Solved Problems in Production Planning Control 2012-11 PDF

SOLVED PROBLEMS IN
PRODUCTION
PLANNING & CONTROL
August 2012
Solved Problems in Production Planning & Control
FORMULAS IN PRODUCTION PLANNING & CONTROL

I. Forecasting
Weighted Moving Average
n
WMAn =
W iDi
i=1
where
W i = the weight for period i, between 0 and 100 percent
Di = demand in period i
Exponential Smoothing
Ft+1 = Dt + (1 ) Ft
where
Ft+1 = the forecast for the next period
Dt = actual demand in the present period
Ft = the previously determined forecast for the present period
= a weighting factor referred to as the smoothing constant
Adjusted Exponential Smoothing
AFt+1 = Ft+1 + Tt+1
where
T = an exponentially smoothed trend factor
Tt+1 = (Ft+1 Ft) + (1 )Tt
where
Tt = the last periods trend factor
= a smoothing constant for trend
Linear Trend Line
y = a + bx
where
a = intercept (at period 0)
b = slope of the line
x = the time period
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y = forecast for demand for period x

xy nxy
b = ------------------------x2 nx2
a = y bx
where
n = number of periods
x
x = ----------------- = the mean of the x values
n
y
y = ----------------- = the mean of the y values
n
Seasonal Factor
Di
Si = -------------D
where
Di = demand in period i
Forecast Accuracy
Mean Absolute Deviation (MAD)
Dt Ft /
MAD = ------------------------n
where
t = the period number
Dt = demand in period t
Ft = the forecast for period t
n = the total number of periods
/ / = absolute value
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Mean Absolute Percent Deviation (MAPD)

Dt Ft /
MAPD = ------------------------Dt
Cumulative Error
E=
et
Average Error
et
E = -----------------n
Forecast Control
(Dt Ft )
E
Tracking Signal = ---------------------------------- = ---------------MAD
MAD
Mean Squared Error =
(Dt Ft )2
--------------------------------n1
Linear Regression
y = a + bx
where
a = the intercept
b = the slope of the line
x = the independent variable
y = the dependent variable
xy nxy
b = ------------------------2
x nx
a = y bx
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where
n = number of variables
x
x = ----------------- = the mean of the x data
n
y
y = ----------------- = the mean of the y data
n
Correlation
n xy x y
r = -------------------------------------------------------[n x2 ( x)2] [n y2 ( y)2]
Coefficient of Determination = r2
II. Inventory Management
Basic Economic Order Quantity Model
Annual Ordering Cost
CoD
Annual Ordering Cost = -----------Q
where
Co = Cost per order
D = Annual demand
Q = Order Size
Annual Carrying Cost
CcQ
Annual Carrying Cots = -----------2
where
Cc = Annual per-unit carrying cost
Q/2 = Average inventory level
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Total Annual Inventory Cost

CoD
CcQ
TC = -------------- + --------------Q
2
Optimal Value of Q
2CoD
Qopt = ----------------Cc
Total Minimum Cost
CoD
CcQopt
TCmin = -------------- + ---------------Qopt
2
EOQ Model with Non Instantaneous Order Receipt
Let:
p = daily rate at which the order is received over time, also known as the production rate.
d = the daily rate at which inventory is demanded.
Maximum Inventory Level = Q (1 d/p)
Average Inventory Level = (Q/2)(1 d/p)
Total Carrying Cost = (CcQ/2)(1 d/p)
CoD
CcQ
Total Annual Inventory Cost = ------------- + ------------- (1 d/p)
Q
2
Optimal Value Q
2CoD
Qopt = --------------------Cc(1 d/p)
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Quantity Discounts
Total Inventory Cost with Quantity Discounts
CoD
CcQ
TC = -------------- + --------------- + PD
Q
2
where
P = per unit price of the item
D = annual demand
Reorder Point with Constant Demand
R = dL
where
d = demand rate per period (e.g. daily)
L = lead time
Reorder Point with Variable Demand
R = dL + z
where
dL = average daily demand
L = lead time
d = the standard deviation of daily demand
Z = number of standard deviations corresponding to the service level probability
z d L = safety stock
Fixed-Time-Period Order Quantity with Variable Demand
Q = d(tb + L) + (z
tb + L ) I
where
d = average demand rate
tb = the fixed time between orders
L = lead time
d = the standard deviation of demand
z d tb + L = safety stock
I = inventory in stock
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2012
III. Material Requirements Planning

Capacity
Capacity = (no. of machines) x (no. of shifts) x (utilization) x (efficiency)
Utilization
Time Working
Utilization = -------------------------------------Total Time Available
Load Percent
Load
Load Percent = -------------------- x 100%
Capacity
IV. Scheduling
Minimum Slack
SLACK = (due date todays date) (processing time)
Critical Ratio
Time Remaining
Due Date Todays Date
CR = ------------------------------ = ------------------------------------------Work Remaining
Processing Time
Sequencing Jobs through One Process:
Assignment Method of Linear Programming Procedure
1. Perform row reductions by subtracting the minimum value in each row from all other row values.
2. Perform column reductions by subtracting the minimum value in each column from all other
column values.
3. The resulting table is an opportunity cost matrix. Cross out all zeroes in the matrix using the
minimum number of horizontal or vertical lines.
4. If the number of lines equals the number of rows in the matrix, an optimum solution has been
reached and assignments can be made where the zeros appear. Otherwise, modify the matrix by
subtracting the minimum uncrossed value from all other uncrossed values and adding this same
amount to all cells where two lines intersect. All other values in the matrix remain unchanged.
5. Repeat steps 3 and 4 until an optimum solution is reached.
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Sequencing Jobs through Two Serial Processes:

Johnsons Rule/ Procedure
1. List the time required to complete each job at each process. Set up a one dimensional matrix to
represent the desired sequence with the number of slots equal to the number of jobs.
2. Select the smallest processing time at either process. If that time occurs at process 1, put the
associated job as near to the beginning of the sequence as possible.
3. If the smallest time occurs at process 2, put the associated job as near to the end of the
sequence as possible.
4. Remove the job from the list.
5. Repeat steps 2 4 until all slots in the matrix have been filled or all jobs have been sequenced.
V. Just-In-Time Systems
Number of Kanbans
Average Demand During Lead Time + Safety Stock
N = -------------------------------------------------------------------------------Container Size
dL +S
N = -------------------C
where
N = number of kanbans or containers
d = average number of units demanded over some time period
L = lead time; the time it takes to replenish an order (expressed in the same terms as demand)
S = safety stock; usually given as a percentage of demand during lead time but can be based on service
and variance of demand during lead time
C = container size
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ANSWER SHEET 1
PROBLEMS IN PRODUCTION PLANNING & CONTROL - QUALITATIVE
NAME: _____________________________________
DATE: ____________________
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SCORE: __________
PASSING RATE: 75%
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/100 X 100 = __________%
2012
PROBLEMS IN PRODUCTION PLANNING & CONTROL - QUALITATIVE

1. The facilities, functions, and activities involved in producing and delivering a product or service, from
suppliers to customers.
a. Supply Chain
c. Sourcing
b. Procurement
d. Delivery
2. He introduced the interchangeable parts that allowed the manufacture of firearms, clocks, watches,
sewing machines, and other goods to shift from customized one-at-a-time production to volume
production of standardized parts.
a. Frederick W. Taylor
c. Adam Smith
b. Henry Ford
d. Eli Whitney
3. When higher levels of output cost more per unit to produce is called
a. Diseconomies of Scale
c. Economies of Scale
b. Disaggregation
d. Lag Capacity
4. As the number of units produced increases, the cost of producing each individual unit decreases, which
is known as -a. Learning Curves
b. Capital Investment
d. Demand-Supply Analysis
5. A mathematical technique that solves a set of four quadratic equations to determine the optimal
workforce size and production rate.
a. Mixed Decision Rule
c. Search Decision Rule
b. Level Decision Rule

d. Linear Decision Rule
6. A level of inventory in stock at which a new order is placed.

a. Reorder Point
c. Order Cycle
b. Service Level
d. Stockout
7. It is the setting of broad policies and plans for using the resources of a firm to best support the firms
long term competitive strategy
a. Operations
c. Operations Strategy
b. Operations Management
d. Strategic Planning
8. An average demand for a fixed sequence of periods including the most recent period.
a. Weighted Moving Average
c. Exponential Smoothing
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b. Moving Average
d. Short Range Forecast
2012
9. These are the basic criteria that permit the firms products to be considered as candidates for purchase
by customers.
a. Competitive Advantage
c. Order Winners
b. Value Added
d. Order Qualifiers
10. A transportation route along which shipments cannot be transported.

a. Limited Route
c. Circle Route
b. Prohibited Route
d. Unbalanced Route
11. An aggregate planning strategy that varies two or more capacity factors to determine a feasible
production plan.
a. Mixed Strategy
c. Level Strategy
b. Pure Strategy
d. Chase Strategy
12. These are the criteria that differentiate the products and services of one firm from another.
c. Order Winners
b. Value Added
d. Order Qualifiers
13. A pricing schedule in which lower prices are provided for specific higher order quantities is called
a. Quantity Discount
c. Stockout Price
b. Reorder Discount
d. Inventory Price
14. Typically component parts or materials used in the process to produce a final product is called
a. Independent Demand
c. Dependent Demand
b. Fixed Demand
d. Variable Demand
15. A measure computed by dividing the cumulative error by MAD and it is used for monitoring bias in a
forecast.
a. Tracking Signal
c. Seasonal Factor
b. Coefficient Factor
d. Smoothing Constant
16. A computerized system that plans all the resources necessary for manufacturing, including financial
and marketing analysis, feedback loops, and overall business plan.
a. Enterprise Resource Planning
c. Capacity Requirements Planning
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b. Manufacturing Resource Planning

d. Material Requirements Planning
2012
17. A method for classifying inventory items according to their dollar value to the firm based on the
principle that only a few items account for the greatest dollar value of total inventory.
a. Fixed-Time-Period System
c. Fixed-Order-Quantity System
b. Continuous Inventory System

d. ABC System
18. The production of a very high-volume commodity product with highly automated equipment is called -a. Mass Production
c. Batch Production
b. Continuous Production
d. Flexible Production
19. The process of determining the quantity and timing of production over an intermediate time frame is
called -a. Capacity Planning
c. Management Coefficients Model
b. Aggregate Production Planning

d. Level Production
20. The limiting of suppliers or transportation carriers for a company to a relative few is called
a. Group-Sourcing
c. Single-Sourcing
b. Double-Sourcing
d. Demand-Sourcing
21. It is the design and operation of productive systems.

a. Operations
c. Operations Function
d. Craft Production
22. It measures the portion of the variation in the dependent variable that can be attributed to the
independent variable.
a. Coefficient of Correlation
c. Coefficient of Determination
b. Coefficient of Error
d. Forecast Error
23. The process of breaking down the aggregate plan into more detailed plans.
b. Disaggregation
d. Lag Capacity
24. A list of all the materials, parts, and assemblies that make up a product, including quantities, parentcomponent relationships, and order of assemblies.
a. Bill of Materials
c. Parts List
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b. Inventory Master File

d. Product Structure File
2012
25. A procedure for acquiring informed judgments and opinions from knowledgeable individuals to use as
a subjective forecast.
a. Delphi Method
c. Time Series Method
b. Qualitative Forecast Method

d. Quantitative Forecast Method
26. The cost of replenishing the stock of inventory including requisition cost, transportation and shipping,
receiving, inspection, handling, and so forth is called
a. Carrying Cost
c. Shortage Cost
b. Ordering Cost
d. Fixed Cost
27. The probability that the amount of inventory on hand during the lead time is sufficient to meet
expected demand.
a. Reorder Point
c. Order Cycle
b. Service Level
d. Stockout
28. A forecast using the linear regression equation to relate demand to time.
a. Linear Trend Line
c. Regression Forecasting Method
b. Linear Regression
d. Time Series Method
29. The total length of time required to manufacture a product and it is also the longest path through a
product structure.
a. Cycle Time
c. Elemental Time
b. Slack Time
d. Cumulative Lead Time
30. The absolute forecast error measured as a percent of demand.

a. Mean Square Error
c. Mean Absolute Percent Deviation
b. Mean Absolute Deviation

d. Average Regression
31. A computerized system with relational data base management, client/ server architecture, and
expanded scope to cover enterprise-wide activities.

32. A mathematical relationship that relates a dependent variable to two or more independent variables.
a. Multiple Regression
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33. It is a function or system that transforms inputs into outputs of greater value.
a. Operations
d. Craft Production
34. The time that it takes for a group of jobs to be completed that is, the completion time of the last job
in a group.
a. Makespan
c. Flow Time
b. Loading Time
d. Sequencing Time
35. A class of mathematical techniques that relate demand to factors that cause demand behavior.
36. A stock of items kept by an organization to meet internal or external customer demand.
a. Safety Stock
c. Reorder Point
b. Inventory
d. Economic Order Quantity
37. The process of subtracting an items lead time from its due date to determine when an order should
be released is called -a. Netting
c. Lead Time Offsetting
b. Loading
d. Time Fence
38. An oscillating movement in demand that occurs periodically in the short run and is repetitive.
a. Seasonal Factor
c. Tracking Signal
b. Seasonal Pattern
d. Random Variation
39. The processing of a single order in separate batches at multiple machines simultaneously is called
a. Netting
b. Order Splitting
d. Time Fence
40. It is a philosophy based on observation, measurement, and analysis that identifies the best method
for performing each job. Once determined, the methods were standardized for all workers, and
economic incentives were established to encourage workers to follow the standards.
a. Mass Production
c. Management Science
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b. Hawthorne Studies
d. Scientific Management
2012
41. Also known as the production lot-size model; an inventory system in which an order is received
gradually and the inventory level is depleted at the same time it is being replenished.
a. Periodic Inventory System
c. Instantaneous Receipt Model

d. Non-Instantaneous Receipt Model
42. A class of statistical methods that uses historical demand data over a period of time to predict future
demand.
43. The process of speeding up orders so that they are completed in less than their normal lead time.
a. Explosion
c. Netting
b. Expediting
d. Time Fence
44. The percent of capacity utilization at which unit costs are lowest.
a. Capacity Cushion
c. Best Operating Level
b. Economies of Scale
d. Yield Management
45. An inventory shortage occurring when demand exceeds the inventory in stock is called
a. Reorder Point
c. Order Cycle
b. Service Level
d. Stockout
46. A computerized inventory control and production planning system for generating purchase orders and
work orders of materials, components, and assemblies.

47. A shop paper that specifies the sequence in which jobs should be processed; it is often derived from
specific sequencing rules.
a. Dispatch List
c. Flow Time
b. Work Package
d. Loading
48. An aggregate planning strategy that schedules production to match demand and absorbs variations in
demand by adjusting the size of the workforce.
a. Mixed Strategy
c. Pure Strategy
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b. Level Production
d. Chase Demand
2012
49. The process of assigning priorities to jobs so that they are processed in particular order is called
a. Scheduling
c. Loading
b. Sequencing
d. Load Leveling
50. It contains inventory status and descriptive information on every item in inventory.
c. Parts List

51. When higher levels of output cost less per unit to produce is called
b. Disaggregation
d. Lag Capacity
52. A scheduling approach that differentiates between bottleneck and non-bottleneck resources and
between transfer batches and process batches.
a. Synchronous Manufacturing
c. Gantt Chart
b. Job Shop Operation

d. Job Assignment
53. An operations strategy is concerned with which of the following?

a. Setting Specific Policies and Plans
c. Coordination of Operational Goals
b. Short Term Competitive Strategies

d. All of These
54. An aggregate planning technique that uses regression analysis to improve the consistency of
production planning decisions.
a. Capacity Planning

d. Level Production
55. The difference between a jobs due date and its completion time for those jobs completed after their
due date is called
a. Check Time
c. Slack Time
b. Tardiness
d. Critical Ratio
56. The degree to which a nation can produce goods and services that meet the test of international
markets while simultaneously maintaining or expanding the real incomes of its citizens.
a. Competitiveness
c. Trading
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b. Globalization
d. Commerce
2012
57. The cost of holding an item in inventory including lost opportunity costs, storage, rent, cooling,
lighting, interest on loans, and so on is called
a. Carrying Cost
c. Shortage Cost
b. Ordering Cost
d. Fixed Cost
58. He proposed the division of labor in which the production process was broken down into a series of
small tasks, each performed by a different worker. The specialization of the worker on limited,
repetitive tasks allowed him or her to become very proficient at those tasks and further encouraged the
development of specialized machinery.
c. Adam Smith
b. Henry Ford
d. Eli Whitney
59. An approach to scheduling that initially assumes infinite capacity and then manually levels the load
of resources that have exceeded capacity.
a. Infinite Scheduling
c. Load Leveling
b. Finite Scheduling
c. Synchronous Scheduling
60. A fixed order quantity that minimizes total inventory costs.

a. Safety Stock
c. Reorder Point
b. Inventory
61. A moving average with more recent demand values adjusted with weights.
b. Moving Average
62. A measure of strength of the causal relationship between the independent and dependent variables in
a linear regression equation.
a. Cumulative Error
c. Coefficient
b. Forecast Error
d. Correlation
63. An algorithm for sequencing any number of jobs through two serial operations to minimize makespan.
a. First Come First Served
c. Minimum Slack
b. Earliest Due Date

d. Johnsons Rule
64. Final or finished products that are not a function of, or dependent upon, internal production activity.
c. Dependent Demand
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b. Fixed Demand
d. Variable Demand
2012
65. It is the temporary or permanent loss of sales that will result when customer demand cannot be met.
a. Carrying Cost
c. Shortage Cost
b. Ordering Cost
d. Fixed Cost
66. A file that contains computerized bills of material for all products.
a. Master Production Schedule
c. Parts List

67. The time between the receipt of orders in an inventory system is called
a. Reorder Point
c. Order Cycle
b. Service Level
d. Stockout
68. Movements in demand that are not predictable and follow no pattern.
a. Seasonal Factors
c. Tracking Signals
b. Seasonal Patterns
d. Random Variations
69. Typically a strategy breaks down into what major components?

a. Operations Effectiveness
c. Production Innovation
b. Customer Management
d. All of These
70. Which of the following is the first phase of the typical phases of product development?
a. Product Engineering
c. Concept Development
b. Product Planning
d. Pilot Production
71. Which of the following is the first step in building a house of quality in product development?
a. List of Customer Requirements
c. Pilot Production
b. Concept Development
d. Concurrent Engineering
72. The per-period average of the absolute difference between actual and forecasted demand is called

73. A manufacturing environment in which major subassemblies are produced in advance of a customers
order and are then configured to order.
a. Netting
c. Assemble-To-Order
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b. Order Splitting
d. Expediting
2012
74. An averaging method that weighs the most recent data more strongly than more distant data.
b. Moving Average
75. The productive capability of a worker, machine, work center, or system is called
a. Production Planning
c. Loading
b. Capacity
d. Scheduling
76. A date specified by management beyond which no changes in the master schedule are allowed.
a. Netting
c. Cycle Counting
b. Order Splitting
d. Time Fence
77. The low-volume production of customized products is called -a. Mass Production
c. Batch Production
78. A method for auditing inventory accuracy that counts inventory and reconciles errors on a cyclical
schedule rather than once a year.
a. Cycle Counting
c. Netting
b. Audit Cycle
d. Time Fence
79. A system in which the inventory level is continually monitored; when it decreases to a certain level, a
fixed amount is ordered.

d. ABC System
80. The weighting factor given to the most recent data in exponential smoothing forecasts.
a. Tracking Signal
c. Seasonal Factor
81. An aggregate planning strategy that produces units at a constant rate and uses inventory to absorb
variations in demand.
a. Mixed Strategy
c. Pure Strategy
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b. Level Production
d. Chase Demand
2012
82. The process of determining requirements for lower-level items by multiplying the planned orders of
parent items by the quantity per assembly of component items is called -a. Explosion
c. Netting
b. Expediting
d. Time Fence
83. Which of the following is an example of a continuous type of process flow structure?
a. Fast Food
c. Hospital
b. Grocery
d. Chemical Operation
84. A pattern search algorithm for aggregate planning.


