Chapter 13: Sales and Operation Planning – Flashcards
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What is Sales & Operations Planning (S&OP)?
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A process for integrating marketing and operations plans to develop a tactical business plan.
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What is the time period for S&OP?
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Next 3 - 18 months. Intermediate range planning.
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S&OP attempt to balance what for optimal organization performance?
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Supply and Demand
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What is the Relationship among Decision Platforms?
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Strategic Tactical Operational
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What are the Quantitative Benefits of S&OP?
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Improved forecast accuracy. Higher customer service. More stable supply. Better new product introduction.
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What are the Qualitative Benefits?
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Better organizational teamwork. Faster & Better aligned decision making. Greater accountability for performance. Better business visibility.
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What is the Rolling Planning Horizons?
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Replan each period for a given number of periods into the future.
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What is the Aggregate Production Planning?
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Specifies the production rates, inventory, employment levels, backlogs, possible subcontracting, and other resources needed to meet the sales plan aka balance.
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What is the goal of Aggregate Production Planning?
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Set targets for inventory and various sources of capacity so that supply will match demand over the intermediate time frame in the most efficient way possible.
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What are the 7 Difference Aggregate Production Planning Costs?
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Holding Inventory Regular Production Overtime Hiring Fire/Layoff Backorder/ Lost Sales Subcontracting
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What is Level Production Strategy?
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When the firm produces at a constant rate over the year, using changing inventory level to buffer S & D
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What is a Chase Strategy?
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The production rate is changed in each period to match the amount of expected demand; inventory remains relatively stable and low.
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When is a Level Production Strategy used?
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When the costs of ramping production up and down are high and inventory costs are relatively low.
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What does Level Production Strategy invest most of its money in?
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In inventory, high inventory carrying cost, and risk of inventory obsolescence, and it requires storage space capacity.
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When is a Chase Strategy used?
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Used by firms that have high per unit inventory holding cost rates relative to their cost of changing the production rate.
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How can a Chase Strategy be executed?
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By adjusting labor, subcontracting, or some mixture of the two.
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What is a Mixed or Hybrid Strategy?
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A strategy that includes a combination of level and chase strategy.
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What are 3 options to accomplish the objective for Chase Plans?
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1. Produce everything in house, vary the workforce level. 2. Produce everything in house, workforce level to meet lowest demand period, use overtime for higher demand. 3. Produce everything in house, workforce level to meet lowest demand period, use subcontractor to produce higher demands.
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What is discussed at Portfolio Review?
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What a firm will sell to the market. What is exit the portfolio.
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What is discussed at Demand Review?
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How much we will sell and when.
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What is discussed at Supply Review?
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How a firm will supply products to market given the landscape of existing constraints.
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What is discussed at Pre-S&OP?
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Where demand & supply are cashed up to provide visibility to the financial components of the business.
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What is discussed at Executive S&OP?
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Designed to close out the process and provide approval and/or follow ups to the enterprise plan that was created through the previous forums.
