OMGT4743 Exam I Review Sheet

 

Exam I will cover the following chapters: 1, 2, 3, and Forecasting Material

Specifically (i.e., study this stuff the most)

1. How to develop a forecast using moving averages and naive method.

2. How to develop an Aggregate Production Plan (APP).

3. How to develop an APP using a pure chase strategy.

4. How to develop an APP using a pure level strategy.

5. How to develop an APP using a hybrid strategy.

6. How to develop a Master Produciton Schedule (MPS).

7. How to develop an MPS for several product lines from an APP.

 

Questions on the exam will be problem solving type questions. There will be NO multiple choice, fill in the blank, etc. Be prepared to find solutions, discuss those solutions, and give explanations to problems (i.e., word problem type questions).

Here are some sample problems for you to attempt. It would behoove you to attempt these problems and then take a look at the solutions I post on the web (HINT: you may see problems very similar to these in the near future). I will post a solutions page by Friday afternoon for those who wish to check their work.

 

Problem 1 - Develop an APP

Clem and his sons (C&S) manufacture a line of baseball logo hats. Hence, the name C&S Logo Hat Inc. Their line consists of three different types of logo hat: Elasto-Fit, Snap-back, and Velcro. The company produces a basic hat template and then runs specific production for each type after. While the demand for each type of hat varies the same work centers are used in the production of each hat type. In fact, C&S have some of the most advanced machines in the business and can switch production from one type of hat almost instanteneously. Set-up costs and switch-over times are therefore negligible.

Table 1.1a displays the last 12 years of demand data for the company's logo hats.  Develop a naive, 3 year, and 5 year moving average forecast for the data and forecast what the upcoming year's forecast should be.  Use an error measurement such as MAD to compare the 3 forecasting models to determine which should be used to forecast the upcoming year's forecast.

Table 1.1a

For planning purposes, C&S uses a quarterly sales forecast that is then used in aggregate production planning. They then break this quarterly plan into a monthly plan that drives the other aspects of the company (i.e., purchasing, materials management, etc.). The information in Table 1.1 is based on what the marketing folks have given Jimmy, the Master Scheduler, regarding the quarterly forecast.

Table 1.1

The cost of carrying inventory is calculated at $0.40 per unit per period. Jimmy has been told they cannot afford stockouts and there is no backordering. The basic hat C&S makes is a commodity. Maximum production capacity is 45000 per month. No work can be subcontracted and overtime work by employees is not allowed. However, the company will allow extra inventory to carry over from quarter to quarter and year to year.

C&S has 25 workers on staff now and each worker can produce 1000 hats per quarter. C&S works the same amount of days per month and will keep the workers on staff after this APP is completed (i.e., no matter how manner workers are left after the last quarter they will all be retained). The labor force is fairly liquid and workers can be readily hired or layed off. Hiring costs are $200 per worker and layoff costs are $400 per worker. His boss suggested they just follow the demand, a chase strategy, through the quarters to minimize un-needed inventory. However, the company HR department always complains about hiring and firing costs so they have suggested a pure level strategy. Jimmy needs to develop an aggregate production plan (APP) for the data given in Table 1.1 that minimizes costs but complies with all company policies. Help Jimmy out.

 

Problem 2 - Develop an MPS for Each Product Line Based on the APP from Problem 1

After Jimmy works out a suitable APP, he must then create a master production schedule (MPS) for the three lines of hats by month. He knows that the demand for the three types of hats is not evenly distributed per product line. He has the following information, Table 1.2, on each of the three hat lines. Help Jimmy create an MPS for the three product lines.

Table 1.2

The Snap-back hats make up 45% of the demand and the demand is equally distributed across all four quarters. The demand for the Elasto-fit and Velcro hats are evenly distributed across the entire year and make up the rest of annual demand (refer to Table 1.2). At the present, there are none of any of these hats in stock. Help Jimmy create the three master schedules for the three product lines with the information given.