85. Refers to the standard hours of work assigned to the facility .

a. Cycle Time
c. Time Fence
b. Lead Time
d. Load
86. An aggregate planning strategy that varies only one capacity factor in determining a feasible
production plan.
a. Mixed Strategy
c. Level Strategy
b. Pure Strategy
d. Chase Strategy
87. A schedule for the production of end items or final products. It drives the MRP process that schedules
the production of component parts.
a. Assembly Schedule
c. Master Production Schedule
b. Load Schedule
d. Operations Schedule
88. A numerical value that is multiplied by the normal forecast to get a seasonal adjusted forecast.
a. Seasonal Factor
c. Tracking Signal
b. Seasonal Pattern
d. Random Variation
89. A system in which the inventory level is checked after a specific time period and a variable amount is
ordered, depending on the inventory in stock.
a. Variable-Time-Period System
c. Periodic Inventory System
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d. ABC System
2012
90. The process of subtracting on-hand quantities from gross requirements to produce net requirements
is called
a. Netting
b. Order Splitting
d. Time Fence
91. A long term strategic decision that establishes the overall level of productive resources for a firm.

d. Level Production
92. An approach to scheduling that loads jobs in priority order and delays to those jobs for which current
capacity is exceeded.
c. Load Leveling
93. Stocks of partially completed items kept between stages of a production process are called
a. Safety Stock
c. Reorder Point
b. Buffer Inventory
d. Stock Out
94. It is also known as a continuous system; an inventory system in which a fixed, predetermined amount
is ordered whenever inventory in stock falls to a certain level called the reorder point.

d. ABC System
95. The process of smoothing out the work assigned across time and the available resources.
c. Load Leveling
96. A percent of capacity held in reserve for unexpected occurrences.

a. Capacity Cushion
d. Yield Management
97. An inventory system in which a variable amount is ordered after a predetermined, constant passage
of time.
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d. ABC System
2012
98. Scheduling and monitoring day-to-day production in a job shop. It is also known as production control
or production activity control.
a. Synchronous Control
c. Input/ Output Control
b. Process Control
d. Shop Floor Control
99. A mathematical technique that relates a dependent to an independent variable in the form of a linear
equation.
100. A computerized system that projects the load from a given material plan onto the capacity of a
system and identifies under loads and over loads.
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2012
SOLVED PROBLEMS IN PRODUCTION PLANNING & CONTROL - QUALITATIVE

1. The facilities, functions, and activities involved in producing and delivering a product or service, from
suppliers to customers.
a. Supply Chain
c. Sourcing
b. Procurement
d. Delivery
Answer: a. Supply Chain
2. He introduced the interchangeable parts that allowed the manufacture of firearms, clocks, watches,
sewing machines, and other goods to shift from customized one-at-a-time production to volume
production of standardized parts.
c. Adam Smith
b. Henry Ford
d. Eli Whitney
Answer: d. Eli Whitney

3. When higher levels of output cost more per unit to produce is called
b. Disaggregation
d. Lag Capacity
Answer: a. Diseconomies of Scale

4. As the number of units produced increases, the cost of producing each individual unit decreases, which
is known as -a. Learning Curves
b. Capital Investment
d. Demand-Supply Analysis
Answer: c. Economies of Scale
5. A mathematical technique that solves a set of four quadratic equations to determine the optimal
workforce size and production rate.

Answer: d. Linear Decision Rule
6. A level of inventory in stock at which a new order is placed.

a. Reorder Point
c. Order Cycle
Answer: a. Reorder Point
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b. Service Level
d. Stockout
2012
7. It is the setting of broad policies and plans for using the resources of a firm to best support the firms
long term competitive strategy
a. Operations
c. Operations Strategy
d. Strategic Planning
Answer: c. Operations Strategy
8. An average demand for a fixed sequence of periods including the most recent period.
b. Moving Average
Answer: b. Moving Average

9. These are the basic criteria that permit the firms products to be considered as candidates for purchase
by customers.
c. Order Winners
b. Value Added
d. Order Qualifiers
Answer: d. Order Qualifiers
10. A transportation route along which shipments cannot be transported.

a. Limited Route
c. Circle Route
b. Prohibited Route
d. Unbalanced Route
Answer: b. Prohibited Route
11. An aggregate planning strategy that varies two or more capacity factors to determine a feasible
production plan.
a. Mixed Strategy
c. Level Strategy
b. Pure Strategy
d. Chase Strategy
Answer: a. Mixed Strategy
12. These are the criteria that differentiate the products and services of one firm from another.
c. Order Winners
b. Value Added
d. Order Qualifiers
Answer: c. Order Winners

13. A pricing schedule in which lower prices are provided for specific higher order quantities is called
a. Quantity Discount
c. Stockout Price
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b. Reorder Discount
d. Inventory Price
2012
Answer: a. Quantity Discount

14. Typically component parts or materials used in the process to produce a final product is called
c. Dependent Demand
b. Fixed Demand
d. Variable Demand
Answer: c. Dependent Demand
15. A measure computed by dividing the cumulative error by MAD and it is used for monitoring bias in a
forecast.
a. Tracking Signal
c. Seasonal Factor
Answer: a. Tracking Signal
16. A computerized system that plans all the resources necessary for manufacturing, including financial
and marketing analysis, feedback loops, and overall business plan.

Answer: b. Manufacturing Resource Planning

17. A method for classifying inventory items according to their dollar value to the firm based on the
principle that only a few items account for the greatest dollar value of total inventory.

d. ABC System
Answer: d. ABC System
18. The production of a very high-volume commodity product with highly automated equipment is called -a. Mass Production
c. Batch Production
Answer: b. Continuous Production
19. The process of determining the quantity and timing of production over an intermediate time frame is
called -a. Capacity Planning
Answer: b. Aggregate Production Planning
26 | P a g e

d. Level Production
2012
20. The limiting of suppliers or transportation carriers for a company to a relative few is called
a. Group-Sourcing
c. Single-Sourcing
b. Double-Sourcing
d. Demand-Sourcing
Answer: c. Single-Sourcing
21. It is the design and operation of productive systems.

a. Operations
d. Craft Production
Answer: b. Operations Management
22. It measures the portion of the variation in the dependent variable that can be attributed to the
independent variable.
a. Coefficient of Correlation
c. Coefficient of Determination
b. Coefficient of Error
d. Forecast Error
Answer: c. Coefficient of Determination
23. The process of breaking down the aggregate plan into more detailed plans.
b. Disaggregation
d. Lag Capacity
Answer: b. Disaggregation
24. A list of all the materials, parts, and assemblies that make up a product, including quantities, parentcomponent relationships, and order of assemblies.
c. Parts List

Answer: a. Bill of Materials

25. A procedure for acquiring informed judgments and opinions from knowledgeable individuals to use as
a subjective forecast.
a. Delphi Method
c. Time Series Method
b. Qualitative Forecast Method

d. Quantitative Forecast Method
Answer: a. Delphi Method

26. The cost of replenishing the stock of inventory including requisition cost, transportation and shipping,
receiving, inspection, handling, and so forth is called
a. Carrying Cost
c. Shortage Cost
27 | P a g e
b. Ordering Cost
d. Fixed Cost
2012
Answer: b. Ordering Cost
27. The probability that the amount of inventory on hand during the lead time is sufficient to meet
expected demand.
a. Reorder Point
c. Order Cycle
b. Service Level
d. Stockout
Answer: b. Service Level
28. A forecast using the linear regression equation to relate demand to time.
Answer: a. Linear Trend Line
29. The total length of time required to manufacture a product and it is also the longest path through a
product structure.
a. Cycle Time
c. Elemental Time
b. Slack Time
d. Cumulative Lead Time
Answer: d. Cumulative Lead Time

30. The absolute forecast error measured as a percent of demand.

Answer: c. Mean Absolute Percent Deviation
31. A computerized system with relational data base management, client/ server architecture, and
expanded scope to cover enterprise-wide activities.

Answer: a. Enterprise Resource Planning
32. A mathematical relationship that relates a dependent variable to two or more independent variables.
Answer: a. Multiple Regression
28 | P a g e
2012
33. It is a function or system that transforms inputs into outputs of greater value.
a. Operations
d. Craft Production
Answer: a. Operations
34. The time that it takes for a group of jobs to be completed that is, the completion time of the last job
in a group.
a. Makespan
c. Flow Time
b. Loading Time
d. Sequencing Time
Answer: a. Makespan
35. A class of mathematical techniques that relate demand to factors that cause demand behavior.
Answer: c. Regression Forecasting Method
36. A stock of items kept by an organization to meet internal or external customer demand.
a. Safety Stock
c. Reorder Point
b. Inventory
Answer: b. Inventory
37. The process of subtracting an items lead time from its due date to determine when an order should
be released is called -a. Netting
b. Loading
d. Time Fence
Answer: c. Lead Time Offsetting

38. An oscillating movement in demand that occurs periodically in the short run and is repetitive.
a. Seasonal Factor
c. Tracking Signal
b. Seasonal Pattern
d. Random Variation
Answer: b. Seasonal Pattern

39. The processing of a single order in separate batches at multiple machines simultaneously is called
a. Netting
29 | P a g e
b. Order Splitting
d. Time Fence
2012
Answer: b. Order Splitting
40. It is a philosophy based on observation, measurement, and analysis that identifies the best method
for performing each job. Once determined, the methods were standardized for all workers, and
economic incentives were established to encourage workers to follow the standards.
a. Mass Production
c. Management Science
b. Hawthorne Studies
d. Scientific Management
Answer: d. Scientific Management
41. Also known as the production lot-size model; an inventory system in which an order is received
gradually and the inventory level is depleted at the same time it is being replenished.
a. Periodic Inventory System
c. Instantaneous Receipt Model

d. Non-Instantaneous Receipt Model
Answer: d. Non-Instantaneous Receipt Model
42. A class of statistical methods that uses historical demand data over a period of time to predict future
demand.
Answer: d. Time Series Method
43. The process of speeding up orders so that they are completed in less than their normal lead time.
a. Explosion
c. Netting
b. Expediting
d. Time Fence
Answer: b. Expediting
44. The percent of capacity utilization at which unit costs are lowest.
a. Capacity Cushion
d. Yield Management
Answer: c. Best Operating Level

45. An inventory shortage occurring when demand exceeds the inventory in stock is called
a. Reorder Point
c. Order Cycle
Answer: d. Stockout
30 | P a g e
b. Service Level
d. Stockout
2012
46. A computerized inventory control and production planning system for generating purchase orders and
work orders of materials, components, and assemblies.

Answer: d. Material Requirements Planning
47. A shop paper that specifies the sequence in which jobs should be processed; it is often derived from
specific sequencing rules.
a. Dispatch List
c. Flow Time
b. Work Package
d. Loading
Answer: a. Dispatch List

48. An aggregate planning strategy that schedules production to match demand and absorbs variations in
demand by adjusting the size of the workforce.
a. Mixed Strategy
c. Pure Strategy
b. Level Production
d. Chase Demand
Answer: d. Chase Demand

49. The process of assigning priorities to jobs so that they are processed in particular order is called
a. Scheduling
c. Loading
b. Sequencing
d. Load Leveling
Answer: b. Sequencing
50. It contains inventory status and descriptive information on every item in inventory.
c. Parts List

Answer: b. Inventory Master File

51. When higher levels of output cost less per unit to produce is called
Answer: c. Economies of Scale
31 | P a g e
b. Disaggregation
d. Lag Capacity
2012
52. A scheduling approach that differentiates between bottleneck and non-bottleneck resources and
between transfer batches and process batches.
a. Synchronous Manufacturing
c. Gantt Chart
b. Job Shop Operation

d. Job Assignment
Answer: a. Synchronous Manufacturing
53. An operations strategy is concerned with which of the following?

a. Setting Specific Policies and Plans
c. Coordination of Operational Goals
b. Short Term Competitive Strategies

d. All of These
Answer: c. Coordination of Operational Goals

54. An aggregate planning technique that uses regression analysis to improve the consistency of
production planning decisions.

d. Level Production
Answer: c. Management of Coefficients Model

55. The difference between a jobs due date and its completion time for those jobs completed after their
due date is called
a. Check Time
c. Slack Time
b. Tardiness
d. Critical Ratio
Answer: b. Tardiness
56. The degree to which a nation can produce goods and services that meet the test of international
markets while simultaneously maintaining or expanding the real incomes of its citizens.
a. Competitiveness
c. Trading
b. Globalization
d. Commerce
Answer: a. Competitiveness
57. The cost of holding an item in inventory including lost opportunity costs, storage, rent, cooling,
lighting, interest on loans, and so on is called
a. Carrying Cost
c. Shortage Cost
Answer: a. Carrying Cost
32 | P a g e
b. Ordering Cost
d. Fixed Cost
2012
58. He proposed the division of labor in which the production process was broken down into a series of
small tasks, each performed by a different worker. The specialization of the worker on limited,
repetitive tasks allowed him or her to become very proficient at those tasks and further encouraged the
development of specialized machinery.
c. Adam Smith
b. Henry Ford
d. Eli Whitney
Answer: c. Adam Smith

59. An approach to scheduling that initially assumes infinite capacity and then manually levels the load
of resources that have exceeded capacity.
c. Load Leveling
Answer: a. Infinite Scheduling
60. A fixed order quantity that minimizes total inventory costs.

a. Safety Stock
c. Reorder Point
b. Inventory
Answer: d. Economic Order Quantity

61. A moving average with more recent demand values adjusted with weights.
b. Moving Average
Answer: a. Weighted Moving Average
62. A measure of strength of the causal relationship between the independent and dependent variables in
a linear regression equation.
a. Cumulative Error
c. Coefficient
b. Forecast Error
d. Correlation
Answer: d. Correlation
63. An algorithm for sequencing any number of jobs through two serial operations to minimize makespan.
a. First Come First Served
c. Minimum Slack
Answer: d. Johnsons Rule
33 | P a g e
b. Earliest Due Date

d. Johnsons Rule
2012
64. Final or finished products that are not a function of, or dependent upon, internal production activity.
c. Dependent Demand
b. Fixed Demand
d. Variable Demand
Answer: a. Independent Demand
65. It is the temporary or permanent loss of sales that will result when customer demand cannot be met.
a. Carrying Cost
c. Shortage Cost
b. Ordering Cost
d. Fixed Cost
Answer: c. Shortage Cost
66. A file that contains computerized bills of material for all products.
a. Master Production Schedule
c. Parts List

Answer: d. Product Structure File

67. The time between the receipt of orders in an inventory system is called
a. Reorder Point
c. Order Cycle
b. Service Level
d. Stockout
Answer: c. Order Cycle
68. Movements in demand that are not predictable and follow no pattern.
a. Seasonal Factors
c. Tracking Signals
b. Seasonal Patterns
d. Random Variations
Answer: d. Random Variations

69. Typically a strategy breaks down into what major components?
a. Operations Effectiveness
c. Production Innovation
b. Customer Management
d. All of These
Answer: d. All of These
70. Which of the following is the first phase of the typical phases of product development?
a. Product Engineering
c. Concept Development
Answer: c. Concept Development
34 | P a g e
b. Product Planning
d. Pilot Production
2012
71. Which of the following is the first step in building a house of quality in product development?
a. List of Customer Requirements
c. Pilot Production
b. Concept Development
d. Concurrent Engineering
Answer: a. List of Customer Requirements

72. The per-period average of the absolute difference between actual and forecasted demand is called

Answer: b. Mean Absolute Deviation

73. A manufacturing environment in which major subassemblies are produced in advance of a customers
order and are then configured to order.
a. Netting
c. Assemble-To-Order
b. Order Splitting
d. Expediting
Answer: c. Assemble-To-Order
74. An averaging method that weighs the most recent data more strongly than more distant data.
b. Moving Average
Answer: c. Exponential Smoothing

75. The productive capability of a worker, machine, work center, or system is called
a. Production Planning
c. Loading
b. Capacity
d. Scheduling
Answer: b. Capacity
76. A date specified by management beyond which no changes in the master schedule are allowed.
a. Netting
c. Cycle Counting
b. Order Splitting
d. Time Fence
Answer: d. Time Fence
77. The low-volume production of customized products is called -a. Mass Production
c. Batch Production
Answer: c. Batch Production
35 | P a g e
2012
78. A method for auditing inventory accuracy that counts inventory and reconciles errors on a cyclical
schedule rather than once a year.
a. Cycle Counting
c. Netting
b. Audit Cycle
d. Time Fence
Answer: a. Cycle Counting
79. A system in which the inventory level is continually monitored; when it decreases to a certain level, a
fixed amount is ordered.

d. ABC System
Answer: b. Continuous Inventory System

80. The weighting factor given to the most recent data in exponential smoothing forecasts.
a. Tracking Signal
c. Seasonal Factor
Answer: d. Smoothing Constant
81. An aggregate planning strategy that produces units at a constant rate and uses inventory to absorb
variations in demand.
a. Mixed Strategy
c. Pure Strategy
b. Level Production
d. Chase Demand
Answer: b. Level Production
82. The process of determining requirements for lower-level items by multiplying the planned orders of
parent items by the quantity per assembly of component items is called -a. Explosion
c. Netting
b. Expediting
d. Time Fence
Answer: a. Explosion
83. Which of the following is an example of a continuous type of process flow structure?
a. Fast Food
c. Hospital
Answer: d. Chemical Operation
36 | P a g e
b. Grocery
d. Chemical Operation
2012
84. A pattern search algorithm for aggregate planning.


