Midterm 2 Answer & Analysis
SCM2160 A01/A04
Winter 2021

1

1. Use the following MRP record to answer the question.
Item: XYZ
Description:
Lot size: P= 3
Lead time: 2 weeks
1 2 3 4 5 6 7 8
Gross
requirements
50 20 30 40 20
Scheduled
receipts
25
Projected
on hand
50
Planned
receipts

Planned order
releases


What are the quantities of planned order releases for item XYZ for the first six weeks (weeks 1, 2, 3, 4,
5, and 6)?
a. 65, 0, 0, 20, 0, 0
b. 73, 0, 0, 20, 0, 0
c. 73, 0, 0, 0, 20, 0
d. 75, 0, 0, 0, 20, 0


Midterm 2 Answer & Analysis
SCM2160 A01/A04
Winter 2021

2

Analysis:

At week 1, you have more than gross requirement (50+25>50). Starting from Week 3, your on-hand
inventory is insufficient (25-20<30), and you need 25 units. However, since we use POQ and P=3, then
we need to take into account the next 3 periods of demand (including week 3), meaning that you need
25+0+40=65. Due to the two-week lead time, the planned order release is 65 for week 1, and 0 for the
next two weeks (you are not allowed to order during these two periods). At week 6, you need 20 and
the next two weeks you don’t need anything, so the planned order receipt at week 6 and the planned
order release at week 4 would be 20.

1 2 3 4 5 6 7 8
Gross
requirements
50 20 30 40 20
Scheduled
receipts
25
Projected
on hand
50 25 5 40 40 0 0 0 0
Planned
receipts
65 0 0 20 0 0
Planned order
releases
65 20
Lot size: P= 3
Lead time: 2 week
Item:XYZ
Description:
Midterm 2 Answer & Analysis
SCM2160 A01/A04
Winter 2021

3

2. Using the chase method for aggregate operations planning, we can determine the production
requirements in units of product. If the beginning inventory is 100 units, the demand forecast is
1,200, and the necessary safety stock is 5% of the demand forecast, which of the following is the
production requirement?
a. 1,120 units
b. 1,140 units
c. 1,160 units
d. 1,180 units


Analysis:
Because it requires 5% of the demand forecast as safety stock, 1200 X (1 + 5%) =1260 units are required.
With 100 units inventory, the production requirement is 1260 – 100 = 1160 units.
Midterm 2 Answer & Analysis
SCM2160 A01/A04
Winter 2021

4

3. Which of the following is the planned-order release using an MRP program if the gross requirement
is 4,000, the beginning projected on-hand inventory is 1,500 and scheduled receipts are 800?
a. 1,700
b. 3,000
c. 3,300
d. 4,700

Analysis:
If projected on-hand inventory at the beginning is 1,500 , then 4000-1500-800 = 1700 .


















Midterm 2 Answer & Analysis
SCM2160 A01/A04
Winter 2021

5

Q4-5
4. Given the following MRP record, in which week should we place the SECOND order?
Item: C
Lot Size: 200 Units
Lead Time: 3 weeks
1 2 3 4 5 6 7 8
Gross Requirements 40 140 60 40 180 65 90
Scheduled Receipts 200
Projected On-Hand
Inventory
100
Net Requirements
Planned-Order-Receipts
Planned-Order-Releases

a. Week 1
b. Week 2
c. Week 3
d. Week 4
5. In the previous question, if the safety stock level were 30 units instead of 0 units, in which week
should we plan to receive the FIRST order?
Item: QRS
Lot Size: 200 Units
Lead Time: 3 weeks
1 2 3 4 5 6 7 8
Gross Requirements 40 140 60 40 180 65 90
Scheduled Receipts 200
Projected On-Hand
Inventory
100
Net Requirements
Planned-Order-Receipts
Planned-Order-Releases

a. Week 1
b. Week 2 or 3
c. Week 4
d. Week 5


Midterm 2 Answer & Analysis
SCM2160 A01/A04
Winter 2021

6

Analysis:
(1)


(2)

1 2 3 4 5 6 7 8
Gross
Requirements
40 140 60 40 180 65 90
Scheduled
Receipts
200
Projected On-
Hand Inventory
100 60 120 60 20 40 175 175 85
Net
Requirements
Planned-Order-
Receipts
200 200
Planned-Order-
Releases
200 200
Item: C
Lot Size: 200 Units
Lead Time: 3 weeks
1 2 3 4 5 6 7 8
Gross
Requirements
40 140 60 40 180 65 90
Scheduled
Receipts
200
Projected On-
Hand Inventory
100 60 120 60 220 40 175 175 85
Net
Requirements
Planned-Order-
Receipts
200 200
Planned-Order-
Releases
200 200
Lot Size: 200 Units
Lead Time: 3 weeks
Item: C
Midterm 2 Answer & Analysis
SCM2160 A01/A04
Winter 2021

