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13 Aggregate Planning
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Summary : Chapter 13: Aggregate Planning

Aggregate planning is an "intermediate-range capacity planning technique, usually covering a
time frame of 2-12 months for a production process, in order to keep the costs of operations at a
minimum." Companies use aggregate planning to help make decisions about their capacity
because seasonal variations in demand are difficult to predict accurately. The main goal of the
company is to match resources with the expected demand. This goal is achieved by taking into
account a diverse amount of factors such as: decisions on output rates, overtime, employment
levels and changes, inventory levels and changes, back orders, and subcontracting work.
A more extensive form of aggregate planning is sales and operations planning. Sales and
operations planning are "intermediate-range decisions to balance supply and demand,
integrating financial and operations planning". Sales and operations planning decisions are
made using demand forecasts, financial limits, and organization's capacity constraints. The
sales and operations plan carries information that impacts the supply chain.
1) Which of the following is a computerized model that can be tested under different scenarios
to identify acceptable solutions?
a. test model
b. difference model
c. simulation model
d. changing model
e. growth model
The answer is C. ( page 627)
2) Which of the following is not included in a planning sequence for aggregate planning?
a. business plan
b. aggregate plan
c. master schedule
d. master plan
e. all of the above are included
The answer is E. (page 613)
3) What are the three most significant factors an organization has to consider when choosing a
strategy for aggregate planning?
a. labor, demand, and time
b. company policy, flexibility, and costs
c. labor, time, and costs
d. company policy, flexibility, and demand
e. flexibility, time, and costs
The answer is B. ( page 619) (pg. 609: 9th edition)
4) What are the key issue(s) in aggregate planning?
a. how to handle variations in demand
b. how to handle changes
c. how to manage cost
d. both a & b
e. none of the above
The answer is C. (page 614)
Question 5
5) What are the three types of aggregate planning?
a. long-range plans, intermediate plans, and short-range plans.

b. Long term demand, short term demand, economies of scale

c. minimization curves, inflections points in cost schedules, profit maximization
d. pricing models, statistical evaluation, tax shelters
e. freight costs, J-I-T delivery, logistics
The answer is A. (page 612)
6) Which of the following are examples of service organizations that use aggregate planning?
a. airlines
b. hospitals
c. restaurants
d. A & B
e. all of the above
ANSWER: E. (found on page 629) (pg. 618 &619: 9th edition)
7) What are the three duties of master scheduling?
A) Provide delivery dates for orders, deal with problems, and schedule aggregate plans.
B) Evaluate the impact of new orders, provide delivery dates for orders, and deal with
C) Schedule aggregate plans, evaluate impact of new orders, deal with problems of previous
D) Evaluate the impact of old orders, provide delivery dates for new orders, and disaggregate
E) Deal with new and old problems, evaluate the impact of production, provide delivery dates for
new orders.
Answer: B (pg. 620: 9th edition)
8) What are the differences between manufacturing and services for aggregate planning?
a. Demand for service can be difficult to predict
b. Capacity availability
c. Labor flexibility
d. Services occur when they are rendered
e. All of above
Answer is E. (page 629-630)
9) Which of the following are Demand Options?
a) Pricing
b) Promotion
c) Using back orders
d) Creating new demand
e) all of the above
Answer: E P616
10) Which of the following is NOT a supply option?
a) Hire and lay off workers
b) Overtime/slack time
c) Subcontractors
d) Promotion
e) All of the above ARE supply options
Answer: D P616
11) Which of the following describes the general procedure steps for aggregate planning?
a) determine demand, determine capacities, identify important policies, determine costs,
develop plans
b) determine capacities, determine demand, determine costs, develop plans, identify important
c) identify important policies, determine costs, determine demand, determine capacities,
develop plans
d) determine demand, identify important policies, determine costs, develop plans, determine
e) none of the above
Answer: A p. 621