Answer: c. Search Decision Rule
85. Refers to the standard hours of work assigned to the facility .

a. Cycle Time
c. Time Fence
b. Lead Time
d. Load
Answer: d. Load
86. An aggregate planning strategy that varies only one capacity factor in determining a feasible
production plan.
a. Mixed Strategy
c. Level Strategy
b. Pure Strategy
d. Chase Strategy
Answer: b. Pure Strategy
87. A schedule for the production of end items or final products. It drives the MRP process that schedules
the production of component parts.
a. Assembly Schedule
c. Master Production Schedule
b. Load Schedule
d. Operations Schedule
Answer: c. Master Production Schedule
88. A numerical value that is multiplied by the normal forecast to get a seasonal adjusted forecast.
a. Seasonal Factor
c. Tracking Signal
b. Seasonal Pattern
d. Random Variation
Answer: a. Seasonal Factor

89. A system in which the inventory level is checked after a specific time period and a variable amount is
ordered, depending on the inventory in stock.
a. Variable-Time-Period System
c. Periodic Inventory System
Answer: c. Periodic Inventory System
37 | P a g e

d. ABC System
2012
90. The process of subtracting on-hand quantities from gross requirements to produce net requirements
is called
a. Netting
b. Order Splitting
d. Time Fence
Answer: a. Netting
91. A long term strategic decision that establishes the overall level of productive resources for a firm.

d. Level Production
Answer: a. Capacity Planning

92. An approach to scheduling that loads jobs in priority order and delays to those jobs for which current
capacity is exceeded.
c. Load Leveling
Answer: b. Finite Scheduling

93. Stocks of partially completed items kept between stages of a production process are called
a. Safety Stock
c. Reorder Point
b. Buffer Inventory
d. Stock Out
Answer: b. Buffer Inventory
94. It is also known as a continuous system; an inventory system in which a fixed, predetermined amount
is ordered whenever inventory in stock falls to a certain level called the reorder point.

d. ABC System
Answer: c. Fixed-Order-Quantity System
95. The process of smoothing out the work assigned across time and the available resources.
c. Load Leveling
Answer: c. Load Leveling

96. A percent of capacity held in reserve for unexpected occurrences.
a. Capacity Cushion
38 | P a g e
d. Yield Management
2012
Answer: a. Capacity Cushion
97. An inventory system in which a variable amount is ordered after a predetermined, constant passage
of time.

d. ABC System
Answer: a. Fixed-Time-Period System
98. Scheduling and monitoring day-to-day production in a job shop. It is also known as production control
or production activity control.
a. Synchronous Control
c. Input/ Output Control
b. Process Control
d. Shop Floor Control
Answer: d. Shop Floor Control
99. A mathematical technique that relates a dependent to an independent variable in the form of a linear
equation.
Answer: b. Linear Regression

100. A computerized system that projects the load from a given material plan onto the capacity of a
system and identifies under loads and over loads.
Answer: c. Capacity Requirements Planning
39 | P a g e

2012
ANSWER SHEET 2
PROBLEMS IN PRODUCTION PLANNING & CONTROL - QUANTITATIVE
NAME: _____________________________________
DATE: ____________________
1. _______
21. _________
41. _________
61. _________
81. _________
2. _______
22. _________
42. _________
62. _________
82. _________
3. _______
23. _________
43. _________
63. _________
83. _________
4. _______
24. _________
44. _________
64. _________
84. _________
5. _______
25. _________
45. _________
65. _________
85. _________
6. _______
26. _________
46. _________
66. _________
86. _________
7. _______
27. _________
47. _________
67. _________
87. _________
8. _______
28. _________
48. _________
68. _________
88. _________
9. _______
29. _________
49. _________
69. _________
89. _________
10. _______
30. _________
50. _________
70. _________
90. _________
11. _______
31. _________
51. _________
71. _________
91. _________
12. _______
32. _________
52. _________
72. _________
92. _________
13. _______
33. _________
53. _________
73. _________
93. _________
14. _______
34. _________
54. _________
74. _________
94. _________
15. _______
35. _________
55. _________
75. _________
95. _________
16. _______
36. _________
56. _________
76. _________
96. _________
17. _______
37. _________
57. _________
77. _________
97. _________
18. _______
38. _________
58. _________
78. _________
98. _________
19. _______
39. _________
59. _________
79. _________
99. _________
20. _______
40. _________
60. _________
80. _________
100. _________
SCORE: __________
PASSING RATE: 75%
40 | P a g e
/100 X 100 = __________%
2012
PROBLEMS IN PRODUCTION PLANNING & CONTROL - QUANTITATIVE

1. The Razon Office Supply Company sells and delivers office supplies to companies, schools, and
agencies within 50-kilometer radius of its warehouse. The office supply business is competitive, and
the ability to deliver orders promptly is a factor in getting new customers and keeping old ones. The
manager of the company wants to be certain enough drivers and vehicles are available to deliver
orders promptly and they have adequate inventory in stock. Therefore, the manager wants to be able
to forecast the number of orders that will occur the next month. From the records of delivery orders,
management has accumulated the following data for the past 10 months, from which it wants to
compute 3-month moving average.
a. 900
c. 1300
Month
Orders
January
February
March
April
May
June
July
August
September
October
1200
900
1000
750
1100
500
750
1300
1100
900
b. 1100
d. 3300
2. In reference to problem no. 1, what is the 5-month moving average?

a. 910
c. 1310
b. 1110
d. 4550
3. In reference to problem no. 1, the company wants to compute a 3-month weighted moving average
with a weight of 50 percent for the October data, a weight of 33 percent for the September data, and
a weight of 17 percent for the August data. These weights reflect the companys desire to have the
most data influence the forecast most strongly.
a. 345
c. 1034
b. 450
d. 1045
4. Marquez Computer Services assembles customized personal computers from generic parts. The
company has had steady growth since it started. The company assembles computers mostly at night,
using part time students. The company purchase generic computer parts in volume at a discount from
a variety of sources whenever they see a good deal. Thus, they need a good forecast of demand for
their computers so that they will know how many computer component parts to purchase and stock.
The company has accumulated the demand data in the table below for its computers for the past
twelve months, from which it wants to consider exponential smoothing forecasts using smoothing
constant equal to 0.30.
41 | P a g e
Period
1
2
3
4
5
6
7
8
9
10
11
12
a. 50
c. 54
Month
January
February
March
April
May
June
July
August
September
October
November
December
2012
Demand
37
40
41
37
45
50
43
47
56
52
55
54
b. 52
d. 56
5. In reference to problem no. 4, compute for the accuracy of its forecast using MAD?
a. 3.58
c. 4.58
b. 3.85
d. 4.85
6. In reference to problem no. 5, what is its Mean Absolute Percent Deviation (MAPD)?
a. 9.1%
c. 44.1%
b. 9.6%
d. 44.6%
7. In reference to problem no. 4, the company wants to develop an adjusted exponentially smoothed
forecast using the same twelve months of demand. It will use the exponentially smoothed forecast
with constant = 0.5 and with a smoothing constant for trend of 0.30. What is the forecast in January
next year?
a. 51
c. 55
b. 53
d. 57
8. In reference to problem no. 4, the demand data for computers appears to follow an increasing linear
trend. The company wants to compute a linear trend line to see if it is more accurate than exponential
smoothing and adjusted exponential smoothing forecast. What is the forecast on period 13?
a. 52
c. 56
b. 54
d. 58
9. Delima Farms grows chickens to sell to a meat processing company throughout the year. However, its
peak season is obviously during the fourth quarter of the year, from October to December. Delima
Farms has experienced the demand for chickens for the past three years shown in the following table:
42 | P a g e
Demand for Chickens at Delima Farms:

Demand (1,000s) per Quarter
Year 1
2
3
Total
2009
2010
2011
12.6
14.1
15.3
8.6
10.3
10.6
6.3
7.5
8.1
17.5
18.2
19.6
45.0
50.1
53.6
Total
42.0
29.5
21.9
55.3
148.7
2012
What are the forecast per quarter in year 2012?

a. 12, 8, 7, 18
c. 16, 12, 9, 22
b. 14, 10, 8, 20
d. 18, 14, 10, 20
10. The Tomas University athletic department wants to develop its budget for the coming year using a
forecast for football attendance. Football attendance accounts for the largest portion of its revenues,
and the athletic director believes attendance is directly related to the number of wins by the team. The
business manger has accumulated total annual attendance for the past eight years.
No. of Wins
4
6
6
8
Attendance
(1,000s)
36.3
40.1
41.2
53.0
No. of Wins
6
7
5
7
Attendance
(1,000s)
44.0
45.6
39.0
47.5
Given the number of returning starters and the strength of the schedule, the athletic director believes the
team will win at least seven games next year. Develop a simple regression equation for this data to
forecast attendance next year.
a. 45,880
c. 47,850
b. 46,880
d. 48,850
11. In reference to problem no. 10, compute the correlation for the linear regression equation.
a. 0.647
c. 0.847
b. 0.747
d. 0.947
12. A manufacturing company has monthly demand for one its products as follows:
43 | P a g e
Month
Demand
February
March
April
May
June
July
August
September
520
490
550
580
600
420
510
610
2012
Develop a three-period moving average forecast.

a. 45,880
c. 47,850
b. 46,880
d. 48,850
13. The Zaki Motorcycle Dealer in Kamuning area wants to be able to forecast accurately the demand for
the Zaki Super VIII motorcycle during the next month. Because the manufacturer is in Japan, it is
difficult to send motorcycles back or reorder if the proper number is not ordered a month ahead. From
sales records, the dealer has accumulated the following data for the past year.
Month
January
February
March
April
May
June
July
August
September
October
November
December
Motorcycle Sales
9
7
10
8
7
12
10
11
12
10
14
16
Compute a 3-month moving average forecast of demand for April through January (of the next
year) and a 5-month moving average forecast for June through January. Compare the two
forecasts computed in parts using MAD. Which one should the dealer use for January of the next
year?
a. 3-month moving ave with MAD = 1.89
c. 5-month moving ave with MAD = 2.43
b. 3-month moving ave with MAD = 2.89

d. 5-month moving ave with MAD = 1.43
14. The manager of the Secreto Carpet outlet needs to be able to forecast accurately the demand for soft
carpet, its biggest seller. If the manager does not order enough carpet from the carpet mill, customers
will buy their carpets from one of Secretos many competitors. The manager has collected the
following demand data for the past eight months.
Months
1
2
3
4
5
Demand for Soft Carpet (1,000 yd)

8
12
7
9
15
6
7
8
11
10
12
Compute a 3-month moving average forecast for months 4 through 9 and a weighted 3-month moving
average forecast for months 4 through 9. Assign weights 0.55, 0.33, and 0.12 to the months in sequence
starting with the most recent month. Compare the two forecasts using MAD. Which forecast appears to be
more accurate?
44 | P a g e
2012

c. Weighted 3-month moving ave with MAD = 2.14
d. Weighted 3-month moving ave with MAD = 1.14
15. The Glorioso Fertilizer Company distributes fertilizer to various lawn and garden shops. The company
must base its quarterly production schedule on a forecast of how many tons of fertilizer will be
demanded from it. The company has gathered the following data for the past three years from its
sales records.
Year
Quarter
Demand for Fertilizer (ton)
1
1
105
2
150
3
93
4
121
2
5
140
6
170
7
105
8
150
3
9
150
10
170
11
110
12
130
Compute a 3-quarter moving average forecast for quarters 4 through 13 and compute the forecast error
for each quarter and a weighted 3-quarter moving average forecast using weights of 0.50, 0.33, and 0.17
for the most recent, next recent, and most distant data, respectively, and compute the forecast error for
each quarter. Compare the forecasts developed using cumulative error. Which forecasts appears to be
more accurate?
a. 3-quarter moving ave with E = 27.00
b. 3-quarter moving ave with E = 32.00
c. Weighted 3-quarter moving ave with E = 33.50
d. Weighted 3-quarter moving ave with E = 28.05
16. Determine the seasonally adjusted forecast for the demand data for fertilizer in Problem No. 15 with
the use a linear trend line model to compute a forecast estimate for demand in year 4.
Year
1
Quarter
1
2
3
4
5
6
7
8
9
10
11
12

105
150
93
121
140
170
105
150
150
170
110
130
a. Q1 = 299, Q2 = 257, Q3 = 228, Q4 = 206

b. Q1 = 219, Q2 = 247, Q3 = 278, Q4 = 266
c. Q1 = 149, Q2 = 187, Q3 = 118, Q4 = 156
d. Q1 = 159, Q2 = 178, Q3 = 138, Q4 = 176
45 | P a g e
2012
17. The chairperson of the department of management at Razon University wants to forecast the number
of students who will enroll in production and operations management next semester in order to
determine how many sections to schedule. The chair has accumulated the following enrollment data
for the past eight semesters:
Semester
1
2
3
4
5
6
7
8
Students Enrolled in POM

400
450
350
420
500
575
490
650
Compute a 3-semester moving average forecast for semesters 4 through 9 and the exponentially
smoothed forecast (= 0.20) for the enrollment data. Compare the two forecasts using MAD and
choose the most accurate.
a. 3-Semester Moving Average with MAD = 80.33
b. 3-Semester Moving Average with MAD = 78.43
c. Exponentially smoothed forecast with MAD = 87.16
d. Exponentially smoothed forecast with MAD = 85.60
18. The Dy Caf in Espana, Manila, is well known for its popular homemade ice cream, which it makes in
a small plant in back of the caf. People drive all the way from Alabang and Mandaluyong to buy the
ice cream. The two ladies who own the caf want to develop a forecasting model so they can plan
their ice cream production operation and determine the number of employees they need to sell ice
cream in the caf. They have accumulated the following sales records for their ice cream for the past
twelve quarters.
Year
1997
1998
1999
Quarter
1
2
3
4
5
6
7
8
9
10
11
11
Ice Cream Sales (gal)

350
510
750
420
370
480
860
500
450
550
820
570
Determine the seasonally adjusted forecast for 1998 with the use of a linear trend line model.
a. Q1 = 486, Q2 = 608, Q3 = 836, Q4 = 596
b. Q1 = 466, Q2 = 628, Q3 = 846, Q4 = 576
c. Q1 = 356, Q2 = 518, Q3 = 776, Q4 = 456
d. Q1 = 376, Q2 = 508, Q3 = 796, Q4 = 486
46 | P a g e
2012
19. The purchasing manager for the Ormilon Steel Company must determine a policy for ordering coal to
operate 12 converters. Each converter requires exactly 5 tons of coal per day to operate, and the
firm operates 360 days per year. The purchasing manager has determined that the ordering cost is
P80 per order, and the cost of holding coal is 20 percent of the average peso value of inventory held.
The purchasing manager has negotiated a contract to obtain the coal for P1200 per ton for the
coming year. Determine the optimal quantity of coal to receive in each other.
a. 100
c. 120
b. 110
d. 130
20. In reference to problem no. 19, determine the total inventory related costs associated with the optimal
ordering policy with cost of coal not included.
a. 29,100
c. 30,200
b. 31,600
d. 28,800
21. In reference to problem no. 19 and if 5 days lead-time is required to receive an order of coal, how
much coal should be on hand when an order is placed?
a. 300
c. 400
b. 350
d. 450
22. The Capulong Lumber Company and Mill processes 10,000 logs annually, operating 250 days per
year. Immediately upon receiving an order, the logging companys supplier begins delivery to the
lumber mill at the rate of 60 logs per day. The lumber mill has determined that the ordering cost
is$1,600 per order, and the cost of carrying logs in inventory before they are processed is $15 per log
on an annual basis. Determine the optimal order size.
a. 3,540
c. 4,250
b. 2,530
d. 5,500
23. In reference to problem no. 22, determine the total inventory cost associated with the optimal order
quantity.
a. 12,759
c. 11,621
b. 11,531
d. 12,649
24. In reference to problem no. 22, determine the number of operating days between orders.
a. 59
c. 63
b. 61
d. 65
25. In reference to problem no. 22, determine the number of operating days required to receive an order.
a. 42
c. 46
47 | P a g e
b. 44
d. 48
2012
26. The Sanga Tire Company produces a brand of tire called the Roadrunner. The annual demand at its
distribution center is 17,400 tires per year. The transport and handling cost are $2,600 each time a
shipment of tires is ordered at the distribution center. The annual carrying cost is $3.75 per tire.
Determine the optimal order quantity and the minimum total annual cost.
a. 4,912 at $20,450
c. 5,126 at $18,870
b. 5,126 at $19,530
d. 4,912 at $18,420
27. In reference to problem no. 26, the company is thinking about relocating its distribution center, which
would reduce transport and handling costs to $1,900 per order but increase carrying costs to $4.50
per tire per year. Determine the savings if the relocation pushes through.
a. $1,255
c. $1,171
b. $1,850
d. $1,625
28. The Ngo Farms produces its own natural organic fertilizer, which it sells mostly to the gardeners and
homeowners. The annual demand for fertilizer is 270,000 pounds. The company is able to produce
305,000 pounds annually. The cost to transport the fertilizer from the plan to the nursery is $620 per
load. The annual carrying load cost is $0.12 per pound. Compute the optimal order size.
a. 135,871
c. 155,926
b. 143,753
d. 163,125
29. In reference to Problem No. 28, compute the total minimum cost.
a. $2,253
c. $2,534
b. $2,147
d. $2,622
30. In reference to Problem No. 28, compute the maximum inventory level.
a. 17,893
c. 19,261
b. 18,953
d. 20,530
31. If Ngo Farms in Problem No. 28 can increase production capacity to 360,000 pounds per year, what
will be the total inventory cost?
a. $1,934
c. $3,169
b. $2,747
d. $4,282
32. The Baldrige Kiln is an importer of ceramics from overseas. It has arranged to purchase a particular
type of ceramic pottery from a Chinese artisan. The artisan makes the pottery in 120-unit batches
and will ship only that exact amount. The transportation and the handling cost of a shipment is
$7,600 (not including the unit cost). The Baldrige Kiln estimates its annual demand to be 900 units.
What storage and handling cost per unit does it need to achieve in order to minimize its inventory
cost?
a. $6,120
c. $4,760
48 | P a g e
b. $5,380
d. $3,450
2012
33. The Ligan Carpet Discount Store has annual demand of 10,000 yards of Super Shag carpet. The
annual carrying cost for a yard of this carpet is $0.75 and the ordering cost is $150. The carpet
manufacturer normally charges the store $8 per yard for the carpet. However, the manufacturer has
offered a discount price of $6.50 per yard if the store will order 5,000 yards. How much should the
store order and the total annual inventory cost for that order quantity?
a. 5,000 at $67,175
c. 2,000 at $81,500
b. 5,000 at $65,325
d. 3,000 at $78,420
34. The Sta. Maria Bar buys draft beer by the barrel from a local distributor. The bar has an annual
demand of 900 barrels, which it purchases at a price of $205 per barrel. The annual carrying cost is
$24.60, and the cost per order is $160. The distributor has offered the bar a reduced price of $190
per barrel if it will order a minimum of 300 barrels. What is the cost difference if the bar takes the
discount?
a. $14,128
c. $12,873
b. $13,374
d. $11,992
35. The bookstore at Aviba University purchases sweatshirts emblazoned with the school name and logo
from the vendor. The vendor sells the sweatshirt to the store for $38 apiece. The cost to the
bookstore for placing an order is $120, and the annual carrying cost is 25 percent of the cost of a
sweatshirt will be sold during the year. The vendor has offered the bookstore the following volume
discount schedule:
Order size
1 299
300 499
500 799
800+
Discount
0%
2%
4%
5%
The bookstore manager wants to determine the bookstores optimal order quantity given this quantity
discount information.
a. 1 299
c. 500 799
b. 300 499
d. 800+
36. Determine the optimal order quantity of sweatshirt and total annual cost in Problem No. 49 if the
carrying cost is a constant $8 per shift per year.
a. 1 299
c. 500 799
b. 300 499
d. 800+
37. The office manager for the Breganza Life Insurance Company orders letterhead stationery from an
office products firm in boxes of 500 sheets. The company uses 6,500 boxes per year. Annual
carrying cost are $3 per box, and ordering costs are $28. The following supply company provides the
following discount price:
49 | P a g e
Order quantity (boxes)