7

Q6-7
6. Using the following table, what is the critical path for this project?
Activity
Immediate
Predecessor(s)
Time
(weeks)
A
B
C

D
E
F

G
H
I

J
K
L
---
---
---

A
A,B
A,B,C

D,E
E
E,F

G,H,I
H,I
I
3
4
2

4
5
2

1
6
5

4
3
6

a. A-D-G-J
b. B-E-H-J
c. B-E-I-L
d. B-E-H-L


7. Based on the previous question, if the time needed by the most time-consuming activity on the
critical path cuts off by 1 week, then which activity is NOT on the critical path?
a. Activity B
b. Activity D
c. Activity J
d. Activity L
e. None of the above



Midterm 2 Answer & Analysis
SCM2160 A01/A04
Winter 2021

8

Analysis:








(1)
Among all paths, the path B-E-I-L requires most time to finish. So it is the critical path.
(2)
The most time-consuming activity on B-E-I-L in (1) is Activity L, which required 6 weeks to complete.
Therefore, now 5 weeks (6-1=5) are required. As a result, the critical path becomes B-E-H-J (4+5+6+4=
19) and B-E-I-L (4+5+5+5= 19), both require 19 weeks to finish. And Activity D is not within both these
two paths.


A D JG
B E H K
C F I L
Midterm 2 Answer & Analysis
SCM2160 A01/A04
Winter 2021

9

Q8-9
8. Using the following table, what is the earliest expected time of completion of the whole project?
Activity
Immediate
Predecessor(s)
Expected
Time (days)
A
B
C
D
E
F
G
H
I
J
K
---
---
A
B
D
E
C
D,G
D
F,H
I
4
4
2
6.5
4
2
6
7
9
5
1

a. less than or equal to 21 days
b. greater than 21 but less than or equal to 22 days
c. greater than 22 but less than or equal to 23 days
d. greater than 23 days


Analysis:






The critical path is A-C-G-H-J, which path spends the longest time to finish. The expected days to finish
the critical path is the earliest expected time of completion of the whole project. Thus, 4+2+6+7+5 = 24
days.

J
I K
B D E F
A C G H
Midterm 2 Answer & Analysis
SCM2160 A01/A04
Winter 2021

10

Q9-10
9. The following information relates to a company’s aggregate production planning activities. If a
CHASE demand strategy is used then the number of workers hired at the start of quarter 2 is
Quarter Demand Forecast Beginning Workforce = 30 workers
Production per Employee = 1,500 units per quarter
Hiring Cost = $500 per worker
Firing Cost = $1,000 per worker
Inventory Holding Cost = $20 per unit per quarter
1 75,000
2 100,000
3 95,000
4 125,000

a. 17 employees
b. 20 employees
c. 33 employees
d. 40 employees
10. If we decide to use a LEVEL production strategy to meet the average demand in the previous
question, then the required quarterly output is
a. 75,000 units
b. 93,750 units
c. 98,750 units
d. 125,000 units

Midterm 2 Answer & Analysis
SCM2160 A01/A04
Winter 2021

11

Analysis:


For CHASE demand strategy, workers required in Q1 and Q2 are 75,000/1500=50 and 100,000/1500=67
respectively. Because there are 50 workers in Q1, another 17 workers (67-50=17) are needed to meet
the demand of Q2.

For LEVEL production strategy, the average demand is (75,000+100,000+95,000+125,000)/4 =98,750
units/quarter.


