Supply Planning Flashcards

A manufacturer uses a 'chase strategy' in aggregate production planning. Which of the following best describes this approach?

Answer: Varying output rate to match demand fluctuations while keeping inventory minimal

A chase strategy adjusts production output — through hiring, layoffs, or overtime — to closely match actual demand, minimizing finished goods inventory.

Which supply planning technique is specifically designed to handle dependent demand for components while independent demand is handled by a different method?

Answer: Material Requirements Planning (MRP)

MRP is designed for dependent demand items — components whose demand is derived from the parent item's production plan rather than being independently ordered by customers.

In S&OP (Sales and Operations Planning), the supply review meeting's primary output is:

Answer: A preliminary supply plan that identifies capacity gaps and constraints to be resolved

The supply review assesses whether available capacity and supply resources can meet the demand plan, highlighting gaps that need resolution before the executive S&OP meeting.

What is the key difference between 'planned orders' and 'firm planned orders' in an MRP system?

Answer: Firm planned orders are frozen by the planner and will not be automatically changed by MRP recalculations

A firm planned order is manually fixed by a planner, preventing the MRP system from automatically rescheduling or deleting it during replanning runs.

A company is considering postponement as a supply planning strategy. Which scenario would benefit most from this approach?

Answer: A product with a common platform that is differentiated late in the process for regional markets

Postponement works best when a product has a common base that can be held as generic inventory and customized (labeled, configured, or packaged) only when actual regional demand is known.

Which lot-sizing technique minimizes total ordering and holding costs by balancing the two over the planning horizon?

Answer: Part period balancing (PPB)

Part period balancing accumulates demand periods until the cumulative holding cost equals the ordering cost, then places one order, balancing both costs.

In capacity requirements planning (CRP), a 'load profile' shows:

Answer: The total hours of work required at each work center compared to available capacity

A CRP load profile compares the work center's required load (from planned and released orders) against available capacity, revealing overloads and underloads by time period.