200 999
1,000 2,999
3,000 5,999
6,000 +
2012
Price per box

$ 16
14
13
12
Determine the optimal order quantity at the least total annual inventory cost.
a. 200 999
c. 3,000 5,999
b. 1,000 2,999
d. 6,000+
38. Determine the optimal quantity and total annual inventory cost for boxes of stationery in Problem No.
37 if the carrying cost is 20 percent of the price of a box of stationery.
a. 200 999
c. 3,000 5,999
b. 1,000 2,999
d. 6,000+
39. Padilla Electronics stocks and sells a particular brand of microcomputer. It costs the firm $450 each
time it places an order with the manufacturer for the microcomputers. The cost of carrying one
microcomputer in inventory for a year is $170. The store manager estimates that total annual demand
for the computers will be 1,200 units, with a constant demand rate throughout the year. Orders are
received within the minutes after placement from a local warehouse maintained by the manufacturer.
The store policy is never to have stock outs of the microcomputers. The store is open for business
everyday of the rear except Christmas day. Determine the optimal order quantity per order.
a. 75
c. 85
b. 80
d. 90
40. In reference to Problem No. 39, determine the minimum total annual inventory cost.
a. $14,150
c. $12,350
b. $13,550
d. $11,950
41. In reference to Problem No. 39, determine the number of orders per year.
a. 15
c. 25
b. 20
d. 30
42. In reference to Problem No. 39, determine the time between orders in working days.
a. 20
c. 14
50 | P a g e
b. 17
d. 11
2012
43. A firm is faced with the attractive situation in which it can obtain immediate delivery of an item it stocks
for retail sale. The firm has therefore not bothered to order the item in any systematic way. However,
recently profits have been squeezed due to increasing competitive pressures, and the firm has
retained a management consultant to study its inventory management. The consultant has
determined that the various cost associated with making an order for the item stocked are
approximately $30 per order. She has also determined that the costs of carrying the item in inventory
amount to approximately $20 per unit per year (primarily storage costs and forgone profit on
investment in inventory). Demand for the item is reasonably constant over time, and the forecast is for
19,200 units per year. When an order is placed for the item, the supplier immediately delivers the
entire order to the firm. The firm operates 6 days a week plus a few Sundays, or approximately 320
days per year. Determine the optimal order per year.
a. 240
c. 250
b. 270
d. 260
44. In reference to Problem No. 43, determine the total annual inventory cost.
a. $2,900
c. $4,800
b. $3,700
d. $5,200
45. In reference to Problem No. 43, determine the optimal number of orders to place per year.
a. 50
c. 70
b. 60
d. 80
46. In reference to Problem No. 43, determine the number of operating days between orders, based on
the optimal ordering.
a. 3
c. 5
b. 4
d. 6
47. The Gonzales Jeans Company purchases denim from Hipolito Textile Mills. The Gonzales uses
35,000 yards of denim per year to make jeans. The cost of ordering denim from the textile company is
$500 per order. It costs Western $0.35 per yard annually to hold a yard from denim in inventory.
Determine the optimal number of yards of denim the company should order.
a. 10,000
c. 14,000
b. 12,000
d. 16,000
48. In reference to Problem No. 47, determine the minimum total inventory cost.
a. $2,500
c. $4,500
b. $3,500
d. $5,500
49. In reference to Problem No. 47, determine the optimal number of orders per year and the optimal time
between orders.
a. 3 orders, 102 days
c. 3 orders, 104 days
51 | P a g e
b. 4 orders, 102 days

d. 4 orders, 104 days
2012
50. The Osila Book Company purchases paper from the Biscocho Paper Company. Osila produces
magazines and paperbacks that require 1,215,000 yards of paper per year. The cost per order for the
company is $1,200 while the cost of holding 1 yard of paper in inventory is $0.08 per year. Determine
the Economic Order Quantity.
a. 180,714
c. 190,919
b. 185,917
d. 200,302
51. In reference to Problem No. 50, determine the minimum total annual cost.
a. $12,972
c. $14,741
b. $13,587
d. $15,274
52. In reference to Problem No. 50, determine the optimal number of orders per year and time between
orders.
53. The Ligon Bakery produces fruit pies for freezing and subsequent sale. The bakery, which operates 5
days a week, 52 weeks a year, can produce pies at the rate of 64 pies per day. The bakery sets up
the pie-production operation and produces until a predetermined number (Q) have been produced.
When not producing pies, the bakery uses its personnel and facilities for producing other bakery
items. The setup cost for a production run of fruit pies is $500. The cost of holding frozen pies in
storage is $5 per pie per year. The annual demand for frozen fruit pies, which is constant over time, is
5,000 pies. Determine the optimum production quantity (Q).
a. 1,196
c. 2,239
b. 1,352
d. 2,474
a. $3,071
c. $5,243
b. $4,182
d. $5,284
55. In reference to Problem No. 53, determine the optimum number of production runs per year.
a. 2
c. 6
b. 4
d. 8
56. In reference to Problem No. 53, determine the optimum cycle time (time between run starts)
a. 39
c. 65
b. 48
d. 74
57. In reference to Problem No. 53, determine the run length in working days.
a. 19
c. 23
52 | P a g e
b. 21
d. 25
2012
58. The Quitain Bicycle Shop operates 364 days a year, closing only on Christmas Day. The shop pays
$300 for a particular bicycle purchased from the manufacturer. The annual holding cost per bicycle is
estimated to be 25 percent of the dollar value of inventory. The shop sells an average of 25 bikes per
week. The ordering cost for each order is $100. Determine the optimal order quantity and the total
minimum cost.
a. 48 at $5,623
c. 59 at $4,416
b. 53 at $4,972
d. 62 at $5,183
59. The Lanuza Petroleum Company uses a highly toxic chemical in one of its manufacturing processes.
It must have the product delivered by special cargo trucks designed for safe shipment of chemicals.
As such, ordering (and delivery) costs are relatively high, at $2,600 per order. The chemical product
is packaged in 1-gallon plastic containers. The cost of holding the chemical in storage is $50 per
gallon per year. The annual demand for the chemical, which is constant overtime, is 2,000 gallons per
year. The lead-time from time of order placement until receipt is 10 days. The company operates 310
working days per year. Compute the optimal order quantity and the total minimum cost.
a. 456 at $22,804
c. 612 at $24,549
b. 562 at $23,782
d. 745 at $25,103
60. In reference to Problem No. 59, determine the reorder point.

a. 35
c. 52
b. 47
d. 64
61. The Sandico Supermarket stocks Munchies Cereal. Demand for munchies is 4,000 boxes per year
(365 days). It costs the store $60 per order of munchies, and it costs $0.80 per box per year to keep
the cereal in stock. Once an order for munchies is placed, it takes 4 days to receive the order from a
food distributor. Determine the optimal order size and the minimum total annual inventory cost.
a. 57 at $805
c. 75 at $620
b. 62 at $780
d. 84 at $560

a. 38
c. 56
b. 44
d. 62
63. The Tenorio Dairy makes cheese to supply to stores in its area. The dairy can make 250 pounds of
cheese per day, and the demand at area stores is 180 pounds per day. Each time the dairy makes
cheese, it costs $125 to set up the production process. The annual cost of carrying a pound of cheese in
a refrigerated storage area is $12. Determine the optimal size and the total annual inventory cost.
a. 2,211 at $7,429
c. 4,010 at $7,521
53 | P a g e
b. 3,244 at $7,955
d. 5,122 at $7,602
2012
64. The Rebueno Water Ski Company is the worlds largest producer of water skis. As you might suspect,
water skis exhibit a highly seasonal demand pattern, with peaks during the summer months and
valleys during the winter months. Given the following costs and quarterly sales forecasts, use the
transportation method to design a production plan that will economically meet demand. What is the
cost of the plan?
Quarter
Sales Forecast
1
2
3
4
50,000
150,000
200,000
52,000
Inventory carrying cost

Production per employee
Regular workforce
Overtime capacity
Subcontracting capacity
Cost of regular production
Cost of overtime production
Cost of subcontracting
a. $20,520,000
c. $28,430,000
$ 3.00 per pair of skis per quarter

1,000 pairs of skis per quarter
50 workers
50,000 pairs of skis
$ 50 per pair of skis
b. $25,850,000
d. $30,290,000
65. The CEO of Rebueno Water Ski from Problem No. 64 has decided to forgo the companys policy of
guaranteed employment. Assume the cost of hiring and firing workers is $100 per worker hired and
$400 per worker fired. Try level production strategy. If necessary, allow backordering at $10 per pair
of skis per quarter. What is the cost of the plan?
a. $21,421,000
c. $26,716,000
b. $23,483,300
d. $28,835,000
66. In reference to Problem No. 64, use the chase demand production strategy and determine the cost of
plan.
a. $20,928,000
c. $24,542,000
54 | P a g e
b. $22,674,200
d. $26,356,000
2012
67. Hong Apparel, manufacturer of a famous swimwear line, needs help planning production for the next
year. Demand for swimwear follows a seasonal pattern, as shown here. Given the following costs and
demand forecasts, use as a strategy the level production with overtime and subcontracting and
determine the cost of the plan.
MONTH
January
February
March
April
May
June
July
August
September
October
November
December
DEMAND FORECAST
1,000
500
500
2,000
3,000
4,000
5,000
3,000
1,000
500
500
3,000
Beginning workforce
Overtime capacity
Production rate per worker
Regular wage rate
Overtime wage rate
Subcontracting wage rate
Hiring cost
Firing cost
Holding cost
Backordering cost
No beginning inventory
a. $725,000
c. $529,000
8 workers
unlimited
2,000 units/month
250 units/month
$ 15 per unit
$ 25 per unit
$ 30 per unit
$ 100 per worker
$ 200 per worker
$ 0.50 per unit/month
$ 10 per unit/month
b. $613,000
d. $448,000
68. In reference Problem No. 67, use as a strategy the level production with backorders as needed and
determine the cost of this plan.
a. $403,250
c. $611,460
b. $524,620
d. $718,500
69. In reference to Problem No. 67, use as a strategy the chase demand and determine the cost of plan.
a. $532,700
c. $367,600
55 | P a g e
b. $424,200
d. $288,300
2012
70. Candelaria Press publishes textbooks for the college market. The demand for college textbooks is
high during the beginning of each semester and then tapers off during the semester. The unavailability of
books can cause a professor to switch adoptions, but the cost of storing books and their rapid
obsolescence must also be considered. Given the demand and cost factors shown here, use the
transportation method to design an aggregate production plan for Candelaria Press that will economically
meet demand. What is the cost of the production plan?
MONTH
February April
May June
August October
November - January
DEMAND FORECAST
5,000
10,000
30,000
25,000
Regular capacity per quarter

Overtime capacity per quarter
Subcontracting capacity per quarter
Regular production rate
Overtime production rate
Subcontracting production rate
Holding cost
a. $1,650,000
c. $1,750,000
10,000 books
5,000 books
10,000 books
$ 20 per book
$ 30 per book
$ 35 per book
$ 2.00 per book
b. $1,800,000
d. $1,900,000
71. Bautistas Empanada is a popular food item during the cold months, but it is marginal in other months.
Use the following demand forecasts to determine the cost of plan if production planning strategy on
level production over the twelve months is used.
MONTH
March
April
May
June
July
August
September
October
November
December
January
February
No backordering
Overtime capacity per month
Subcontracting capacity per month
Regular production cost
Overtime production cost
Subcontracting production cost
Holding cost
Beginning workforce
56 | P a g e
DEMAND FORECAST
2,000
1,000
1,000
1,000
1,000
1,500
2,500
3,000
9,000
7,000
4,000
3,000
regular production
unlimited
$ 30 per pallet
$ 40 per pallet
$ 50 per pallet
$ 2 per pallet
10 workers
Production rate
Hiring cost
Firing cost
2012
200 pallet per worker per month

$ 5,000 per worker
$ 8,000 per worker
a. $1,197,000
c. $1,341,000
b. $1,232,000
d. $1,475,000
72. In reference to Problem No. 71, use a strategy to produce and meet the demand each month and
absorb variations in demand by changing the size of the workforce to determine the cost of plan.
a. $1,560,000
c. $1,722,000
b. $1,602,000
d. $1,850,000
73. In reference to Problem No. 71, use a strategy to keep the workforce at its current level and
supplement with overtime and subcontracting as necessary to determine the cost of plan.
a. $1,571,000
c. $1,391,000
b. $1,453,000
d. $1,293,000
74. The Palanca Company produces two products, A and B, that are made from components C and D.
Given the following product structures, master scheduling requirements, and inventory information,
determine when order should be released for product A and the size of the order.
Product
On Hand
A
B
C
D
10
5
140
200
Scheduled
Receipts
0
0
0
250, period 2
Lot Size
1
1
150
250
Gross
Requirements
100, period 8
200, period 6
-
Product Structure Diagram:

A
LT = 3
C(3)
LT = 3
a. 150, period 6
c. 90, period 5
B
LT = 2
D(2)
LT = 3
D(3)
LT = 3
Level 0
Level 1
b. 100, period 8
d. 80, period 7
75. In reference to Problem No. 74, determine when order should be released for product B and the size
of the order.
a. 250, period 2
c. 100, period 6
57 | P a g e
b. 195, period 4
d. 90, period 8
2012
76. In reference to Problem No. 74, determine when order should be released for product C and the size
of the order.
a. 250, period 2
c. 100, period 3
b. 195, period 4
d. 150, period 1
77. In reference to Problem No. 74, determine when order should be released for product D and the size
of the order.
a. 250, period 2 & 250, period 3
c. 250, period 3 & 500, period 4
b. 500, period 1 & 250, period 2

d. 500, period 5 & 250, period 6
78. Given the following MRP matrix, what is the entry value for X?
Item: E
LCC: 1
Lot Size: 50
LT:2
Gross
Requirements
Scheduled
Receipts
Projected On
Hand
Net
Requirements
Planned
Order
Receipts
Planned
Order
Releases
Period
PD
20
30
50
50
60
90
40
60
50
40
a. 20
c. 50
X
Y
b. 40
d. 70
79. In reference to Problem No. 78, what is the entry value for Y?
a. 20
c. 50
b. 40
d. 70
80. In reference to Problem No. 78, what is the entry value for Z?
a. 50
c. 100
58 | P a g e
b. 70
d. 150
2012
81. Referring to the following product structure diagram, how many Es are needed for each A.
A
B(3)
C(5)
D(4)
C(2)
D(3)
G(5)
F(2)
J(3)
E(3)
a. 85
c. 125
H(2)
I(3)
E(4)
b. 110
d. 130
82. In reference to problem no. 81, how many Js are needed for two As?
a. 80
c. 120
b. 100
d. 140
83. Capistrano Cans packages processed food into cans for a variety of customers. The factory has four
multipurpose cookers and canning lines that can pressure-cook, vacuum-pack, and applies labels to
just about any type of food or size of can. The processing equipment was purchased some years
apart, and some of the cookers are faster and more efficient than others. Capistrano Cans has four
orders that need to be run today for a particular customer: canned beans, canned peaches, canned
tomatoes, and canned corn. The customer is operating under a just-in-time production system and
needs the mixed order of canned food tomorrow. Capistrano Cans has estimated the number of
hours required to pressure-cook, process, and can each type of food by type of cooker as follows:
Cooker
Food
Beans
Peaches
Tomatoes
Corn
10
6
7
9
5
2
6
5
6
4
5
4
10
6
6
10
Due to time constraints imposed by lengthy changeover procedures, only one job can be assigned to
each cooker. How should the jobs be assigned to the cookers in order to process the food most
efficiently?
a. Beans-1, Peaches-2, Tomatoes-3, Corn-4
c. Beans-2, Peaches-1, Tomatoes-4, Corn-3
59 | P a g e
b. Beans-4, Peaches-3, Tomatoes-2, Corn-1

d. Beans-1, Peaches-3, Tomatoes-4, Corn-2
2012
84. In reference to Problem No. 83, when can they complete the customers order?
a. 4
c. 6
b. 5
d. 7
85. Liquido Printing Shop has four jobs waiting to be run this morning. Fortunately, they have four printing
presses available. However, the presses are of different vintage and operate at different speeds. The
approximate times (in minutes) required to process each job on each press are given next. Assign jobs to
presses so that the batch can be completed as soon as possible.
Press
Job
A
B
C
D
1
20
40
30
60
a. A-1, B-2, C-3, D-4

c. A-4, B-1, C-3, D-2
2
90
45
70
45
3
40
50
35
70
4
10
35
25
40
b. A-3, B-1, C-4, D-2

d. A-2, B-3, C-4, D-1
86. In reference to Problem No. 85, when can the entire batch be completed?
a. 35
c. 70
b.45
d. 90
87. Today is the morning of September 1. Because of the approaching holiday season, Mr. Cuenco is
scheduled to work 7 days a week for the next 2 months. Septembers work for Mr. Cuenco consists
of five jobs, A, B, C, D, E. Job A takes 5 days to complete and is due September 10, job B takes 10
days to complete and is due September 15, job C takes 2 days to process and is due September 5,
job D takes 8 days to process and is due September 12, and job E, which takes 6 days to process, is
due September 8.
What is the average completion time if you sequence the jobs by First-Come, First-Serve (FCFS)?
a. 15.00
c. 17.80
b. 16.40
d. 18.60
88. In reference to Problem No. 87, what is the average tardiness if you sequence the jobs by earliest
due date (DDATE)?
a. 5.6
c. 6.8
b. 6.0
d. 9.6
89. In reference to Problem No. 87, what is the number of jobs tardy if you sequence the jobs by
minimum slack (SLACK)?
a. 2
c. 4
60 | P a g e
b. 3
d. 5
2012
90. In reference to Problem No. 87, what is the maximum tardiness if you sequence the jobs by shortest
processing time (SPT)?
a. 26
c. 17
b. 23
d. 16
91. In reference to Problem No. 87, what is the sequence of jobs if you use the smallest critical ratio (CR)
rule?
a. A-B-C-D-E
c. E-C-D-A-B
b. C-E-A-D-B
d. E-D-B-A-C
92. Today is day 4 of the planning cycle. Sequence the following jobs by FCFS and determine the
average completion time.
Job
A
B
C
D
E
F
G
a. 19.91
c. 23.81
Processing Time
(in days)
3
10
2
4
5
8
7
Due Date
10
12
25
8
15
18
20
b. 21.61
d. 24.71
due date (DDATE)?
a. 6.66
c. 8.86
b. 7.86
d. 9.66
a. 4
c. 6
b. 5
d. 7
a. 31
c. 17
61 | P a g e
b. 21
d. 11
2012
rule?
a. A-B-C-D-E-F-G
c. F-B-D-A-E-G-C
b. C-E-A-D-B-G-F
d. G-F-E-D-B-A-C
97. Zerrudo Fine Restoration has received a rush order to refinish five carousel animals an alligator, a
bear, a cat, a deer, and an elephant. The restoration involves two major processes: sanding and
painting. Mr. Zerrudo takes care of the sanding; his son does the painting. The time required for
each refinishing job differs by the state of disrepair and degree of detail of each animal. Given the
following processing times (in hours), determine the order in which the jobs should be processed so
that the rush order can be completed as soon as possible.
Job
A
B
C
D
E
Process 1
6
11
7
9
5
a. B-A-C-D-E
c. E-A-D-B-C
Process 2
8
6
3
7
10
b. D-E-A-C-B
d. A-D-E-B-C
98. Satumira Car Service has five cars waiting to be washed and waxed. The time required (in minutes)
for each activity is given below. In what order should the cars be processed through the facility using the
Johnsons rule?
Car
1
2
3
4
5
Wash
5
7
10
8
3
a. 2-1-5-4-3
c. 3-2-4-5-1
Wax
10
2
5
6
5
b. 5-1-4-3-2
d. 4-3-1-2-5
99. Au Princena works in a cosmetic factory filling, capping, and labeling bottles. She is asked to process
an average of 150 bottles per hour through her work cell. If one kanban is attached to every
container, a container holds 25 bottles, it takes 30 minutes to receive new bottles from the previous
workstation, and the factory uses a safety stock factor of 10 percent, how many kanbans are
needed for the bottling process?
a. 3
c. 7
62 | P a g e
b. 5
d. 9
2012
100. An assembly station is asked to process 100 circuit boards per hour. It takes 20 minutes to receive
the necessary components from the previous workstation. Completed circuit boards are placed in a
rack that will hold 10 boards. The rack must be full before it is sent on to the next workstation. If the
factory uses a safety factor of 10 percent, how many kanbans are needed for the circuit board
assembly process?
a. 2
c. 6
63 | P a g e
b. 4
d. 8
2012
SOLVED PROBLEMS IN PRODUCTION PLANNING & CONTROL - QUANTITATIVE

1. The Razon Office Supply Company sells and delivers office supplies to companies, schools, and
agencies within 50-kilometer radius of its warehouse. The office supply business is competitive, and
the ability to deliver orders promptly is a factor in getting new customers and keeping old ones. The
manager of the company wants to be certain enough drivers and vehicles are available to deliver
orders promptly and they have adequate inventory in stock. Therefore, the manager wants to be able
to forecast the number of orders that will occur the next month. From the records of delivery orders,
management has accumulated the following data for the past 10 months, from which it wants to
compute 3-month moving average.
Month
Orders
January
February
March
April
May
June
July
August
September
October
1200
900
1000
750
1100
500
750
1300
1100
900
a. 900
c. 1300
b. 1100
d. 3300
Answer: b. 1100
Solution:
900 + 1100 + 1300
MA3 = -----------------------------3
MA3 = 1100 orders for November
2. In reference to problem no. 1, what is the 5-month moving average?
a. 910
c. 1310
Answer: a. 910
Solution:
900 + 1100 + 1300 + 750 + 500
MA5 = -----------------------------------------------5
MA5 = 910 orders for November
64 | P a g e
b. 1110
d. 4550
2012
3. In reference to problem no. 1, the company wants to compute a 3-month weighted moving average
with a weight of 50 percent for the October data, a weight of 33 percent for the September data, and
a weight of 17 percent for the August data. These weights reflect the companys desire to have the
most data influence the forecast most strongly.
a. 345
c. 1034
b. 450
d. 1045
Answer: c. 1034
Solution:
WMA3 = (0.50)(900) + (0.33)(1100) + (0.17)(1300)
WMA3 = 1034 orders for November
4. Marquez Computer Services assembles customized personal computers from generic parts. The
company has had steady growth since it started. The company assembles computers mostly at night,
using part time students. The company purchase generic computer parts in volume at a discount from
a variety of sources whenever they see a good deal. Thus, they need a good forecast of demand for
their computers so that they will know how many computer component parts to purchase and stock.
The company has accumulated the demand data in the table below for its computers for the past
twelve months, from which it wants to consider exponential smoothing forecasts using smoothing
constant equal to 0.30.
Period
1
2
3
4
5
6
7
8
9
10
11
12
Month
January
February
March
April
May
June
July
August
September
October
November
December
a. 50
c. 54
Answer: b. 52
Solution:
F2 = (0.30)(37) + (0.70)(37)
F2 = 37 units
F3 = (0.30)(40) + (0.70)(37)
F3 = 37.9 units
65 | P a g e
Demand
37
40
41
37
45
50
43
47
56
52
55
54
b. 52
d. 56
Period
1
2
3
4
5
6
7
8
9
10
11
12
13
Month
January
February
March
April
May
June
July
August
September
October
November
December
January
Demand
37
40
41
37
45
50
43
47
56
52
55
54
-
Forecast, Ft+1
37.00
37.90
38.83
38.28
40.29
43.20
43.14
44.30
47.81
49.06
50.84
51.79
F13 = (0.30)(54) + (0.70)(50.84)

