand on January 1 to meet the forecast demand throughout the year?

Question 3. The Vice President of Koza Company has estimated the following demand requirements for the forthcoming periods.

Periods Forecast Period Forecast
1 1400 5 2200
2 1600 6 2200
3 1800 7 1800
4 1800 8 1400

The operations manager is considering the following plans:

Plan 1: Maintain a stable workforce that is capable of producing 1800 units per period, and meet the demand by overtime at a premium of $50 per unit. Idle time costs are equivalent to $60 per unit. Do not build to inventory.

Plan 2: Produce at a steady of 1600 units per period, and accept a limited number of backorders during periods when demand exceeds 1600 units. The stockout cost of lost sales is $100 per unit. Inventory costs per period are $20 per unit.

Plan 3: Produce at a steady rate equal to minimum requirements of 1400 units and subtract the additional units at a $75 per unit premium.

Plan 4: Vary the workforce level, which is currently capable of producing 1600 units per period.

The cost of additional workforce per 100 units is $5000, and the cost of layoffs per 100 units is $7500.

Plan 5: Vary inventory levels, but maintain a stable workforce level by maintaining a constant production rate equal to the average requirements. The company can accumulate required inventory before period 1 at no additional cost. The inventory cost per period is $20 per unit.

Answer the following:

1. Analyse the above plans. Use graph and tables for presentation of your analysis.

2. Discuss the merits and disadvantages of these plans.

3. Which plan will you recommend and why?

Question 4. Using the data in Table 1 below, compute weekly requirement for the following schedule:

5. With reference to Problem 4, calculate the capacity requirements for the final assembly department, ignoring lead times.

Average assembly time:           1.2 hours
Average subassembly time:      0.8 hours
Average fabrication time:         0.2 hours

The subassembly lead times are included in the assembly lead times.

Assignment – B

Question 1. Given the following BOM, MPS and inventory status, develop MRP tables for all items (ten tables in total)

Question 2. An item has the following gross requirements and a beginning inventory of 40 units:

Question 3. Clark Company makes three products on three different types of equipment. The matrix of operating times and job setup times (in decimal hours), demand per month, and economical lot sizes for manufacturing are given in Table below. The machine utilisation factor is approximately 90%, and operator efficiency of the shop is believed to be 105%.

How many of each of the machines will be needed if the plant works a 40 hour week?

Case Study

Notes: Read the case study and answer the questions given at the end.


In 1990, Jain began to make custom furniture full time in his garage. Jain’s work had been admired by friends and neighbours, who often asked him to make special pieces for them. In 1995, he expanded his operations by leasing a used facility and hiring two additional skilled workers: a woodworker and a leather specialist. By 1998, Jain formed a company called Good

Wood P Ltd, and had 11 employees.

Today, Good Wood serves a custom furniture market covering Delhi and surrounding regions. Jain, the CEO, has a staff of 37 employees. Custom made furniture is the sole product line, and the company has prided itself on high quality and timely delivery services. Organisationally, Good Wood has Production, Sales, Purchasing, Shipping, and Design departments. Production department includes wood framing, wood preparation, wood finishing, metal finishing, leather, glass, plastics, and cloth fabrics.

This past year, 250 to 300 jobs were processed in the facility on any given day. Although product quality remains high, on time deliveries have deteriorated. The average job seems to be four to seven weeks late. Suresh, an employee since 1995, and a special assistant to the shop manager does the shop loading. His job also includes coordinating the overall shop efforts with those of the sales and design departments. He recently compiled data on waiting job orders for a typical day.

Detailed scheduling of orders has always been the responsibility of the three shop foremen. Joshi is foreman of the wood preparation, framing, and finishing departments. Srivastava is the foreman for the leather and cloth fabrics departments. Chatterjee is the foreman of the metal, glass and plastics departments.

Jain is concerned about job lateness. He feels deteriorating customer service might well affect future sales. He has requested George, whose primary experience has been co-ordinating a new physical distribution system, to analyse the current situation and recommend changes. George is uncertain which factors he should consider and how to proceed with the problem.


