Please enable JavaScript.
Coggle requires JavaScript to display documents.
CHAPTER 19: SALES AND OPERATIONS PLANNING (SALES AND OPERATIONS PLANNING…
CHAPTER 19: SALES AND OPERATIONS PLANNING
SALES AND OPERATIONS PLANNING
Sales and operation planning is the process that helps firms provide
Better customer service
Lower inventory
Shorten customer lead times
Stabilize production rates
Give top management a handle on the business
An Overview of Sales and Operations Planning Activities
Type of Planning
Long-range planning: than 1 year, usually performed annually
Short-range planning: from 1 day to 6 months with daily or weekly time increments
Intermediate-range planning: from 3 to 8 months, time increments are quickly , monthly, or quarterly
The Aggregate Operations Plan
Specifies the optimal combination of
Production rate
Workforce level
Inventory on hand
Product group or broad category
Planning done over an intermediate-range planning period of 3 to 18 months
The Production Planning Enviroment
The external enviroment is outside production planner's direct control
With services, cycles are more often measured in hours than months
Complementary products work for firms facing cyclical demand fluctuations
Production Planning Strategies
Chase strategy
Match the production rate by hiring and laying off employees
Must have a pool of easily trained applicants to draw on
Stable workforce-variable works hours
Vary the number of hours worked through flexible work schedules on overtime
Level strategy
Demand changes are absorbed by fluctuating inventory levels, order backlogs, and lost sales
Relevant Costs
Basic production costs
Costs associated with changes in the production rate
Inventory holding costs
Backorder costs
AGGREGATE PLANNING TECHNIQUES
Graphic method
Cut - and - try approach
Spreadsheet approach
Sophisticated approach
Aggregate planning applied to Services