F13 = 51.79 = 52 for January next year
5. In reference to problem no. 4, compute for the accuracy of its forecast using MAD?
a. 3.58
c. 4.58
b. 3.85
d. 4.85
Answer: d. 4.85
Solution:
Computational Values for MAD
Period
Month
1
January
2
February
3
March
4
April
5
May
6
June
7
July
8
August
9
September
10
October
11
November
12
December
Demand, Dt
37
40
41
37
45
50
43
47
56
52
55
54
Total
557
Ft with
37.00
37.00
37.90
38.83
38.28
40.29
43.20
43.14
44.30
47.81
49.06
50.84
= 0.30
/Dt Ft/
3.00
3.10
1.83
6.72
9.69
0.20
3.86
11.70
4.19
5.94
3.15
53.39
53.39
MAD = ------------- = 4.85
11
6. In reference to problem no. 5, what is its Mean Absolute Percent Deviation (MAPD)?
a. 9.1%
c. 44.1%
66 | P a g e
b. 9.6%
d. 44.6%
2012
2012
Answer: b. 9.6%
Solution:
53.39
MAPD = -------------- x 100 = 9.6%
557
7. In reference to problem no. 4, the company wants to develop an adjusted exponentially smoothed
forecast using the same twelve months of demand. It will use the exponentially smoothed forecast
with constant = 0.5 and with a smoothing constant for trend of 0.30. What is the forecast in January
next year?
a. 51
c. 55
b. 53
d. 57
Answer: c. 55
Solution:
The adjusted forecast for February, AF2, is the same as the exponentially smoothed forecast, since the
trend computing factor will be zero i.e. F1 and F2 are the same and T2 = 0. Thus, we compute the adjusted
forecast for March, AF3, as follows:
T3 = (0.30)(38.5 37.0) + (1 0.30)(0)
T3 = 0.45
AF3 = F3 + T3
AF3 = 38.5 +0.45
AF3 = 38.95 units
Period
1
2
3
4
5
6
7
8
9
10
11
12
13
Month
January
February
March
April
May
June
July
August
September
October
November
December
January
Demand
37
40
41
37
45
50
43
47
56
52
55
54
-
T13 = (0.30)(53.61 53.21) + (0.70)(1.77)

T13 = 1.36
AF13 = 53.61 + 1.36
AF13 = 54.97 = 55 units for January next year
67 | P a g e
Forecast, Ft+1
37.00
37.00
38.50
39.75
38.37
41.68
45.84
44.42
45.71
50.85
51.42
53.21
53.61
Trend Tt+1
0.00
0.45
0.69
0.07
1.04
1.97
0.95
1.05
2.28
1.76
1.77
1.36
AFt+1
37.00
38.95
40.44
38.44
42.73
47.82
45.37
46.76
53.13
53.19
54.98
54.97
2012
8. In reference to problem no. 4, the demand data for computers appears to follow an increasing linear
trend. The company wants to compute a linear trend line to see if it is more accurate than exponential
smoothing and adjusted exponential smoothing forecast. What is the forecast on period 13?
a. 52
c. 56
b. 54
d. 58
Answer: d. 58
Solution:
Least Squares Calculations:
Total
x (period)
y (demand)
xy
x2
1
2
3
4
5
6
7
8
9
10
11
12
37
40
41
37
45
50
43
47
56
52
55
54
37
80
123
148
225
300
301
376
504
520
605
648
1
4
9
16
25
36
49
64
81
100
121
144
78
557
3867
650
78
x = --------------- = 6.5
12
557
y = --------------- = 46.42
12
3867 [(12)(6.5)(46.42)]
b= ----------------------------------------------650 [12(6.5)2]
b = 1.72
a = 46.42 (1.72)(6.5)
a = 35.2
y = 35.2 + 1.72x
y = 35.2 + 1.72(13) = 57.56 = 58 units for period 13
68 | P a g e
2012
9. Delima Farms grows chickens to sell to a meat processing company throughout the year. However, its
peak season is obviously during the fourth quarter of the year, from October to December. Delima
Farms has experienced the demand for chickens for the past three years shown in the following table:
Demand for Chickens at Delima Farms:
Demand (1,000s) per Quarter
Year 1
2
3
Total
2009
2010
2011
12.6
14.1
15.3
8.6
10.3
10.6
6.3
7.5
8.1
17.5
18.2
19.6
45.0
50.1
53.6
Total
42.0
29.5
21.9
55.3
148.7
What are the forecast per quarter in year 2012?

a. 12, 8, 7, 18
c. 16, 12, 9, 22
Answer: c. 16, 12, 9, 22
Solution:
42.0
S1 = ---------------- = 0.28
148.7
29.5
S2 = ---------------- = 0.20
148.7
21.9
S3 = ---------------- = 0.15
148.7
55.3
S4 = ---------------- = 0.37
148.7
Linear Trend Line for three years:
y = 40.97 + 4.30x
y = 40.97 + 4.30(4)
y = 58.17
SF1 = (S1)(F5) = (0.28)(58.17) = 16.28 = 16
SF2 = (S2)(F5) = (0.20)(58.17) = 11.63 = 12
SF3 = (S3)(F5) = (0.15)(58.17) = 8.73 = 9
SF4 = (S4)(F5) = (0.37)(58.17) = 21.53 = 22
69 | P a g e
b. 14, 10, 8, 20
d. 18, 14, 10, 20
2012
10. The Tomas University athletic department wants to develop its budget for the coming year using a
forecast for football attendance. Football attendance accounts for the largest portion of its revenues,
and the athletic director believes attendance is directly related to the number of wins by the team. The
business manger has accumulated total annual attendance for the past eight years.
No. of Wins
4
6
6
8
Attendance
(1,000s)
36.3
40.1
41.2
53.0
No. of Wins
6
7
5
7
Attendance
(1,000s)
44.0
45.6
39.0
47.5
Given the number of returning starters and the strength of the schedule, the athletic director believes the
team will win at least seven games next year. Develop a simple regression equation for this data to
forecast attendance next year.
a. 45,880
c. 47,850
b. 46,880
d. 48,850
Answer: b. 46,880
Solution:
Least Squares Computation:
Total
x
No. of Wins
y
Attendance
(1,000s)
xy
x2
4
6
6
8
6
7
5
7
36.3
40.1
41.2
53.0
44.0
45.6
39.0
47.5
145.2
240.6
247.2
424.0
264.0
319.2
195.0
332.5
16
36
36
64
36
49
25
49
49
346.9
2,167.7
311
49
x = --------------- = 6.125
8
346.9
y = --------------- = 43.36
8
(2,167.7) [(8)(6.125)(43.36)]
b= ----------------------------------------------------(311) [(8)(6.125)2]
b = 4.06
a = 43.36 (4.06)(6.125)
70 | P a g e
a = 18.46
y = 18.46 + 4.06x
y = 18.46 + 4.06(7) = 46.88 = 46,880 attendance for 7 wins
11. In reference to problem no. 10, compute the correlation for the linear regression equation.
a. 0.647
c. 0.847
b. 0.747
d. 0.947
Answer: d. 0.947
Solution:
[(8)(2,167.7)] [(49)(346.9)]
r = ------------------------------------------------------------------------ = 0.947
[(8)(311) (49)2][(8)(15,224.75) (346.9)2]
12. A manufacturing company has monthly demand for one its products as follows:
Month
Demand
February
March
April
May
June
July
August
September
520
490
550
580
600
420
510
610
Develop a three-period moving average forecast.

a. 45,880
c. 47,850
Answer: b. 46,880
Solution:
520 + 490 + 550
MA3 = -----------------------------3
MA3 = 1100
71 | P a g e
b. 46,880
d. 48,850
2012
2012
13. The Zaki Motorcycle Dealer in Kamuning area wants to be able to forecast accurately the demand for
the Zaki Super VIII motorcycle during the next month. Because the manufacturer is in Japan, it is
difficult to send motorcycles back or reorder if the proper number is not ordered a month ahead. From
sales records, the dealer has accumulated the following data for the past year.
Month
January
February
March
April
May
June
July
August
September
October
November
December
Motorcycle Sales
9
7
10
8
7
12
10
11
12
10
14
16
Compute a 3-month moving average forecast of demand for April through January (of the next
year) and a 5-month moving average forecast for June through January. Compare the two
forecasts computed in parts using MAD. Which one should the dealer use for January of the next
year?
c. 5-month moving ave with MAD = 2.43

d. 5-month moving ave with MAD = 1.43
Answer: a. 3-month moving ave with MAD = 1.89

Solution:
Month
January
February
March
April
May
June
July
August
September
October
November
December
January
Sales
9
7
10
8
7
12
10
11
12
10
14
16
13.33
a.) MA3
8.67
8.33
8.33
9
9.67
11
11
11
12
____
17
0.67
1.33
3.67
1
1.33
1
1
3
4
12.6
b.) MA5
8.2
8.8
9.4
9.6
10.4
11
11.4
____
17
3.8
1.2
1.6
2.4
0.4
3
4.6
MAD3 = 17/ 9 = 1.89

MAD5 = 17/ 7 = 2.43
The dealer should use the Three-month Moving Average w/a MAD of 1.89. The smaller the MAD,
the more accurate the forecast is.
72 | P a g e
2012
14. The manager of the Secreto Carpet outlet needs to be able to forecast accurately the demand for soft
carpet, its biggest seller. If the manager does not order enough carpet from the carpet mill, customers
will buy their carpets from one of Secretos many competitors. The manager has collected the
following demand data for the past eight months.
Months
1
2
3
4
5
6
7
8
Demand for Soft Carpet (1,000 yd)

8
12
7
9
15
11
10
12
Compute a 3-month moving average forecast for months 4 through 9 and a weighted 3-month moving
average forecast for months 4 through 9. Assign weights 0.55, 0.33, and 0.12 to the months in sequence
starting with the most recent month. Compare the two forecasts using MAD. Which forecast appears to be
more accurate?
c. Weighted 3-month moving ave with MAD = 2.14
d. Weighted 3-month moving ave with MAD = 1.14
Answer: b. 3-month moving ave with MAD = 1.60
Solution:
MA3
= Di/3
= (8+12+7)/3
=9
WMA3 = W iDi
= 7(0.55) + 12(.33) + 8(0.12)
= 8.77
MAD (MA3)
MAD (WMA3)
73 | P a g e
= Demand MA3 / n
= 8/5
= 1.60
= Demand WMA3 / n
= 10.74/5
= 2.14
2012
Tabular Representation:
Month
1
2
3
4
5
6
7
8
9
Demand
8
12
7
9
15
11
10
12
MA3
9
9.33
10.33
11.66
12
11
WMA3
8.77
8,70
12.06
12.08
10.93
11.22
II MA3
0
5.67
0.67
1.66
0
-
II WMA3
0.23
6.30
1.06
2.08
1.07
-
Because MAD and the cumulative error are less for the weighted 3-month moving average
forecast, it would appear to be the most accurate.
15. The Glorioso Fertilizer Company distributes fertilizer to various lawn and garden shops. The company
must base its quarterly production schedule on a forecast of how many tons of fertilizer will be
demanded from it. The company has gathered the following data for the past three years from its
sales records.
Year
1
Quarter
1
2
3
4
5
6
7
8
9
10
11
12

105
150
93
121
140
170
105
150
150
170
110
130
Compute a 3-quarter moving average forecast for quarters 4 through 13 and compute the forecast error
for each quarter and a weighted 3-quarter moving average forecast using weights of 0.50, 0.33, and 0.17
for the most recent, next recent, and most distant data, respectively, and compute the forecast error for
each quarter. Compare the forecasts developed using cumulative error. Which forecasts appears to be
more accurate?
a. 3-quarter moving ave with E = 27.00
b. 3-quarter moving ave with E = 32.00
c. Weighted 3-quarter moving ave with E = 33.50
d. Weighted 3-quarter moving ave with E = 28.05
Answer: d. Weighted 3-quarter moving ave with E = 28.05
74 | P a g e
2012
Solution:
3-Quarter Moving Average:
Year
Quarter
1
1
2
3
4
2
5
6
7
8
3
9
10
11
12
Demand (ton)
105
150
93
121
140
170
105
150
150
170
110
130
MA3
116
121.33
118
143.67
138.33
156.67
143.33
156.67
143.33
5.00
18.67
52.00
38.67
11.67
8.33
35.00
-46.67
-13.33
32.00
Weighted 3-Quarter Moving Average with 0.50, 0.33, 0.17

YEAR
QUARTER
DEMAND (ton)
WA3
1
1
105
2
150
3
93
4
121
113.85
2
5
140
116.69
6
170
125.74
7
105
151.77
8
150
132.40
3
9
150
138.55
10
170
142.35
11
110
160
12
130
136
7.15
23.31
44.26
-46.77
17.60
17.45
27.65
50.00
6.60
28.05
Comparison using Cumulative Error: 3-Quarter Moving Average with E = 32.00 and Weighted 3-Quarter
Moving Average with E = 28.05
Weighted 3-Quarter Moving Average is more accurate than the moving average because it has lower
error.
75 | P a g e
2012
16. Determine the seasonally adjusted forecast for the demand data for fertilizer in Problem No. 15 with
the use a linear trend line model to compute a forecast estimate for demand in year 4.
Year
1
Quarter
1
2
3
4
5
6
7
8
9
10
11
12

105
150
93
121
140
170
105
150
150
170
110
130
a. Q1 = 299, Q2 = 257, Q3 = 228, Q4 = 206

b. Q1 = 219, Q2 = 247, Q3 = 278, Q4 = 266
c. Q1 = 149, Q2 = 187, Q3 = 118, Q4 = 156
d. Q1 = 159, Q2 = 178, Q3 = 138, Q4 = 176
Answer: c. Q1 = 149, Q2 = 187, Q3 = 118, Q4 = 156
Solution:
Year
1
2
3
Total
Quarter
105
140
15
395
Quarter
150
170
170
490
Quarter
93
105
110
308
Quarter
121
150
130
401
Total
469
565
560
1594
S1 = Di / D
S1 = 395 / 1594
= 0.24
S2 = 490 / 1594
= 0.30
S3 = 308 / 1594
= 0.19
S4 = 401 / 1594
= 0.25
Get the linear trend:

b = 45.51
a = 440.31
y = 440.31 + 45.51x
For the fourth year:

y = 1850 + 180(4)
y = 622.35
Using the annual forecast of demand, the seasonally adjusted forecast for year 4 is:
SF1 = (S1)(y) = (0.24)(622.35) = 149.36 = 149
SF2 = (S2)(y) = (0.30)(622.35) = 186.70 = 187
SF3 = (S3)(y) = (0.19)(622.35) = 118.24 = 118
SF4 = (S4)(y) = (0,25)(622.35) = 155.58 = 156
76 | P a g e
2012
17. The chairperson of the department of management at Razon University wants to forecast the number
of students who will enroll in production and operations management next semester in order to
determine how many sections to schedule. The chair has accumulated the following enrollment data
for the past eight semesters:
Semester
1
2
3
4
5
6
7
8
Students Enrolled in POM

400
450
350
420
500
575
490
650
Compute a 3-semester moving average forecast for semesters 4 through 9 and the exponentially
smoothed forecast (= 0.20) for the enrollment data. Compare the two forecasts using MAD and
choose the most accurate.
a. 3-Semester Moving Average with MAD = 80.33
b. 3-Semester Moving Average with MAD = 78.43
c. Exponentially smoothed forecast with MAD = 87.16
d. Exponentially smoothed forecast with MAD = 85.60
Answer: a. 3-Semester Moving Average with MAD = 27.00
Solution:
SEM
1
2
3
4
5
6
7
8
9
STUDENTS
400
450
350
420
500
575
490
650
MA3
400
406.67
423.33
498.33
521.67
571.67
Dt-Ft
20.00
93.33
151.67
8.33
128.33
498.02
401.66
Ft+1(=.20)
Dt-Ft
400.00
410.00
398.00
402.40
421.92
452.54
460.03
50.00
60.00
22.00
97.60
153.08
37.46
189.97
610.11
MAD MA3 = 401.66/5 = 80.33

MAD Ft+1 = 610.11/7 = 87.16
The 3-Semester Moving Average is more accurate because it has lower value of MAD.
18. The Dy Caf in Espana, Manila, is well known for its popular homemade ice cream, which it makes in
a small plant in back of the caf. People drive all the way from Alabang and Mandaluyong to buy the
ice cream. The two ladies who own the caf want to develop a forecasting model so they can plan
their ice cream production operation and determine the number of employees they need to sell ice
cream in the caf. They have accumulated the following sales records for their ice cream for the past
twelve quarters.
77 | P a g e
Year
1997
1998
1999
Quarter
1
2
3
4
5
6
7
8
9
10
11
11
Ice Cream Sales (gal)

350
510
750
420
370
480
860
500
450
550
820
570
Determine the seasonally adjusted forecast for 1998 with the use of a linear trend line model.
a. Q1 = 486, Q2 = 608, Q3 = 836, Q4 = 596
b. Q1 = 466, Q2 = 628, Q3 = 846, Q4 = 576
c. Q1 = 356, Q2 = 518, Q3 = 776, Q4 = 456
d. Q1 = 376, Q2 = 508, Q3 = 796, Q4 = 486
Answer: d. Q1 = 376, Q2 = 508, Q3 = 796, Q4 = 486
Solution:
Year
1997
1998
1999
Total
Quarter
350
370
450
1170
Quarter
510
480
550
1540
Quarter
750
860
820
2430
Quarter
420
500
570
1490
Total
2030
2210
2390
6630
S1 = Di / D
S1 = 1170 / 6630
= 0.17
S2 = 1540 / 6630
= 0.23
S3 = 2430 / 6630
= 0.36
S4 = 1490 / 6630
= 0.22
Get the linear trend:

b = 180 a = 1850
y = 1850 + 180x
For the year 1998:

y = 1850 + 180(2)
y = 2210
Using the annual forecast of demand, the seasonally adjusted forecast for 1998 is:
SF1 = (S1)(y) = (0.17)(2210) = 375.70 = 376
SF2 = (S2)(y) = (0.23)(2210) = 508.30 = 508
SF3 = (S3)(y) = (0.36)(2210) = 795.60 = 796
SF4 = (S4)(y) = (0.22)(2210) = 486.20 = 486
78 | P a g e
2012
2012
19. The purchasing manager for the Ormilon Steel Company must determine a policy for ordering coal to
operate 12 converters. Each converter requires exactly 5 tons of coal per day to operate, and the
firm operates 360 days per year. The purchasing manager has determined that the ordering cost is
P80 per order, and the cost of holding coal is 20 percent of the average peso value of inventory held.
The purchasing manager has negotiated a contract to obtain the coal for P1200 per ton for the
coming year. Determine the optimal quantity of coal to receive in each other.
a. 100
c. 120
b. 110
d. 130
Answer: c. 120
Given:
12 converters
5 tons of coal/day
360 days/yr
Co = P80/ order
Cc = 20% of the ave. peso value of inventory held
P = P1200/ton
Solution:
Qopt =
2 (P80/ order) (12 converters)(5 tons/ converter)(360 days/ yr)