1. What is the main problem and what could be the causes of the problem?

2. Propose a production planning and control system to George which would minimise the above problems

Assignment – C

1. If the order winner is delivery speed to customer, then the production planning and control system must focus on:
(a) Cost
(b) Lead time
(c) Quality
(d) Coordination with Marketing

2. A firm uses simple exponential smoothing to forecast demand with α = 0.2. The forecast for the month of March was 500 units whereas the actual demand turned out to be 460 units. What is the forecast for the month of April?
(a) 489.6
(b) 492
(c) 480
(d) 490

3. Bias as a measure of forecast error is used to determine:
(a) The total magnitude of error
(b) The direction of error
(c) Absolute value
(d) Weighted average

4. Aggregate output planning generally consists of planning a desired output over a period of:
(a) one week
(b) five years
(c) daily
(d) three months to 1 year

5. Optimum inventory level as per EOQ system will increase:
(a) in direct proportion to increase in holding cost
(b) inversely with setup cost
(c) in proportion to square root of demand for the year
(d) in direct proportion to square root of holding cost

6. Product structure tree is:
(a) a diagram explaining the features of a product
(b) used to display the total makeup of a particular product
(c) is representation of a tree
(d) identical to decision tree

7. Kit numbers are used in MPS:
(a) when there are many small, loose parts – such as fasteners, nuts and bolts – at level 1 in the product structure
(b) to identify related items
(c) to add complexity to planning
(d) as a quick aid to forecasting

8. MRP takes the output from the master schedule, combines that with information from inventory records and product structure records and determines:
(a) the volume of production in each period
(b) the schedule of timing and quantities for each item to get the right materials to the right place at the right time
(c) closing inventory
(d) whether customer demand can be met

9. Manufacturing Resource Planning is:
(a) the planning of resources in the manufacturing environment using the closed loop system
(b) another term for rough cut capacity planning
(c) is also known as MRP I or little
(d) is a quicker way to MRP

10. A classification system has been devised to determine how well an MRP system has been implemented. Class C company is:
(a) one which has MRP II in full use and the closed loop is working
(b) one in which MRP system is working only in the computing department
(c) one which may have MRP, capacity planning and shop floor controls working
(d) one which uses MRP for inventory ordering but not for scheduling

11. MRP logic uses the following relationships:
(a) Net requirements = total requirements – available inventory
(b) Net requirements = scheduled receipts + inventory on hand
(c) Net requirements = gross requirements – allocations
(d) Net requirements = gross requirements – on hand inventory

12. Lot-for-Lot technique in MRP yields:
(a) high holding cost
(b) low setup cost
(c) zero holding cost
(d) zero setup cost

13. The simulation studies on many of the lot sizing rules show:
(a) good performance of L-4-L rule
(b) good performance of EOQ rule
(c) poor performance of PPB, GR and MCP rules
(d) poor performance of L-4-L and EOQ rules

14. Time fence is a designated length of time
(a) to create system nervousness in MRP system
(b) that is the longest lead time from raw material to finished production for an end item
(c) that must pass without changing the MPS, to stabilise the MRP system; afterward the MPS is allowed to change
(d) around which the system is upgraded

15. Pegging is used in MRP system for:
(a) identifying which components are affected by disruptions in material plans
(b) pausing the system
(c) showing old records
(d) showing current records with updated status

16. Route sheet used in production planning and control is:
(a) used to indicate the location of each department
(b) a document to show the routing of a component, including the work centers and operation times, through its production processes
(c) a flow process chart used for process change
(d) a document showing the daily production schedule

17. The Master Production Schedule (MPS) is a schedule of:
(a) weekly production plan for each product according to customer orders and demand forecasts
(b) aggregate production plan in product groups
(c) daily production plan for shop floor control
(d) business activity expressed in money value

18. A good strategy to meet short term overload for a month can be:
(a) buy a new equipment
(b) invest in a new project
(c) subcontract work
(d) telling marketing that the job cannot be done

19. Infinite loading is:
(a) assigning jobs to work centers without considering the work center’s capacity
(b) using Gantt chart for loading
(c) using visual load profile for showing load
(d) considering loading of planned orders only

20. Final Assembly Schedule can serve as MPS:
(a) when the number of end products manufactured is small
(b) when the number of end products is large
(c) when there is a need to disaggregate
(d) when M-bills have to be used

21. An aluminium extruder forecasted the demand for pipe extrusions to be 500 units per month for each of three months. The actual demands turned out to be 400, 560 and 700. The forecast error in terms of MAD(Mean Absolute Deviation) is:
(a) -50 units
(b) 125 units
(c) 120 units
(d) 53 units

