APICS Supply Planning 4 — Questions and Answers
Question 1: A manufacturer uses a 'chase strategy' in aggregate production planning. Which of the following best describes this approach?
- Maintaining a level workforce and building inventory during slow periods
- Varying output rate to match demand fluctuations while keeping inventory minimal (Correct answer)
- Outsourcing all production during peak demand periods
- Setting production at the average annual demand rate
Correct 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.
Question 2: Which supply planning technique is specifically designed to handle dependent demand for components while independent demand is handled by a different method?
- Reorder point (ROP) system
- Material Requirements Planning (MRP) (Correct answer)
- Economic Order Quantity (EOQ) model
- Two-bin system
Correct 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.
Question 3: In S&OP (Sales and Operations Planning), the supply review meeting's primary output is:
- A finalized customer delivery schedule
- A preliminary supply plan that identifies capacity gaps and constraints to be resolved (Correct answer)
- An updated demand forecast by SKU
- A list of approved suppliers for the next quarter
Correct 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.
Question 4: What is the key difference between 'planned orders' and 'firm planned orders' in an MRP system?
- Planned orders are for purchased items; firm planned orders are for manufactured items
- Firm planned orders are frozen by the planner and will not be automatically changed by MRP recalculations (Correct answer)
- Planned orders have been released to production; firm planned orders have not
- Firm planned orders require management approval before being created
Correct 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.
Question 5: A company is considering postponement as a supply planning strategy. Which scenario would benefit most from this approach?
- A commodity product with stable demand and a single customer
- A product with a common platform that is differentiated late in the process for regional markets (Correct answer)
- A make-to-order product with highly customized specifications
- A product with very short shelf life requiring immediate shipment
Correct 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.
Question 6: Which lot-sizing technique minimizes total ordering and holding costs by balancing the two over the planning horizon?
- Lot-for-lot (L4L)
- Part period balancing (PPB) (Correct answer)
- Fixed order quantity (FOQ)
- Period order quantity (POQ)
Correct 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.
Question 7: In capacity requirements planning (CRP), a 'load profile' shows:
- The financial budget allocated to a work center over time
- The total hours of work required at each work center compared to available capacity (Correct answer)
- The number of operators assigned to each shift
- The maintenance schedule for production equipment
Correct 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.
APICS Supply Planning 4
A manufacturer uses a 'chase strategy' in aggregate production planning.
Which of the following best describes this approach?