(0.20)(P1200)
Qopt =
2 (P80) (21,600)
(240)
= 120 tons of coal
20. In reference to problem no. 19, determine the total inventory related costs associated with the optimal
ordering policy with cost of coal not included.
a. 29,100
c. 30,200
Answer: d. 28,800
Solution:
Tc = CoD + Cc Qopt
Qopt
2
= (80)(21,600) + 240 (120)
120
2
= P 28,800
79 | P a g e
b. 31,600
d. 28,800
2012
21. In reference to problem no. 19 and if 5 days lead-time is required to receive an order of coal, how
much coal should be on hand when an order is placed?
a. 300
c. 400
b. 350
d. 450
Answer: a. 300
Solution:
R = dL= (12) (5) (5) = 300 coal
22. The Capulong Lumber Company and Mill processes 10,000 logs annually, operating 250 days per
year. Immediately upon receiving an order, the logging companys supplier begins delivery to the
lumber mill at the rate of 60 logs per day. The lumber mill has determined that the ordering cost
is$1,600 per order, and the cost of carrying logs in inventory before they are processed is $15 per log
on an annual basis. Determine the optimal order size.
a. 3,540
c. 4,250
b. 2,530
d. 5,500
Answer: b. 2,530
Given:
D = 10,000
250 days/yr
Co = $1600/order
Cc = $15/log annually
p = 60 logs/day
d = 10,000_
250 days
= 40 logs / day
Solution:
a.) Qopt = 2 (1,600) (10,000)
15 1- 40
60
Qopt = 2,529.8 logs = 2,530 logs

23. In reference to problem no. 22, determine the total inventory cost associated with the optimal order
quantity.
a. 12,759
c. 11,621
b. 11,531
d. 12,649
Answer: d. 12,649
Solution:
Tc = CoD + Cc Qopt (1-d/p)
Qopt
2
= 1,600 (10,000) + 15 (2,529.8)
2,529.8
2
80 | P a g e
1-40
60
2012
Tc =$12,649.11 = $12,649
24. In reference to problem no. 22, determine the number of operating days between orders.
a. 59
c. 63
b. 61
d. 65
Answer: c. 63
Solution:
Order cycle time
__250 days
10,000/2,529.8
63.25 days = 63 days
25. In reference to problem no. 22, determine the number of operating days required to receive an order.
a. 42
c. 46
b. 44
d. 48
Answer: a. 42
Solution:
Production run
Q
p
2,529.8
60
42.16 days per order = 42 days
26. The Sanga Tire Company produces a brand of tire called the Roadrunner. The annual demand at its
distribution center is 17,400 tires per year. The transport and handling cost are $2,600 each time a
shipment of tires is ordered at the distribution center. The annual carrying cost is $3.75 per tire.
Determine the optimal order quantity and the minimum total annual cost.
a. 4,912 at $20,450
c. 5,126 at $18,870
b. 5,126 at $19,530
d. 4,912 at $18,420
Answer: d. 4,912 at $18,420

Given:
D = 17,400/yr
Co = $ 2,600
Solution:
Qopt =
81 | P a g e
2CoD
Cc
Co = $ 3.75
2 (2,600) (17,400)
3.75
Qopt
4,912.03 = 4,912 tires
Tc
CoD + Qopt Cc
Qopt
2
(2,600) (17,400) + (4,912.03) (3.75)

4,912.03
2
$18,420.098 = 18,420
2012
27. In reference to problem no. 26, the company is thinking about relocating its distribution center, which
would reduce transport and handling costs to $1,900 per order but increase carrying costs to $4.50
per tire per year. Determine the savings if the relocation pushes through.
a. $1,255
c. $1,171
b. $1,850
d. $1,625
Answer: c. $1,171
Solution:
Co =
$1,900; Cc = $ 4.5
Qopt =
2CoD
Cc
Qopt =
Tc
2 (1,900) (17,400)
4.5
3,833.19
CoD + Qopt Cc
Qopt
2
(1,900) (17,400) + (3,833.19) (4.5)

3,833.19
2
= $17,249
The Company should relocate with the savings of $18,420 - $17,249 = $1,171
82 | P a g e
2012
28. The Ngo Farms produces its own natural organic fertilizer, which it sells mostly to the gardeners and
homeowners. The annual demand for fertilizer is 270,000 pounds. The company is able to produce
305,000 pounds annually. The cost to transport the fertilizer from the plan to the nursery is $620 per
load. The annual carrying load cost is $0.12 per pound. Compute the optimal order size.
a. 135,871
c. 155,926
b. 143,753
d. 163,125
Answer: c. 155,926
Given:
D = 270,000/yr
Co = $620
p = 305,000/yr
Cc = $0.12
Solution:
Qopt =
2 (620) (270,000)
0.12 1- 270,000
305,000
Qopt =
155,925.8 = 155,926
29. In reference to Problem No. 28, compute the total minimum cost.
a. $2,253
c. $2,534
b. $2,147
d. $2,622
Answer: b. $2,147
Solution:
Tc = (620) (270,000) + 0.12 (155,925.8) 1- 270,000
155,925.8
2
305,000
Tc = $2,147.18 = $2,147
30. In reference to Problem No. 28, compute the maximum inventory level.
a. 17,893
c. 19,261
b. 18,953
d. 20,530
Answer: a. 17,893
Solution:
Max. Inv. Level = Q 1 - d
P
= 155,925.8
1 - 270,000
305,000
= 17,893.12 = 17,893
83 | P a g e
2012
31. If Ngo Farms in Problem No. 28 can increase production capacity to 360,000 pounds per year, what
will be the total inventory cost?
a. $1,934
c. $3,169
b. $2,747
d. $4,282
Answer: b. $3,169
Solution:
Qopt = 2 (620) (270,000)

0.12 1 - 270,000
360,000
Qopt = 105,640.9 tires
Tc
= 620 (270,000) + .12 (105,640.9) 1- 270,000

105,640.0
2
360,000
Tc = $3,169.23 = $3,169
Increasing production capacity will not reduce total inventory cost
32. The Baldrige Kiln is an importer of ceramics from overseas. It has arranged to purchase a particular
type of ceramic pottery from a Chinese artisan. The artisan makes the pottery in 120-unit batches
and will ship only that exact amount. The transportation and the handling cost of a shipment is
$7,600 (not including the unit cost). The Baldrige Kiln estimates its annual demand to be 900 units.
What storage and handling cost per unit does it need to achieve in order to minimize its inventory
cost?
a. $6,120
c. $4,760
b. $5,380
d. $3,450
Answer: d. $3,450
Given:
Qopt = 120
D = 900
Solution:
Qopt =
Co = 7600
Cc = ?
2CoD
Cc
2
(120)2 =
14,400 =
Cc =
Cc =
84 | P a g e
2(7,600)(900)
Cc
49,680,000
Cc
49,680,000
14,400
$3,450 / unit is needed to achieve in order to minimize its inventory cost.
2012
33. The Ligan Carpet Discount Store has annual demand of 10,000 yards of Super Shag carpet. The
annual carrying cost for a yard of this carpet is $0.75 and the ordering cost is $150. The carpet
manufacturer normally charges the store $8 per yard for the carpet. However, the manufacturer has
offered a discount price of $6.50 per yard if the store will order 5,000 yards. How much should the
store order and the total annual inventory cost for that order quantity?
a. 5,000 at $67,175
c. 2,000 at $81,500
b. 5,000 at $65,325
d. 3,000 at $78,420
Answer: a. 5,000 at $67,175

Given:
D = 10,000 yards
Co = $150
Cc = $ .75/yrd
P = $ 8/yrd
Discount price= $ 6.5/yrd with minimum order of 5,000 yrds.
Solution:
Qopt =
2CoD
Cc
= 2 (150) (10,000)
0.75
= 2,000 yards
Discounted:
Qopt = 5,000
Tc = 150 (10,000) + 0.75(5,000) + 6.5 (10,000)

5,000
2
Tc = $67,175
Tc = CoD + Cc Qopt + PD
Qopt
2
= 150 (10,000) + 0.75 (2,000) + 8(10,000)
2,000
2
= $81,500
The store should order 5,000 to avail discount and only have a total cost of $67,175
34. The Sta. Maria Bar buys draft beer by the barrel from a local distributor. The bar has an annual
demand of 900 barrels, which it purchases at a price of $205 per barrel. The annual carrying cost is
$24.60, and the cost per order is $160. The distributor has offered the bar a reduced price of $190
per barrel if it will order a minimum of 300 barrels. What is the cost difference if the bar takes the
discount?
a. $14,128
c. $12,873
b. $13,374
d. $11,992
Answer: d. $11,992
Given:
D = 900
P = $205/barrel
Cc = 424.60
Co = $160
Discounted price of $ 190/barrel with min order of 300
85 | P a g e
Solution:
At regular price:
At discounted price:
Qopt =
Qopt = 300
2CoD
Cc
= 2 (160) (900)
24.16
2012
Tc = 160 (900) + 24.6 (300) + 190 (900)

300
2
= 108.2 108
Tc = CoD + Cc Qopt + PD
Qopt
2
Tc = $ 175,170
Tc = 160 (900) + 24.6 (108) + 205 (900)

108
2
= $187,161.73
The bar should take the discount with a difference of $ 11,992 to the regular price
35. The bookstore at Aviba University purchases sweatshirts emblazoned with the school name and logo
from the vendor. The vendor sells the sweatshirt to the store for $38 apiece. The cost to the
bookstore for placing an order is $120, and the annual carrying cost is 25 percent of the cost of a
sweatshirt will be sold during the year. The vendor has offered the bookstore the following volume
discount schedule:
Order size
1 299
300 499
500 799
800+
Discount
0%
2%
4%
5%
The bookstore manager wants to determine the bookstores optimal order quantity given this quantity
discount information.
a. 1 299
c. 500 799
b. 300 499
d. 800+
Answer: c. 500 799

Given:
P = $38
Co = 120
D = 1,700
Cc = 25% price of the sweatshirt
Solution:
Cc (0%) = (.25) (38)
= 9.5
Qopt =
2 (120) (1,700)
9.5
= 207.24 207
86 | P a g e
Tc = 120 (1,700) + 9.5 (207.24) + 38(1,700)

207.24
2
= $66,568.76
2012
Cc (2%) = (.25) [38-(38*.02)] Tc= 120 (1,700) + 9.31(300) + 37.24 (1,700)

= 9.31
300
2
= $ 65,384.5
Cc (4%) = (.25) [38-(38*.04)] Tc = 120 (1,700) + 9.12 (500) + 36.48 (1,700)
= 9.12
500
2
= $ 64,704
Cc (5%) = (.25) [38-(38*.05)] Tc = 120 (1,700) + 9.025 (800) + 36.1 (1,700)
= 9.025
800
2
= $ 65,235
The bookstore manager should choose the 500-799 brackets having the lowest total cost.
36. Determine the optimal order quantity of sweatshirt and total annual cost in Problem No. 49 if the
carrying cost is a constant $8 per shift per year.
a. 1 299
c. 500 799
b. 300 499
d. 800+
Answer: c. 500 799

Given:
P = $38
Co = $120
D = 1700
Cc = $ 8
Solution:
At (0%)
Qopt =
2 (120) (1,700)
8
= 22.5 226
At (2%)
Qopt = 300
P = [38-(38*.02)]
= 37.24
At ( 4%)
Qopt = 500
P = [38-(38*.04)]
= 36.48
At (5%)
Qop = 800
P = [38-(38*.05)]
=36.1
Tc = 120 (1,700) + 8 (226) + 38 (1,700)

226
2
= $66,406.65
Tc = 120 (1,700) + 8 (300) + 37.24 (1,700)

300
2
= $65,188
Tc = 120 (1,700) + 8 (500) + 36.48 (1,700)

500
2
= $64,424
Tc = 120 (1,700) + 8 (800) + 36.1 (1,700)

800
2
= $64,825
500 - 799 is the optimal order quantity with the total annual cost of $64,424
87 | P a g e
2012
37. The office manager for the Breganza Life Insurance Company orders letterhead stationery from an
office products firm in boxes of 500 sheets. The company uses 6,500 boxes per year. Annual
carrying cost are $3 per box, and ordering costs are $28. The following supply company provides the
following discount price:
Order quantity (boxes)
200 999
1,000 2,999
3,000 5,999
6,000 +
Price per box

$ 16
14
13
12
Determine the optimal order quantity at the least total annual inventory cost.
a. 200 999
c. 3,000 5,999
b. 1,000 2,999
d. 6,000+
Answer: d. 6,000+
Given:
D = 6,000
Cc = $ 3/box
Co = $28
Solution:
Qopt =
2 (28) (6,500)
3
Qopt = 348.33 boxes

At P = 16
Tc = 28 (6500) + 3 (348.33) + 16 (6,500)
348.33
2
Tc = $105,044.988
At P = 14
Tc = 28 (6,500) + 3 (1,000) + 14 (6,500)
1,000
2
Tc = $92,682
At P = 13
Tc = 28 (6,500) + 3 (3,000) + 13 (6,500)
3,000
2
Tc = $89,060.66
At P = 12
Tc = 28 (6,500) + 3 (6,000) + 12 (6,500)
6,000
2
Tc = $87,030.33
The manager should order 6,000 with the lowest total annual inventory cost $ 87,030.33
88 | P a g e
2012
38. Determine the optimal quantity and total annual inventory cost for boxes of stationery in Problem No.
37 if the carrying cost is 20 percent of the price of a box of stationery.
a. 200 999
c. 3,000 5,999
b. 1,000 2,999
d. 6,000+
Answer: d. 6,000+
Given:
D = 6,500
Co = $28
Cc = 20% of the price
Solution:
At P = 16
Qopt =
2 (28) (6,500)
3.2
= 337.27 337
Tc = 28 (6,500) + 3.2 ( 337) + 16 (6,500)

337
2
= $105,021.40
At P =14
Qopt = 1,000
Cc = (.20*14)
= 2.8
Tc = 28 (6,500) + 2.8 (1,000) + 14 (6,500)

1,000
2
= $92,563.5
At P = 13
Qopt = 3,000
Cc = (.20*13)
Tc = 28 (6,500) + 2.6 (3,000) + 13 (6,500)

3,000
2
= 2.6
At P = 12
Qopt = 6,000
Cc = (.20*12)
Cc = 2.4
= $88,454.17
Tc = 28 (6,500) + 2.4 (6,000) + 12 (6,500)

6,000
2
= $85,227.08
The optimal order quantity is 6,000 with the lowest total annual inventory of $ 85,227.08
39. Padilla Electronics stocks and sells a particular brand of microcomputer. It costs the firm $450 each
time it places an order with the manufacturer for the microcomputers. The cost of carrying one
microcomputer in inventory for a year is $170. The store manager estimates that total annual demand
for the computers will be 1,200 units, with a constant demand rate throughout the year. Orders are
received within the minutes after placement from a local warehouse maintained by the manufacturer.
The store policy is never to have stock outs of the microcomputers. The store is open for business
everyday of the rear except Christmas day. Determine the optimal order quantity per order.
a. 75
c. 85
b. 80
d. 90
Answer: b. 80
Given:
89 | P a g e
Co = $450
Cc = $170
D = 1,200 units
364 days open

Solution:
Qopt =
2 Co D
Cc
= 2(450)(1200)
170
= 79.71 = 80 units
40. In reference to Problem No. 39, determine the minimum total annual inventory cost.
a. $14,150
c. $12,350
b. $13,550
d. $11,950
Answer: b. $13,550
Solution:
TC = Co D + Cc Q
Q
2
= (450)(1200) + (170)(79.71)
79.71
2
= $13,549.91 = $13,550
41. In reference to Problem No. 39, determine the number of orders per year.
a. 15
c. 25
b. 20
d. 30
Answer: a. 15
Solution:
D
= Number of orders per year
Qopt
1200 = 15.05 = 15 orders per year
79.71
42. In reference to Problem No. 39, determine the time between orders in working days.
a. 20
c. 14
Answer: c. 14
90 | P a g e
b. 17
d. 11
2012
2012
Solution:
364 = 14.19 = 14 store days
15.05
43. A firm is faced with the attractive situation in which it can obtain immediate delivery of an item it stocks
for retail sale. The firm has therefore not bothered to order the item in any systematic way. However,
recently profits have been squeezed due to increasing competitive pressures, and the firm has
retained a management consultant to study its inventory management. The consultant has
determined that the various cost associated with making an order for the item stocked are
approximately $30 per order. She has also determined that the costs of carrying the item in inventory
amount to approximately $20 per unit per year (primarily storage costs and forgone profit on
investment in inventory). Demand for the item is reasonably constant over time, and the forecast is for
19,200 units per year. When an order is placed for the item, the supplier immediately delivers the
entire order to the firm. The firm operates 6 days a week plus a few Sundays, or approximately 320
days per year. Determine the optimal order per year.
a. 240
c. 250
b. 270
d. 260
Answer: a. 240
Given:
Co = $30
Cc = $20
D = 19,000 units
320 days per year
Solution:
Qopt
2 Co D
Cc
= 2(30)(19,200)
20
= 240 units
a. $2,900
c. $4,800
Answer: c. $4,800
Solution:
TC
= Co D + Cc Q
Q
2
= (80)(19,200) + (20)(240)
240
2
= $4,800
91 | P a g e
b. $3,700
d. $5,200
2012
45. In reference to Problem No. 43, determine the optimal number of orders to place per year.
a. 50
c. 70
b. 60
d. 80
Answer: d. 80
Solution:
D
Qopt
= Number of orders per year
19,200 = 80 orders per year

240
46. In reference to Problem No. 43, determine the number of operating days between orders, based on
the optimal ordering.
a. 3
c. 5
b. 4
d. 6
Answer: b. 4
Solution:
320
80
= 4 days
47. The Gonzales Jeans Company purchases denim from Hipolito Textile Mills. The Gonzales uses
35,000 yards of denim per year to make jeans. The cost of ordering denim from the textile company is
$500 per order. It costs Western $0.35 per yard annually to hold a yard from denim in inventory.
Determine the optimal number of yards of denim the company should order.
a. 10,000
c. 14,000
Answer: a. 10,000
Given:
Co = $500
Cc = $0.35
D = 35,000 yards
Solution:
Qopt =
2 Co D
Cc
= 2(500)(35,000)
0.35
= 10,000 yards
92 | P a g e
b. 12,000
d. 16,000
2012
48. In reference to Problem No. 47, determine the minimum total inventory cost.
a. $2,500
c. $4,500
b. $3,500
d. $5,500
Answer: b. $3,500
TC = Co D + Cc Q
Q
2
= (500)(35,000) + (0.35)(10,000)
10,000
2
= $3,500
49. In reference to Problem No. 47, determine the optimal number of orders per year and the optimal time
between orders.

