Org Management
Study Guide for the Second Exam
Aggregate Production Planning (APP)
1. What are the major inputs, constraints, and outputs of the aggregate production plan (APP)?
Inputs - Strategic objectives of the corporation, policies, demand.
Constraints - financial constraints (cash) and capacity constraints (machining capacity, limited labor in certain skill category, a critical component and/or raw material.)
Outputs - is to determine the gross levels of inventory, overtime, subcontracting, backordering, workers hired and/or fired. Usually the levels of these variables are expressed in terms of monthly, bi-monthly or quarterly figures.
2. APP is an intermediate term plan that can span a period of 3 months to a year
3. Does APP have to be in terms of a real product?
No, the product can be a pseudo product ( Car with 2 transmissions) or or the generic name for a family of products.
4. Do the costs of carrying inventory, hiring, firing, backordering exist in the accounting books?
They do not exist in the books.
The decision maker must estimate these cost figures and use them for choosing between the plans. The actual cost of the plan can be quite different from the computations we make for decision making purposes.
5. Where does APP fit in the hierarchy of plans?
Business Strategy v
Operations Strategy v
Aggregate Production Plan v
6. What is a pure strategy? A Level (Toyota) or Chase (Construction) strategy
What is a mixed strategy? A strategy that uses two or more control variables.
7. How do we determine (judge) whether one plan is better than the other?
The decision maker must estimate these cost figures and use them for choosing between the plans.
8. Is it appropriate for a company, which competes on the basis of quality, to construct a chase plan?
No, level plan when quality is the order winner, chase when cost is the main consideration and the product does not require a complex
Aggregate Production Planning (APP)
1. What are the major inputs, constraints, and outputs of the aggregate production plan (APP)?
Inputs - Strategic objectives of the corporation, policies, demand.
Constraints - financial constraints (cash) and capacity constraints (machining capacity, limited labor in certain skill category, a critical component and/or raw material.)
Outputs - is to determine the gross levels of inventory, overtime, subcontracting, backordering, workers hired and/or fired. Usually the levels of these variables are expressed in terms of monthly, bi-monthly or quarterly figures.
2. APP is an intermediate term plan that can span a period of 3 months to a year
3. Does APP have to be in terms of a real product?
No, the product can be a pseudo product ( Car with 2 transmissions) or or the generic name for a family of products.
4. Do the costs of carrying inventory, hiring, firing, backordering exist in the accounting books?
They do not exist in the books.
The decision maker must estimate these cost figures and use them for choosing between the plans. The actual cost of the plan can be quite different from the computations we make for decision making purposes.
5. Where does APP fit in the hierarchy of plans?
Business Strategy v
Operations Strategy v
Aggregate Production Plan v
6. What is a pure strategy? A Level (Toyota) or Chase (Construction) strategy
What is a mixed strategy? A strategy that uses two or more control variables.
7. How do we determine (judge) whether one plan is better than the other?
The decision maker must estimate these cost figures and use them for choosing between the plans.
8. Is it appropriate for a company, which competes on the basis of quality, to construct a chase plan?
No, level plan when quality is the order winner, chase when cost is the main consideration and the product does not require a complex