22. Frigerware has experienced demand for ice coolers at 400 units for April, 500 units for May and

600 units for June. The forecast of demand for July using a three period model with the most recent period’s demand weighted twice as heavily as each of the previous two period’s demand is:
(a) 425
(b) 525
(c) 625
(d) 400

23. In the regression model for forecasting, the forecast of the period’s demand F is expressed as
F = a + bX, where:
(a) F is the independent variable
(b) X is the dependent variable
(c) X is the independent variable
(d) a is the slope of the line

24. Capacity is a facility’s productive capability, usually expressed as volume of:
(a) input in case of automobiles
(b) output in case of steel producer
(c) likely business as per marketing
(d) output in case of hospital

25. For short term periods of up to one year, fundamental capacity is fixed. However, short term adjustments of capacity are possible by:
(a) building inventories during slack periods to meet later demand
(b) subcontracting during slack periods
(c) building inventories during peak periods to meet demand in slack periods
(d) wishing that some customers may cancel the order

26. Steel manufacturing is an example of :
(a) Job manufacturing process
(b) Continuous manufacturing flow process
(c) Assembly line process
(d) None of the above

27. Visual Load profile is:
(a) a graph comparing work loads and capacities on a time scale
(b) identical to Gantt load chart
(c) used for forward scheduling process
(d) used for job sequencing

28. SPT rule in scheduling:
(a) assigns highest priority to the slowest job
(b) prioritises on basis of setup time
(c) prioritises on basis of delivery times
(d) assigns highest priority to the job order whose processing time is shortest

29. Which sequencing rule will you prefer for minimising average job lateness:
(a) Shortest processing time rule
(b) Longest processing time rule
(c) Earliest Due Date rule
(d) First cum first served rule

30. For scheduling N jobs through two machine centers in series, you will use:
(a) Johnson rule to decide the sequence and then schedule on a Gantt chart
(b) McLaren’s Order Moment
(c) Groff’s Algorithm
(d) None of the above

31. If a machining center has a machine utilisation of 95% and operator efficiency of 80%, what is the effective work centre capacity in July assuming 26 working days and 3 shifts running each day:
(a) 472.24 hours
(b) 472 hours
(c) 158.08 hours
(d) 59.28 hours

32. Critical Ratio used in Capacity Planning and Control is:
(a) Time to due date divided by required time for remaining operations
(b) Time for first job divided by time for second job
(c) Capacity consumed by the job divided by total capacity of the plant
(d) Capacity of output divided by capacity of input

33. Job A and B are waiting to be released. Both will go to work center 1. Then A will continue on to work center 3 while B will go to work center 4. Suppose that A has high priority on the first work center and center 4 is backlogged and center 4 is idle. Which order should be released first?
(a) Job A
(b) Job B
(c) Both Job A and Job B together
(d) Toss a coin and if its heads, go for Job A otherwise Job B.

34. Cycle time as used in assembly line manufacturing is:
(a) the time taken in last work station
(b) the productive time divided by demand
(c) the time taken by the bottleneck operation
(d) both b) and c) are considered and the higher value taken

35. In an assembly line the total processing time per, unit is 380 seconds. and the cycle time for the line is 90 seconds. What is the minimum number of workstations required in the assembly line?
(a) 4 stations
(b) 4.22 stations
(c) 5 stations
(d) 4.2 stations

36. Runout Time (ROT) used in batch processing is:
(a) the time taken to complete the batch
(b) the current inventory of an item divided by the demand per period for that item
(c) the demand for the item divided by the opening inventory level
(d) time for setup plus processing time

37. JIT is:
(a) another management jargon
(b) a philosophy of waste reduction and techniques for reducing inventory and waste
(c) applicable only to job shop units
(d) none of the above

38. If the setup cost is Rs 10,000 per setup, annual demand is 100,000 units and holding cost is Rs. 200 per unit per year the optimal batch quantity in production should be (rounded off):
(a) 3162
(b) 316
(c) 31623
(d) 3000

39. Kanban is:
(a) a push production system
(b) another word for MRP system
(c) a pull system based on a ‘visible record’ or ‘card’
(d) input output system

40. If D is the demand per unit of time, L is the lead time, A is the container capacity and S the safety stock factor,the number of Kanbans N will be :
(a) DL(1+S)/A
(b) A(1+S)/D
(c) LAS(1+D)/24
(d) (D/A)+L+S


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