Answer: d. 4 orders, 104 days

Solution:
D . = Number of orders per year
Qopt
35,000 = 3.5 = 4 orders per year
10,000
365
3.5
= 104.29 = 104 days
50. The Osila Book Company purchases paper from the Biscocho Paper Company. Osila produces
magazines and paperbacks that require 1,215,000 yards of paper per year. The cost per order for the
company is $1,200 while the cost of holding 1 yard of paper in inventory is $0.08 per year. Determine
the Economic Order Quantity.
a. 180,714
c. 190,919
Answer: c. 190,919
Given:
Co = $1,200
Cc = $0.08
D = 1,215,000 units
320 days per year
93 | P a g e
b. 185,917
d. 200,302
2012
Solution:
Qopt =
2 Co D
Cc
= 2(1,200)(1,215,000)
0.08
= 190,918.83 = 190,919 units
51. In reference to Problem No. 50, determine the minimum total annual cost.
a. $12,972
c. $14,741
b. $13,587
d. $15,274
Answer: d. $15,274
Solution:
TC = Co D + Cc Q
Q
2
= (1,200)(1,215,000) + (0.08)(190,918.83)
190,918.83
2
= $15,273.51 = $15,274
52. In reference to Problem No. 50, determine the optimal number of orders per year and time between
orders.
Answer: d. 6 orders, 57 days
Solution:
Qopt
1,215,000 = 6.36 = 6 orders per year
190,918.83
365 = 57.39 = 57 days
6.36
94 | P a g e
2012
53. The Ligon Bakery produces fruit pies for freezing and subsequent sale. The bakery, which operates 5
days a week, 52 weeks a year, can produce pies at the rate of 64 pies per day. The bakery sets up
the pie-production operation and produces until a predetermined number (Q) have been produced.
When not producing pies, the bakery uses its personnel and facilities for producing other bakery
items. The setup cost for a production run of fruit pies is $500. The cost of holding frozen pies in
storage is $5 per pie per year. The annual demand for frozen fruit pies, which is constant over time, is
5,000 pies. Determine the optimum production quantity (Q).
a. 1,196
c. 2,239
b. 1,352
d. 2,474
Answer: a. 1,196
Given:
Co = $500
Cc = $5
D = 5,000 pies
d = (5,000 260) = 19.23 pies per day
P = 64 pies per day
Solution:
a.) Qopt =
2 Co D .
Cc 1 - d
p
= 2(500)(5,000)
5 1-19.23
64
= 1,195.63 = 1,196
a. $3,071
c. $5,243
b. $4,182
d. $5,284
Answer: b. $4,182
Solution:
TC = Co D + Cc Q 1 - d
Q
2
p
= ($500)(5,000) + (5)(1,195.63)
1,195.63
2
= $4,181.90 = $4,182
95 | P a g e
1 19.23
64
2012
55. In reference to Problem No. 53, determine the optimum number of production runs per year.
a. 2
c. 6
b. 4
d. 8
Answer: b. 4
Solution:
Qopt
5,000
= 4.18 = 4 runs per year
1,195.63
56. In reference to Problem No. 53, determine the optimum cycle time (time between run starts)
a. 39
c. 65
b. 48
d. 74
Answer: d. 74
Solution:
311 days = 74.37 = 74 (optimal cycle time)
4.18
57. In reference to Problem No. 53, determine the run length in working days.
a. 19
c. 23
b. 21
d. 25
Answer: a. 19
Solution:
Q = 1,195.23 = 18.68 = 19 days per order
p
64
58. The Quitain Bicycle Shop operates 364 days a year, closing only on Christmas Day. The shop pays
$300 for a particular bicycle purchased from the manufacturer. The annual holding cost per bicycle is
estimated to be 25 percent of the dollar value of inventory. The shop sells an average of 25 bikes per
week. The ordering cost for each order is $100. Determine the optimal order quantity and the total
minimum cost.
a. 48 at $5,623
c. 59 at $4,416
Answer: c. 59 at $4,416
96 | P a g e
b. 53 at $4,972
d. 62 at $5,183
Given:
2012
Co = $100
Cc = 300 x 0.25 =75
D = 1,300
Solution:
Qopt =
2 Co D
Cc
= 2(100)(1300)
75
= 58.8 = 59
TC = Co D + Cc Q
Q
2
= (100)(1300) + (75)(58.8)
58.8
2
= $4,415.88 = $4,416
59. The Lanuza Petroleum Company uses a highly toxic chemical in one of its manufacturing processes.
It must have the product delivered by special cargo trucks designed for safe shipment of chemicals.
As such, ordering (and delivery) costs are relatively high, at $2,600 per order. The chemical product
is packaged in 1-gallon plastic containers. The cost of holding the chemical in storage is $50 per
gallon per year. The annual demand for the chemical, which is constant overtime, is 2,000 gallons per
year. The lead-time from time of order placement until receipt is 10 days. The company operates 310
working days per year. Compute the optimal order quantity and the total minimum cost.
a. 456 at $22,804
c. 612 at $24,549
Answer: a. 456 at $22,804
Given:
Co = $2,600
Cc = $ 50
D = 2,000
L = 10 days
310 days per year
Solution:
Qopt =
2 Co D
Cc
= 2(2,600)(2,000)
50
= 456.07 = 456
97 | P a g e
b. 562 at $23,782
d. 745 at $25,103
2012
TC = Co D + Cc Q
Q
2
= (2,600)(2,000) + (50)(456.07)
456.07
2
= $22,803.51 = $22,804

a. 35
c. 52
b. 47
d. 64
Answer: d. 64
Solution:
R = dL
R = (64.52) x (10) = 64.52 = 64 gal
61. The Sandico Supermarket stocks Munchies Cereal. Demand for munchies is 4,000 boxes per year
(365 days). It costs the store $60 per order of munchies, and it costs $0.80 per box per year to keep
the cereal in stock. Once an order for munchies is placed, it takes 4 days to receive the order from a
food distributor. Determine the optimal order size and the minimum total annual inventory cost.
a. 57 at $805
c. 75 at $620
Answer: c. 75 at $620
Given:
Co = $60
Cc = $0.80
D = 4,000
L = 4 days
Solutions:
Qopt =
2 Co D
Cc
= 2(60)(4,000)
0.80
= 774.60 = 775
TC = Co D + Cc Q
Q
2
= (60)(4,000) + (0.80)(774.60)
774.60
2
= $619.68 = $620
98 | P a g e
b. 62 at $780
d. 84 at $560
2012

a. 38
c. 56
b. 44
d. 62
Answer: b. 44
Solution:
R = d(L)
R = (10.96) x (4) = 43.84 = 44 boxes
63. The Tenorio Dairy makes cheese to supply to stores in its area. The dairy can make 250 pounds of
cheese per day, and the demand at area stores is 180 pounds per day. Each time the dairy makes
cheese, it costs $125 to set up the production process. The annual cost of carrying a pound of
cheese in a refrigerated storage area is $12. Determine the optimal size and the total annual
inventory cost.
a. 2,211 at $7,429
c. 4,010 at $7,521
b. 3,244 at $7,955
d. 5,122 at $7,602
Answer: a. 2,211 at $7,429

Given:
Co = $125
Cc = $12
D = 65,700 units
d = 180 lbs/day
p = 250 lbs/day
Solution:
Qopt =
2 Co D .
Cc 1 - d
p
= 2(125)(65,700)
12 1-180
250
= 2,210.97 = 2,211
TC = Co D + Cc Q 1 - d
Q
2
p
= (125)(65,700) + (12)(2,210.97) 1 180
2,210.97
2
250
= $7,428.86 = $7,429
99 | P a g e
2012
64. The Rebueno Water Ski Company is the worlds largest producer of water skis. As you might suspect,
water skis exhibit a highly seasonal demand pattern, with peaks during the summer months and
valleys during the winter months. Given the following costs and quarterly sales forecasts, use the
transportation method to design a production plan that will economically meet demand. What is the
cost of the plan?
Quarter
Sales Forecast
1
2
3
4
50,000
150,000
200,000
52,000
Inventory carrying cost

Production per employee
Regular workforce
Overtime capacity
Cost of regular production
Cost of overtime production
Cost of subcontracting
$ 3.00 per pair of skis per quarter

1,000 pairs of skis per quarter
50 workers
a. $20,520,000
c. $28,430,000
b. $25,850,000
d. $30,290,000
Answer: d. $30,290,000
Solution:
PERIOD OF USE
PERIOD OF
PRODUCTION
capacity
56
59
50,000
75
50,000
78
84
50,000
85
88
regular
50,000
50
overtime
50,000
75
85
50,000
1
91
94
20,000
40,000
53
56
50,000
78
81
50,000
40,000
88
91
40,000
regular
50,000
50
53
50,000
overtime
50,000
75
78
50,000
40,000
85
88
40,000
50,000
50
50,000
2,000
75
48,000
50,000
52,000
85
40,000
40,000
subcontract
subcontract
20,000
regular
4
unused
capacity
-
subcontract
53
overtime
regular
2
50
beginning inventory
1
overtime
subcontract
DEMAND
100 | P a g e
50,000
150,000
200,000
2012
PRODUCTION PLAN
PERIOD
DEMAND
REGULAR
OVERTIME
SUBCONTRACT
1
2
3
4
TOTAL
50,000
150,000
200,000
52,000
452,000
50,000
50,000
50,000
50,000
200,000
50,000
50,000
50,000
2,000
152,000
20,000
40,000
40,000
0
100,000
ENDING
INVENTORY
70,000
60,000
0
0
130,000
Total cost = 200,000 ($ 50) + 152,000 ($ 75) + 100,000 ($ 85) + 130,000 ($ 3) = $30,290,000
65. The CEO of Rebueno Water Ski from Problem No. 64 has decided to forgo the companys policy of
guaranteed employment. Assume the cost of hiring and firing workers is $100 per worker hired and
$400 per worker fired. Try level production strategy. If necessary, allow backordering at $10 per pair
of skis per quarter. What is the cost of the plan?
a. $21,421,000
c. $26,716,000
b. $23,483,300
d. $28,835,000
Answer: b. $23,483,300
Solution:
QUARTER
SALES
FORECAST
REGULAR
BACKORDER
INVENTORY
WORKERS
HIRED
FIRED
50,000
113,000
63,000
113
63
150,000
113,000
26,000
113
200,000
113,000
61,000
113
52,000
113,000
113
TOTAL
452,000
452,000
61,000
89,000
63
Level production with backorder:

Total Cost = 452,000 ($50) + 61,000 ($10) + 89,000 ($3) + 63 ($100) = $ 23,483,300
66. In reference to Problem No. 65, use the chase demand production strategy and determine the cost of
plan.
a. $20,928,000
c. $24,542,000
Answer: b. $22,674,200
101 | P a g e
b. $22,674,200
d. $26,356,000
2012
Solution:
Chase Demand
SALES
FORECAST
50,000
150,000
150,000
150
100
200,000
200,000
200
50
52,000
52,000
52
148
TOTAL
452,000
452,000
150
148
QUARTER
REGULAR
WORKERS
HIRED
FIRED
50,000
50
Total Cost = 452,000 ($50) + 100 ($150) + 148 ($400) = $ 22,674,200
67. Hong Apparel, manufacturer of a famous swimwear line, needs help planning production for the next
year. Demand for swimwear follows a seasonal pattern, as shown here. Given the following costs and
demand forecasts, use as a strategy the level production with overtime and subcontracting and
determine the cost of the plan.
MONTH
January
February
March
April
May
June
July
August
September
October
November
December
DEMAND FORECAST
1,000
500
500
2,000
3,000
4,000
5,000
3,000
1,000
500
500
3,000
Beginning workforce
Overtime capacity
Production rate per worker
Regular wage rate
Overtime wage rate
Subcontracting wage rate
Hiring cost
Firing cost
Holding cost
Backordering cost
a. $725,000
c. $529,000
Answer: d. $448,000
102 | P a g e
b. $613,000
d. $448,000
8 workers
unlimited
2,000 units/month
250 units/month
$ 15 per unit
$ 25 per unit
$ 30 per unit
$ 100 per worker
$ 200 per worker
$ 0.50 per unit/month
$ 10 per unit/month
2012
Solution:
Level production with overtime and subcontracting:
MONTH
DEMAND
REGULAR
January
1,000
February
OVERTIME
SUBCON
INVENTORY
WORKERS
HIRED
FIRED
2,000
1,000
500
2,000
2,500
March
500
2,000
4,000
April
2,000
2,000
4,000
May
3,000
2,000
3,000
June
4,000
2,000
1,000
July
5,000
2,000
2,000
1,000
August
3,000
2,000
September
1,000
2,000
1,000
October
500
2,000
2,500
November
500
2,000
4,000
December
3,000
2,000
3,000
TOTAL
24,000
24,000
3,000
26,000
Total cost = 24,000 ($ 15) + 3,000 ($ 25) + 26,000 ($ 0.50) = $ 448,000

68. In reference Problem No. 67, use as a strategy the level production with backorders as needed and
determine the cost of this plan.
a. $403,250
c. $611,460
Answer: a. $403,250
103 | P a g e
b. $524,620
d. $718,500
2012
Solution:
Level production with backorders as needed:
MONTH
DEMAND
REGULAR
January
1,000
February
BACKORDER
INVENTORY
WORKERS
HIRED
FIRED
2,000
1,000
500
2,000
2,500
March
500
2,000
4,000
April
2,000
2,000
4,000
May
3,000
2,000
3,000
June
4,000
2,000
1,000
July
5,000
2,000
August
3,000
2,000
1,000
September
1,000
2,000
2,000
October
500
2,000
500
November
500
2,000
1,000
December
3,000
2,000
TOTAL
24,000
24,000
3,500
16,500
Total cost = 24,000 ($ 15) + 3,500 ($ 10) + 16,500 ($ 0.50) = $ 403,250
69. In reference to Problem No. 67, use as a strategy the chase demand and determine the cost of plan.
a. $532,700
c. $367,600
b. $424,200
d. $288,300
Answer: c. $367,600
Solution: Chase demand
104 | P a g e
MONTH
January
February
March
April
DEMAND
1,000
500
500
2,000
REGULAR
1,000
500
500
2,000
WORKERS
4
2
2
8
HIRED
0
0
0
6
FIRED
4
2
0
0
May
June
July
August
September
October
November
December
TOTAL
3,000
4,000
5,000
3,000
1,000
500
500
3,000
24,000
3,000
4,000
5,000
3,000
1,000
500
500
3,000
24,000
12
16
20
12
4
2
2
12
4
4
4
0
0
0
0
10
28
0
0
0
8
8
2
0
0
24
2012
Total Cost = 24,000 ($ 15) + 28 ($ 100) + 24 ($ 200) = $ 367,600
70. Candelaria Press publishes textbooks for the college market. The demand for college textbooks is
high during the beginning of each semester and then tapers off during the semester. The
unavailability of books can cause a professor to switch adoptions, but the cost of storing books and
their rapid obsolescence must also be considered. Given the demand and cost factors shown here,
use the transportation method to design an aggregate production plan for Candelaria Press that will
economically meet demand. What is the cost of the production plan?
MONTH
February April
May June
August October
November - January
DEMAND FORECAST
5,000
10,000
30,000
25,000
Regular capacity per quarter

Overtime capacity per quarter
Subcontracting capacity per quarter
Regular production rate
Overtime production rate
Subcontracting production rate
Holding cost
a. $1,650,000
c. $1,750,000
Answer: c. $1,800,000
Solution:
105 | P a g e
b. $1,800,000
d. $1,900,000
10,000 books
5,000 books
10,000 books
$ 20 per book
$ 30 per book
$ 35 per book
$ 2.00 per book
2012
PRODUCTION PLAN
MONTHS
FebruaryApril
May-July
AugustOctober
NovemberJanuary
TOTAL
DEMAND
REGUALR
OVERTIME
SUBCONTRACT
ENDING
INVENTORY
5,000
10,000
5,000
10,000
10,000
10,000
5,000
15,000
30,000
10,000
5,000
25,000
10,000
5,000
10,000
70,000
40,000
20,000
10,000
25,000
Total cost = 40,000 ($ 20) + 20,000 ($ 30) + 10,000 ($ 35) + 25,000 ($ 2) = $ 1,800,000
71. Bautistas Empanada is a popular food item during the cold months, but it is marginal in other months.
Use the following demand forecasts to determine the cost of plan if production planning strategy on
level production over the twelve months is used.
MONTH
March
April
May
June
July
August
September
October
November
December
January
February
No backordering
Overtime capacity per month
Subcontracting capacity per month
Regular production cost
Overtime production cost
Subcontracting production cost
Holding cost
Beginning workforce
Production rate
Hiring cost
Firing cost
a. $1,197,000
c. $1,341,000
Answer: b. $1,232,000
106 | P a g e
DEMAND FORECAST
2,000
1,000
1,000
1,000
1,000
1,500
2,500
3,000
9,000
7,000
4,000
3,000
regular production
unlimited
$ 30 per pallet
$ 40 per pallet
$ 50 per pallet
$ 2 per pallet
10 workers
200 pallet per worker per month
$ 5,000 per worker
$ 8,000 per worker
b. $1,232,000
d. $1,475,000
2012
Solution: Level production over the twelve months

MONTH
March
April
May
June
July
August
September
October
November
December
January
February
TOTAL
DEMAND
2,000
1,000
1,000
1,000
1,000
1,500
2,500
3,000
9,000
7,000
4,000
3,000
36,000
REGULAR
3,000
3,000
3,000
3,000
3,000
3,000
3,000
3,000
3,000
3,000
3,000
3,000
36,000
INVENTORY
1,000
3,000
5,000
7,000
9,000
10,500
11,000
11,000
5,000
1,000
0
0
63,500
WORKERS
15
15
15
15
15
15
15
15
15
15
15
15
HIRED
5
0
0
0
0
0
0
0
0
0
0
0
5
FIRED
0
0
0
0
0
0
0
0
0
0
0
0
0
Total cost = 36,000 ($ 30) + 63,500 ($ 2) + 5 ($ 5,000) = $ 1,232,000

72. In reference to Problem No. 71, use a strategy to produce and meet the demand each month and
absorb variations in demand by changing the size of the workforce to determine the cost of plan.
a. $1,560,000
c. $1,722,000
b. $1,602,000
d. $1,850,000
Answer: a. $1,560,000
Solution: Produce to meet demand each month. Absorb variations in demand by changing the size of the
workforce.
MONTH
March
April
May
June
July
August
September
October
November
December
January
February
TOTAL
DEMAND
2,000
1,000
1,000
1,000
1,000
1,500
2,500
3,000
9,000
7,000
4,000
3,000
36,000
REGULAR
2,000
1,000
1,000
1,000
1,000
1,500
2,500
3,000
9,000
7,000
4,000
3,000
36,000
WORKERS
10
5
5
5
5
8
13
15
45
35
20
15
Total cost = 36,000 ($ 30) + 40 ($ 5,000) + 35 ($ 8,000) = $ 1,560,000
107 | P a g e
HIRED
0
0
0
0
0
3
5
2
30
0
0
0
40
FIRED
0
5
0
0
0
0
0
0
0
10
15
5
35
2012
73. In reference to Problem No. 71, use a strategy to keep the workforce at its current level and
supplement with overtime and subcontracting as necessary to determine the cost of plan.
a. $1,571,000
c. $1,391,000
b. $1,453,000
d. $1,293,000
Answer: d. $1,293,000
Solution: Keep the workforce at its current level. Supplement with overtime and subcontracting as
necessary.
MONTH
DEMAND
REGULAR
March
2,000
April
OVERTIME
SUBCON
INVENTORY
WORKERS
HIRED
FIRED
2,000
10
1,000
2,000
1,000
10
May
1,000
2,000
2,000
10
June
1,000
2,000
3,000
10
July
1,000
2,000
4,000
10
August
1,500
2,000
4,500
10
September
2,500
2,000
4,000
10
October
3,000
2,000
3,000
10
November
9,000
2,000
2,000
2,000
10
December
7,000
2,000
2,000
3,000
10
January
4,000
2,000
2,000
10
February
3,000
2,000
1,000
10
TOTAL
36,000
24,000
7,000
5,000
21,500
Total cost = 24,000($ 30) + 7,000 ($ 40) + 5,000 ($ 50) + 21,500 ($ 2) = $1,293,000
74. The Palanca Company produces two products, A and B, that are made from components C and D.
Given the following product structures, master scheduling requirements, and inventory information,
determine when order should be released for product A and the size of the order.
Product
On Hand
A
B
C
D
10
5
140
200
Scheduled
Receipts
0
0
0
250, period 2
Lot Size
1
1
150
250
Product Structure Diagram:

A
LT = 3
C(3)
LT = 3
108 | P a g e
B
LT = 2
D(2)
LT = 3
D(3)
LT = 3
Level 0
Level 1
Gross
Requirements
100, period 8
200, period 6
-
a. 150, period 6
c. 90, period 5
2012
b. 100, period 8
d. 80, period 7
Answer: c. 90, period 5

Solution:
Item: A
LCC: 0
Lot Size: 1
LT:3
Gross
Requirements
Scheduled
Receipts
Projected On
Hand
Net
Requirements
Planned
Order
Receipts
Planned
Order
Releases
Period
PD
8
100
10
10
10
10
10
10
10
10
0
90
90
90
75. In reference to Problem No. 74, determine when order should be released for product B and the size
of the order.
a. 250, period 2
c. 100, period 6
b. 195, period 4
d. 90, period 8
Answer: b. 195, period 4

Solution:
Item: B
LCC: 0
Lot Size: 1
LT:2
Gross
Requirements
Scheduled
Receipts
Projected On
Hand
Net
Requirements
Planned
Order
Receipts
Planned
Order
Releases
109 | P a g e
Period
PD
6
200
0
195
195
195
2012
76. In reference to Problem No. 74, determine when order should be released for product C and the size
of the order.
a. 250, period 2
c. 100, period 3
b. 195, period 4
d. 150, period 1
Answer: d. 150, period 1

