30 Questions
Which time horizon refers to a period in which capacity can be completely changed and new resources can be added?
Long term
Why do organizations forecast sales?
To make supply decisions ahead of demand
Which time horizon typically covers a week or a month?
Short term
What is the aim of forecasting and capacity planning?
To calculate capacity related information and data
Which time horizon is in between short term and long term?
Medium term
Which business has a long term time horizon of 30 years?
Electric Utility
According to the text, forecasting is difficult because of which of the following reasons?
All of the above
According to the text, what are the consequences of poor forecasts?
Both Excess Inventory and Poor Availability
What is the main purpose of forecasting?
To match supply and demand
According to the text, which statement about forecasting models is true?
Forecasts are rarely perfect
What are the steps in the forecasting process?
Evaluate and analyze appropriate data, select and test the forecasting model, generate the forecast
Which type of forecasting method is based on human judgement and opinions?
Qualitative Methods
Which of the following is NOT a quantitative forecasting method?
Executive opinion
Which forecasting technique gives more weight to the most recent data?
Exponential smoothing
Which forecasting technique smoothes both the level and trend of the data?
Exponential smoothing
Which forecasting technique smoothes the level, trend, and seasonal factors of the data?
Holt-Winter’s Exponential Smoothing
What is the definition of capacity in the context of capacity planning?
The maximum output rate that can be achieved by a facility
What is the formula for capacity utilization?
Actual output rate / design capacity
Which of the following best describes the definition of takt time?
The synchronization of work flow with customer demand
What is the formula to calculate takt time?
Takt Time = Net available time to work / customer demand
If there are 5 working days in a week, 2 shifts per day with 8 hours per shift, and a 1-hour allowance per shift, what is the net available time to work?
72 hours
If the customer demand is 120 parts per week, what is the takt time in minutes?
35 minutes
What does operator flexibility refer to in the context of takt time?
The ability of operators to adapt to changing customer demand
What is the work content after smoothing to takt time?
6
According to the text, what is the formula for Economic Order Quantity (EOQ)?
Q = (2CoD/Ch)½
What are the costs associated with holding stock (Ch)?
Working capital cost
What is the formula for Total Cost of Inventory (Ct)?
Ct = ChQ/2 + CoD/Q
What is the purpose of the Re-order Level in inventory management?
To determine when to place an EOQ order
What are some real-world 'adaptations' in inventory management?
All of the above
What are some criticisms of the EOQ / EBQ optima?
All of the above
Study Notes
Factory Operations and Production Planning
- Time horizons in production planning include short term, long term, and medium term.
- Short term planning involves fixed capacity and resources, typically for a week or a month.
- Long term planning allows for complete changes in capacity and resources, typically for more than one year.
- Medium term planning falls in between short and long term planning and involves flexing current resources.
- Different businesses have different time horizons for their planning, based on their industry.
- Forecasting and capacity planning are important for making supply decisions and carrying out various planning activities.
- Forecasting helps in demand and inventory planning, while capacity planning involves production and distribution planning.
- Forecasting is challenging and often inaccurate, with two-thirds of sales forecasts having a margin of error exceeding 25%.
- Poor forecasts can lead to excess inventory or poor availability of products, causing financial and logistical issues.
- Improving the match between supply and demand can be achieved through communication, collaboration, and robust baseline forecasting.
- Integrated cross-functional planning is necessary for aligning demand and supply planning processes across different functions.
- Capacity planning involves determining the maximum output rate that can be achieved by a facility and reconciling customer demand with input resources.
Test your knowledge of forecasting methods and statistical techniques used in data analysis. This quiz covers qualitative and quantitative methods, including executive opinion, market research, weighted moving average, exponential smoothing, linear regression, and more. See how well you understand the importance of relevant data in forecasting accuracy.
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