Excerpts from Assignments Submitted to Explain the Questions posed in First Test (Quiz)

Que: Cycle Counting is

Ans: “Periodic auditing of the inventory quantities in the store to ensure accuracy”

Excerpt from Ashish Kumar’s assignment - Cycle counting: “A” inventory items require tight control
policies and close managerial scrutiny, through frequent policy review i.e. cycle counting, a periodic audit of
inventory quantities to ensure accuracy. Typically A items are so designated either because they are critical
items or they represent an unusually high dollar value inventory items.

Que: A service firm, after preparing the MPS can prepare ____________________ to determine the
equipment, staff and other materials required to meet demand, at the time they are needed.

Ans: Bill or Resources

Excerpt from Aarthi Mohan’s assignment - The service analogy to the Bill of Materials in a
manufacturing company is the Bill of Resources (BOR), which is a record of a service firm’s parent-
component relationships and all of the materials, equipment time, staff and other resources associated with
them, including usage quantities.

Que: The quantity of end items that marketing department can assure to deliver on specified dates to
customer is known as

Ans: “Available-to-Promise” (ATP) inventory

Excerpt from Aarthi Mohan’s assignment - The quantity of end items that marketing can promise to
deliver on specified dates is called Available-to-promise (ATP) inventory.

Que: CHARTER is

Ans: “Assignment of product families to a specific plant or sub-process within a plant”

Excerpt from Abdul Akbar’s assignment - “Charter:-assignment of the product families to a specific
plant or sub process within a plant.”

Que: Brief ‘Low-level coding’

Ans & excerpt from Ankit Gupta’s assignment - “Low level coding – bringing about all the identical
parts which occur at the same level for each end product so that the total number of parts and materials
needed for a product can be computed easily. Ex – If item N is needed as an input for item L and item M and
item M is needed as an input for item L then item N can be lowered to level 2”
Que: Mention two ‘Expedient Methods’ to calculate reorder level in fixed-order quantity model

Ans and excerpt from Alka Agrawal’s assignment -

EXPEDIENT METHODS - Due to the variation in demand and the complexity of calculating quantities for
each component, some expedient methods have also been suggested to determine reorder level:
a. Ultraconservative method: multiply the largest daily usage ever occurred to the longest lead time ever
made by the supplier
b. Safety stock percentage method: safety stock = avg demand * avg lead time * % of safety stock required.
c. Square root of lead time usage method: safety stock = square root of average usage lead time. Because it
is seen that lead time seldom increases by the value equal to its square root.
d. Demand percentage method: determine what percentage of stock outs can be borne without seriously
affecting production. Based on this, calculate the safety stock and reorder level.
e. Simulation exercises: this is more demanding, but provides a closer approximation of actual variation in
demand.

Que: Hiring and Laying-off employees, using overtime, using part-time labor are all cases of modifying
supply component to manage capacity in aggregate demand planning. One of the following is a case of
modifying demand component to manage capacity in aggregate demand planning:
Ans: “Pricing & promotion”
Excerpt from Amrita Rani & Ankita Garg’s assignment -
The aggregate planning problem can be clarified by a discussion of the various decision options available.
These will be divided into two types of decisions:

Those modifying demand and they are:

1) Pricing 2) Advertising and Promotion

3) Backlog or reservations 4) Development of complementary products

And those modifying supply and they are:

1) Hiring and layoff of employees 2) Using overtime and under time

3) Using Part-time or temporary labour 4) Carrying Inventory

5) Subcontracting 6) Making Cooperative arrangements

Que: Name two mathematical approaches to aggregate planning

Ans & excerpt from Anju Khatri’s assignment -

The following are some of the better known mathematical techniques that can be used in more complex
aggregate planning applications.
 • Linear programming
• Mixed integer programming
• Linear decision rule
• Modeling management Behavior
• Search decision rule
• Simulation

Que:

If M = 1000, I = 300, Q = 50, when to place order?

Ans & excerpt from Basharat Abass’s assignment - q = 700 (i.e. Order to be placed when q ≥ Q) and in
all other cases q < Q.

Que: Mention one advantage and one disadvantage of MRP system

Ans & excerpt from Akbar’s assignment -

Disadvantages - i) Integrity of the data

ii) Assuming lead time is always same while building MRP

Advantages - i) Proper planning of receipts

ii) Inventory cost reduction as we procure when needed