Production 1,500
Hiring Cost $500 /worker
Layoff cost $1,000 /worker
Inventory
Holding Cost
$20 /unit/quarter
Begining
Worker
30
Chase
Strategy
Quarter 1 2 3 4
Demand 75,000 100,000 95,000 125,000
Workers
Required
50 67 64 84
Workers
Hired
30 20 17 20
Workers
fired
3
LEVEL
production
strategy
Quarter 1 2 3 4
Demand 98,750 98,750 98,750 98,750
Workers
Required
66 66 66 66
Workers
Hired
30 36
Workers
fired
Output 99,000 99,000 99,000 99,000
units/worker/quarter
Midterm 2 Answer & Analysis
SCM2160 A01/A04
Winter 2021

12

Q11-12
The R&D department of Smart Electronics is investigating the feasibility of a new product
development project. The following table provides all the necessary information about this project:
the precedence of activities, normal and crash activity times, and normal and crash costs.
Activity Predecessors
Normal time
(weeks)
Normal costs
($)
Crash time
(weeks)
Crash costs
/week ($)
A None 16 1100 10 200
B None 12 3200 10 150
C None 25 4000 19 100
D A 10 2500 5 50
E A, B 20 1400 18 180
F C 18 4100 15 300
G E, D 15 2700 14 300

11. What is the duration of the project?
a. 43 weeks
b. 47 weeks
c. 51 weeks
d. 58 weeks
12. If we want to shorten the duration of the whole project by 8 weeks while minimizing the total costs,
what will be the new cost of the project?
a. 19000
b. 20460
c. 20810
d. 22910
e. None of the above

Midterm 2 Answer & Analysis
SCM2160 A01/A04
Winter 2021

13

Analysis:

(1)

(2)
Total Normal Cost = 1100+3200+4000+2500+1400+4100+2700 = $ 19000
Costs
($)
Duration
(weeks)
Critical path
Crashable
activities
Best option
Activity
time
(weeks)
19000 51 Start – A – E – G – End A, E, G E (by 2 weeks, cost =180*2=360) E' = 18
19360 49 Start – A – E' – G – End A, G A (by 4 weeks, cost = 200*4=800) A' = 12
20160 45
Start – A' – E' – G – End A'&B, G G (by 1 week, cost = 300) G' = 14
Start – B – E' – G – End
20460 44
Start – A' – E' – G' –
End
A'&B
A''&B' (by 1 week,
cost=200+150=350)
A'' = 11
Start – B – E' – G' – End B' = 11
20810 43
Start – A'' – E' – G' –
End

Start – B' – E' – G' –
End

Start – C – F – End

Midterm 2 Answer & Analysis
SCM2160 A01/A04
Winter 2021

14

Q13-16
CONSIDER THE MPS, BOM, AND INVENTORY DATA SHOWN BELOW, TO ANSWER Q17-20.
a) Master Production Schedule: the following table shows the MPS quantities for Product A
(production lead time = 0 weeks)
Week 1 2 3 4 5 6
MPS 100 80
b) Bill of Material: Item A uses 1 of component D, 2 of component C and 2 of subassembly B.
Subassembly B uses 1 of component D.
c) Selected Inventory Data:
Data Category B C D
Lot-sizing rule
Lead time (wks)
Beginning (on-hand) inventory
Scheduled receipts
L4L
1
30
150 (wk 2)
EOQ = 150
1
160
180 (wk 1)
EOQ = 180
2
150
100 (wk 1)
d) Bill of Material: Item A uses 1 of component D, 2 of component C and 2 of subassembly B.
Subassembly B uses 1 of component D.
Item W1 W2 W3 W4 W5 W6
A
Gross Requirements
Scheduled Receipts
Projected On-Hand Inventory
Net Requirements
Planned-Order-Receipts
Planned-Order-Releases
B
Gross Requirements
Scheduled Receipts
Projected On-Hand Inventory
Net Requirements
Planned-Order-Receipts
Planned-Order-Releases


13. Which one of the following statements concerning item B is TRUE?
a. The projected on-hand inventory quantity at the end of week 6 is 20 units.
b. There are exactly 2 planned order releases.
c. The first planned order release occurs in week 3.
d. The planned order received in week 4 is 160 units.
Midterm 2 Answer & Analysis
SCM2160 A01/A04
Winter 2021

15

14. When does the first planned order release for item C occur?
a. Week 1 or 2
b. Week 3
c. Week 4
d. No planned order releases needed
15. What is the projected on-hand inventory for item D in week 5?
a. Zero
b. 50
c. 70
d. 90
16. What is the gross requirement for item D in week 3?
a. 80
b. 180
c. 240
d. 100

Midterm 2 Answer & Analysis
SCM2160 A01/A04
Winter 2021

16

Analysis:
A

B X2 C X2 D X1

D X1


Note: Gross Requirements of D required by A and Gross Requirements of D required by B should be
separated.



Midterm 2 Answer & Analysis
SCM2160 A01/A04
Winter 2021

17


(This material is provided as a teaching material for SCM2160A01&A04 Winter 2021. Please
note that Academic Integrity in the Asper School is applied.)