Solution:
Item: C
LCC: 1
Lot Size: 150
LT:4
Gross
Requirements
Scheduled
Receipts
Projected On
Hand
Net
Requirements
Planned
Order
Receipts
Planned
Order
Releases
Period
PD
20
20
20
270
(90 x 3)
140
140
140
140
140
20
130
150
150
77. In reference to Problem No. 74, determine when order should be released for product D and the size
of the order.
a. 250, period 2 & 250, period 3
c. 250, period 3 & 500, period 4
b. 500, period 1 & 250, period 2

d. 500, period 5 & 250, period 6
Answer: a. 250, period 2 & 250, period 3

Solution:
Item: D
LCC: 1
Lot Size: 250
LT:4
Gross
Requirements
Scheduled
Receipts
Projected On
Hand
Net
Requirements
Planned
Order
Receipts
Planned
Order
Releases
110 | P a g e
Period
PD
585
(195 x 3)
180
(90 x 2)
115
185
135
65
250
250
20
20
20
250
200
200
450
250
450
250
2012
78. Given the following MRP matrix, what is the entry value for X?
Item: E
LCC: 1
Lot Size: 50
LT:2
Gross
Requirements
Scheduled
Receipts
Projected On
Hand
Net
Requirements
Planned
Order
Receipts
Planned
Order
Releases
Period
PD
20
30
50
50
60
90
40
60
50
40
X
Y
a. 20
c. 50
b. 40
d. 70
Answer: b. 40
Solution:
Item: E
LCC: 1
Lot Size: 50
LT:2
Gross
Requirements
Scheduled
Receipts
Projected On
Hand
Net
Requirements
Planned
Order
Receipts
Planned
Order
Releases
Period
PD
20
30
50
50
60
90
40
60
50
40
20
40
X = 40
10
50
50
79. In reference to Problem No. 78, what is the entry value for Y?
a. 20
c. 50
Answer: a. 20
111 | P a g e
b. 40
d. 70
2012
Solution:
Item: E
LCC: 1
Lot Size: 50
LT:2
Gross
Requirements
Scheduled
Receipts
Projected On
Hand
Net
Requirements
Planned
Order
Receipts
Planned
Order
Releases
Period
PD
20
30
50
50
60
90
40
60
40
40
30
10
10
Y = 20
50
50
50
50
40
20
50
40
50
50
80. In reference to Problem No. 79, what is the entry value for Z?
a. 50
c. 100
b. 70
d. 150
Answer: a. 50
Solution:
Item: E
LCC: 1
Lot Size: 50
LT:2
Gross
Requirements
Scheduled
Receipts
Projected On
Hand
Net
Requirements
Planned
Order
Receipts
Planned
Order
Releases
112 | P a g e
Period
PD
20
30
50
50
60
90
40
60
40
40
30
10
10
10
20
60
40
50
50
50
50
60
50
50
50
60
50
Z = 50
50
40
20
50
40
50
2012
81. Referring to the following product structure diagram, how many Es are needed for each A.
A
B(3)
C(5)
D(4)
C(2)
D(3)
G(5)
F(2)
J(3)
E(3)
a. 85
c. 125
b. 110
d. 130
Answer: c. 125
Solution:
E = (3 X 5 X 3) + (4 X 5 X 4) = 45 + 80 = 125
82. In reference to problem no. 81, how many Js are needed for two As?
a. 80
c. 120
Answer: c. 120
Solution:
E = (3 X 5 X 4) (2) = 120
113 | P a g e
b. 100
d. 140
H(2)
E(4)
I(3)
2012
83. Capistrano Cans packages processed food into cans for a variety of customers. The factory has four
multipurpose cookers and canning lines that can pressure-cook, vacuum-pack, and applies labels to
just about any type of food or size of can. The processing equipment was purchased some years
apart, and some of the cookers are faster and more efficient than others. Capistrano Cans has four
orders that need to be run today for a particular customer: canned beans, canned peaches, canned
tomatoes, and canned corn. The customer is operating under a just-in-time production system and
needs the mixed order of canned food tomorrow. Capistrano Cans has estimated the number of
hours required to pressure-cook, process, and can each type of food by type of cooker as follows:
Cooker
Food
Beans
Peaches
Tomatoes
Corn
10
6
7
9
5
2
6
5
6
4
5
4
10
6
6
10
Due to time constraints imposed by lengthy changeover procedures, only one job can be assigned to
each cooker. How should the jobs be assigned to the cookers in order to process the food most
efficiently?
a. Beans-1, Peaches-2, Tomatoes-3, Corn-4
c. Beans-2, Peaches-1, Tomatoes-4, Corn-3
b. Beans-4, Peaches-3, Tomatoes-2, Corn-1

d. Beans-1, Peaches-3, Tomatoes-4, Corn-2
Answer: c. Beans-2, Peaches-1, Tomatoes-4, Corn-3

Solution:
Row Reduction:
Cooker
Food
Beans
Peaches
Tomatoes
Corn
5
4
2
5
0
0
1
1
1
2
0
0
5
4
1
6
3
2
0
3
0
0
1
1
1
2
0
0
4
3
0
5
3
2
0
3
0
0
1
1
1
2
0
0
4
3
0
5
Column Reduction:
Cooker
Food
Beans
Peaches
Tomatoes
Corn
Cover all zeros:
Cooker
Food
Beans
Peaches
Tomatoes
Corn
114 | P a g e
2012
Since the number of lines does not equal the number of rows, continue.
Modify the matrix:
Cooker
Food
Beans
Peaches
Tomatoes
Corn
1
0
0
1
0
0
3
1
1
2
2
0
2
1
0
3
1
0
0
1
0
0
3
1
1
2
2
0
2
1
0
3
1
0
0
1
0
0
3
1
1
2
2
0
2
1
0
3
Cover all zeros:

Cooker
Food
Beans
Peaches
Tomatoes
Corn
Make the assignments:
Cooker
Food
Beans
Peaches
Tomatoes
Corn
84. In reference to Problem No. 83, when can they complete the customers order?
a. 4
c. 6
b. 5
d. 7
Answer: c. 6
Cooker
Food
Beans
Peaches
Tomatoes
Corn
10
6
7
9
5
2
6
5
6
4
5
4
10
6
6
10
Beans will take 5 hours to cook, peaches will take 6 hours, tomatoes 6 hours, and corn 4 hours. Given
that the four cooker/ canning lines can operate simultaneously, we can complete the customers order in
6 hours.
115 | P a g e
2012
85. Liquido Printing Shop has four jobs waiting to be run this morning. Fortunately, they have four printing
presses available. However, the presses are of different vintage and operate at different speeds. The
approximate times (in minutes) required to process each job on each press are given next. Assign jobs to
presses so that the batch can be completed as soon as possible.
Press
Job
A
B
C
D
1
20
40
30
60
2
90
45
70
45
a. A-1, B-2, C-3, D-4

c. A-4, B-1, C-3, D-2
3
40
50
35
70
4
10
35
25
40
b. A-3, B-1, C-4, D-2

d. A-2, B-3, C-4, D-1
Answer: c. A-4, B-1, C-3, D-2

Solution:
Row reduction:
Job
A
B
C
D
1
10
5
5
20
2
80
10
45
5
3
30
15
10
30
4
0
0
0
0
1
5
0
0
15
2
75
5
40
0
3
20
5
0
20
4
0
0
0
0
1
5
0
0
15
2
75
5
40
0
3
20
5
0
20
4
0
0
0
0
Column reduction:
Job
A
B
C
D
Cover all zeroes:
Job
A
B
C
D
The number of lines equals the number of rows, so this is the final solution. Make assignments:
Job
A
B
C
D
1
5
0
0
15
2
75
5
40
0
3
20
5
0
20
4
0
0
0
0
Assign job A to press 4, job B to press 1, job C to press 3, and job D to press 2.
116 | P a g e
2012
86. In reference to Problem No. 85, when can the entire batch be completed?
a. 35
c. 70
b.45
d. 90
Answer: b. 45
Solution:
Job
A
B
C
D
1
20
40
30
60
2
90
45
70
45
3
40
50
35
70
4
10
35
25
40
Since the jobs can be run concurrently, the entire batch will be completed by the maximum completion
time of the individual jobs, or job Ds time of 45 minutes.
87. Today is the morning of September 1. Because of the approaching holiday season, Mr. Cuenco is
scheduled to work 7 days a week for the next 2 months. Septembers work for Mr. Cuenco consists
of five jobs, A, B, C, D, E. Job A takes 5 days to complete and is due September 10, job B takes 10
days to complete and is due September 15, job C takes 2 days to process and is due September 5,
job D takes 8 days to process and is due September 12, and job E, which takes 6 days to process, is
due September 8.
What is the average completion time if you sequence the jobs by First-Come, First-Serve (FCFS)?
a. 15.00
c. 17.80
b. 16.40
d. 18.60
Answer: d. 18.60
Solution:
FCFS
Sequence
A
B
C
D
E
Total
Average
Start Time
0
5
15
17
25
Processing
Time
5
10
2
8
6
Completion
Time
5
15
17
25
31
93
93/5 = 18.60
Due Time
Tardiness
10
15
5
12
8
0
0
12
13
23
48
48/5 = 9.6
due date (DDATE)?
a. 5.6
c. 6.8
Answer: a. 5.6
117 | P a g e
b. 6.0
d. 9.6
2012
Solution:
DDATE
Sequence
C
E
A
D
B
Total
Average
Start Time
0
2
8
13
21
Processing
Time
2
6
5
8
10
Completion
Time
2
8
13
21
31
75
75/5 = 15.00
Due Time
Tardiness
5
8
10
12
15
0
0
3
9
16
28
28/5 = 5.6
a. 2
c. 4
b. 3
d. 5
Answer: c. 4
Solution: Slack = (due date todays date) processing time
Job A = (10 1) 5 = 4
Job B = (15 1) 10 = 4
Job C = (5 1) 2 = 2
Job D = (12 1) 8 = 3
Job E = (8 1) 6 = 1
SLACK
Sequence
E
C
D
A
B
Total
Average
Start Time
0
6
8
16
21
Processing
Time
6
2
8
5
10
Completion
Time
6
8
16
21
31
82
82/5 = 16.40
Due Time
Tardiness
8
5
12
10
15
0
3
4
11
16
34
34/5 = 6.8
a. 26
c. 17
Answer: d. 16
118 | P a g e
b. 23
d. 16
2012
Solution:
SPT
Sequence
C
A
E
D
B
Total
Average
Start Time
0
2
7
13
21
Processing
Time
2
5
6
8
10
Completion
Time
2
7
13
21
31
74
74/5 = 14.80
Due Time
Tardiness
5
10
8
12
15
0
0
5
9
16
30
30/5 = 6.0
rule?
a. A-B-C-D-E
c. E-C-D-A-B
b. C-E-A-D-B
d. E-D-B-A-C
Answer: d. E-D-B-A-C
Solution: Critical Ratio = Time Remaining / Work Remaining
Job A = (10 1)/ 5 = 1.80
Job B = (15 1)/ 10 = 1.40
Job C = (5 1)/ 2 = 2.00
Job D = (12 1)/ 8 = 1.37
Job E = (8 1)/ 6 = 1.16
Sequence: Smallest to Highest CR = E-D-B-A-C
92. Today is day 4 of the planning cycle. Sequence the following jobs by FCFS and determine the
average completion time.
Job
A
B
C
D
E
F
G
a. 19.91
c. 23.81
Answer: d. 24.71
119 | P a g e
Processing Time
(in days)
3
10
2
4
5
8
7
b. 21.61
d. 24.71
Due Date
10
12
25
8
15
18
20
2012
Solution:
FCFS
Sequence
A
B
C
D
E
F
G
Total
Average
Start Time
4
7
17
19
23
28
36
Processing
Time
3
10
2
4
5
8
7
Completion
Time
7
17
19
23
28
36
43
173
173/7 = 24.71
Due Time
Tardiness
10
12
25
8
15
18
20
0
5
0
15
13
18
23
74
74/7 = 10.6
due date (DDATE)?
a. 6.66
c. 8.86
b. 7.86
d. 9.66
Answer: c. 8.86
Solution:
DDATE
Sequence
D
A
B
E
F
G
C
Total
Average
Start Time
4
8
11
21
26
34
41
Processing
Time
4
3
10
5
8
7
2
Completion
Time
8
11
21
26
34
41
43
184
184/7 = 26.29
Due Time
Tardiness
8
10
12
15
18
20
25
0
1
9
11
16
21
14
62
62/7 = 8.86
a. 4
c. 6
b. 5
d. 7
Answer: d. 7
Solution: Slack = (due date todays date) processing time
Job A = (10 4) 3 = 3
Job B = (12 4) 10 = -2
Job C = (25 4) 2 = 19
Job D = (8 4) 4 = 0
Job E = (15 4) 5 = 6
Job F = (18 4) 8 = 6
120 | P a g e
2012
Job G = (20 4) 7 = 9
SLACK
Sequence
B
D
A
E
F
G
C
Total
Average
Start Time
4
14
18
21
26
34
41
Processing
Time
10
4
3
5
8
7
2
Completion
Time
14
18
21
26
34
41
43
197
197/7 = 28.14
Due Time
Tardiness
12
8
10
15
18
20
25
2
10
11
11
16
21
18
89
89/7 = 12.71
a. 31
c. 17
b. 21
d. 11
Answer: a. 31
Solution:
SPT
Sequence
C
A
D
E
G
F
B
Total
Average
Start Time
4
6
9
13
18
25
33
Processing
Time
2
3
4
5
7
8
10
Completion
Time
6
9
13
18
25
33
43
119
119/7 = 17.00
Due Time
Tardiness
25
10
8
15
20
18
12
0
0
5
3
5
15
31
40
40/7 = 5.71
rule?
a. A-B-C-D-E-F-G
c. F-B-D-A-E-G-C
b. C-E-A-D-B-G-F
d. G-F-E-D-B-A-C
Answer: c. F-B-D-A-E-G-C
Solution: Critical Ratio = Time Remaining / Work Remaining
Job A = (10 4)/ 3 = 2.00
Job B = (12 4)/ 10 = 0.80
Job C = (25 4)/ 2 = 11.00
Job D = (8 4)/ 4 = 1.00
Job E = (15 4)/ 5 = 2.20
Job F = (18 4)/ 8 = 0.50
121 | P a g e
2012
Job G = (20 4)/ 7 = 2.29

Sequence: Smallest to Highest CR = F-B-D-A-E-G-C
97. Zerrudo Fine Restoration has received a rush order to refinish five carousel animals an alligator, a
bear, a cat, a deer, and an elephant. The restoration involves two major processes: sanding and
painting. Mr. Zerrudo takes care of the sanding; his son does the painting. The time required for
each refinishing job differs by the state of disrepair and degree of detail of each animal. Given the
following processing times (in hours), determine the order in which the jobs should be processed so
that the rush order can be completed as soon as possible.
Job
A
B
C
D
E
Process 1
6
11
7
9
5
a. B-A-C-D-E
c. E-A-D-B-C
Process 2
8
6
3
7
10
b. D-E-A-C-B
d. A-D-E-B-C
Answer: c. E-A-D-B-C
Solution:
The smallest processing time is 3 hours, occurs at process 2 for job C, so we place job C to the end of
the sequence.
C
The next smallest is 5 hours. It occurs at process 1 for job E, so we place it to the beginning of the
sequence.
E
The next smallest time is 6 hours. It occurs at process 1 for job A and at process 2 for job B. Thus, we
place job A as near to the beginning of the sequence and job B as near to the end.
E
The only remaining is job D. It is placed in the only available slot, in the middle of the sequence.
E
122 | P a g e
2012
98. Satumira Car Service has five cars waiting to be washed and waxed. The time required (in minutes)
for each activity is given below. In what order should the cars be processed through the facility using the
Johnsons rule?
Car
1
2
3
4
5
Wash
5
7
10
8
3
Wax
10
2
5
6
5
a. 2-1-5-4-3
c. 3-2-4-5-1
b. 5-1-4-3-2
d. 4-3-1-2-5
Answer: b. 5-1-4-3-2
Solution:
The lowest processing time is 2 minutes for waxing car 2. Since waxing is the second operation,
we place car 2 as near to the end of the sequence as possible, in last place.
The next-lowest time is 3 minutes for washing car 5. Since washing is the first operation, we
place car 5 as near to the front of the sequence as possible, in first place.
The next-lowest time is 5 minutes for washing car 1 and waxing car 3. Car 1 is scheduled in
second place, and car 3 is put in the next-to-last place (i.e. fourth). That leaves car 4 for third
place.
Sequence: 5-1-4-3-2
99. Au Princena works in a cosmetic factory filling, capping, and labeling bottles. She is asked to process
an average of 150 bottles per hour through her work cell. If one kanban is attached to every
container, a container holds 25 bottles, it takes 30 minutes to receive new bottles from the previous
workstation, and the factory uses a safety stock factor of 10 percent, how many kanbans are
needed for the bottling process?
a. 3
c. 7
b. 5
d. 9
Answer: a. 3
Given:
d = 150 bottles per hour
L = 30 minutes = 0.5 hour
S = 0.10 (150 x 0.5) = 7.5
C = 25 bottles
Solution:
dL + S
(150 x 0.5) + 7.5
N = -------------------- = ------------------------------- = 3.3 = 3 kanbans or containers
C
25
123 | P a g e
2012
100. An assembly station is asked to process 100 circuit boards per hour. It takes 20 minutes to receive
the necessary components from the previous workstation. Completed circuit boards are placed in a
rack that will hold 10 boards. The rack must be full before it is sent on to the next workstation. If the
factory uses a safety factor of 10 percent, how many kanbans are needed for the circuit board
assembly process?
a. 2
c. 6
b. 4
d. 8
Answer: b. 4
Given:
d = 100 circuit boards per hour
L = 20 minutes = 20/60 = 0.33333 hour
S = 0.10 (100 x 0.33333) = 3.33333
C = 10 bottles
Solution:
dL + S
(100 x 20/60) + 3.33
N = -------------------- = --------------------------------- = 3.67 = 4 kanbans or containers
C
10
124 | P a g e
2012
REFERENCES
[1]
Russel, R.S. and Taylor, B.W., III Operations Management, Third Edition, Prentice Hall, Inc.,
2000
[2]
Stevenson, W.J., Production/ Operations Management, Fifth Edition. McGraw Hill Companies,
Inc., 1996
125 | P a g e

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SOLVED PROBLEMS IN

Solved Problems in Production Planning & Control

FORMULAS IN PRODUCTION PLANNING & CONTROL

Solved Problems in Production Planning & Control

y = forecast for demand for period x

Solved Problems in Production Planning & Control

Mean Absolute Percent Deviation (MAPD)

Mean Squared Error =

Solved Problems in Production Planning & Control

Solved Problems in Production Planning & Control

Total Annual Inventory Cost

Solved Problems in Production Planning & Control

Solved Problems in Production Planning & Control

III. Material Requirements Planning

Solved Problems in Production Planning & Control

Sequencing Jobs through Two Serial Processes:

Solved Problems in Production Planning & Control

/100 X 100 = __________%

Solved Problems in Production Planning & Control

PROBLEMS IN PRODUCTION PLANNING & CONTROL - QUALITATIVE

b. Level Decision Rule

6. A level of inventory in stock at which a new order is placed.

Solved Problems in Production Planning & Control

10. A transportation route along which shipments cannot be transported.

b. Manufacturing Resource Planning

Solved Problems in Production Planning & Control

b. Continuous Inventory System

b. Aggregate Production Planning

21. It is the design and operation of productive systems.

b. Inventory Master File

Solved Problems in Production Planning & Control

b. Qualitative Forecast Method

30. The absolute forecast error measured as a percent of demand.

b. Mean Absolute Deviation

b. Manufacturing Resource Planning

Solved Problems in Production Planning & Control

Solved Problems in Production Planning & Control

b. Continuous Inventory System

b. Manufacturing Resource Planning

Solved Problems in Production Planning & Control

b. Inventory Master File

b. Job Shop Operation

53. An operations strategy is concerned with which of the following?

b. Short Term Competitive Strategies

b. Aggregate Production Planning

Solved Problems in Production Planning & Control

60. A fixed order quantity that minimizes total inventory costs.

b. Earliest Due Date

Solved Problems in Production Planning & Control

b. Inventory Master File

69. Typically a strategy breaks down into what major components?

b. Mean Absolute Deviation

Solved Problems in Production Planning & Control

b. Continuous Inventory System

Solved Problems in Production Planning & Control

84. A pattern search algorithm for aggregate planning.

b. Level Decision Rule

85. Refers to the standard hours of work assigned to the facility .

b. Continuous Inventory System

Solved Problems in Production Planning & Control

b. Aggregate Production Planning

b. Continuous Inventory System

96. A percent of capacity held in reserve for unexpected occurrences.