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Exercise: Sales and

Operations Planning

This exercise is available for e-prelude: intermediate level

Open folder: SOP

Open the Document Management page, select the folder that is
located in the Public Documents Library in English, the Exercise
subdirectory on the S&OP. Select the folder SOP and click Open.
The current date is January 3rd 2022.
The Trucks Inc. factory is organized as a production-to-stock
system and manufactures toys and more particularly flatbed
truck, removal truck and tank truck miniatures.
We will now establish the Sales and Operations Plan for the
TRUCKS company for year 2022

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Questions 1: Technical information
Item Families
For S&OP, the items sold (the 6 truck references) are grouped
into three families: Moving trucks, Tank trucks and Flatbed
trucks.
Three families were created. Their codes are FCC, FCD and
FCR, respectively. They can be viewed on the Family Items
page (S&OP menu).
Sales prices, standard costs and stock costs were specified.
Note that subcontracted is not permitted and that lost sales are
not carried forward. We do not impose a minimum inventory at
the end of the month but we want to restore a minimum
inventory at the end of the year
Each family contains two references: the red model and the blue
model.
Review the sales and planning information. You will notice that
the proportions of the red and blue models differ according to
the families.

The resource items

Four resources were created:

 The machining resource (code MACH), which

corresponds to the work centers for the
production of parts and components.
 The assembly resource (code ASS), which
corresponds to the assembly work centers for
subassembly and the final assembly.
 The direct labor resource (code LAB), which
represents the labor for other departments.
 The raw material (code MAT), which correspond
to an external resource without capacity
limitation.

These resources can be reviewed in the Resource item

maintenance page (S&OP menu).
Normal hour costs were entered (Resource unit cost). It is
allowed 20% of overtime (Max. % of over capacity) as a higher
cost than the normal cost (Over capacity cost).
The normal hour cost for the ASS resource is 20 € / h, for the
LAB resource is 25 € / h and for the MACH resource is 30 € / h.
The hour overtime cost of the ASS resource is 25 € / h, that of
the LAB resource is 30 € / h and that of the MACH resource is
36 € / h.

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 The variations of enrollment have been specified: the number of
staff can be increased by 100% (e.g. doubling) from one period
to the next (Max % of capacity increase per period). The
number of employees can be reduced by 50% (e.g. divided by
two) from one period to the next (Max. % of capacity decrease
per period). The costs of positive and negative changes were
specified (Capacity increase cost unit and Capacity decrease
cost unit).
The cost of changes in capacity is € 300 upwards (Hiring) and
€ 500 downwards (Firing) on each of the resources.
The Resources Item for each family were entered.
Review this information in the Bill of Materials maintenance
page. Open successively the family items and select the BOM
type: Resources.
Initial capacity of resource have been defined.
The capacity coefficients are the number of elementary
resources available in each category (e.g. number of people).
From the Resource Item Maintenance page, click the
Capacity button. All resources are attached to the standard
calendar.
At the beginning of the year, there is 3 people in assembly, 8
people in direct labor and 5 people in machining. These numbers
are maintained throughout the year.
The inventory holding rate was specified on the Administration
page, Folder parameters, Inventory Costs tab (20% per year).

Question 2: Initial Data Analysis

The periods of the S&OP have been entered (S&OP menu,

Plans period maintenance option): Monthly for year 2022.
The calendar of working days has been defined. The factory
closes during the first three weeks of August.
Review the weekly capabilities (Planning menu, Calendar
maintenance page, select Month button).
The Sales plan was entered for year 2022 as well as the initial
stocks. Review these plans (S&OP menu, Sales and operations
plans maintenance option).
A initial stock has been specified. Company management
intends to replenish this inventory at the end of the year.
Review the sales plan of each family. Since the operation plans
have not been executed, the table shows stockout…
Open the S&OP appraisal page. Review the amount of
inventory, turnover and profits.

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 Open the S&OP Valuation page. Review and record the costs
incurred.
We will now test three plans to meet demand, minimize costs or
maximize profits. We shall then seek a better plan than these
three extreme plans.

Question 3: Production plan adjustments

Open the Sales and operations plans maintenance page. Select
successively each item. The table shows the stock.
Enter the production plan so that there is no stockout (in the
Production Plan line, enter quantities equal to the stockout) and
that the final inventory is equal to the beginning inventory. Once
Once the plan is entered, click OK.
Repeat this procedure for all Family items.
Open the Resource Load Profiles page.
Review resource loads. Show Capacity Utilization graph by
period and cumulative. What can we conclude?
Open the S&OP Valuation page. Review the costs incurred.

Question 4: Resource capacity Adjustments

In order to obtain a satisfactory capacity workload, a first
solution is to modify the capacities of the resources.
Open the Resource Capacity page, select a resource. Modify
resource capacity coefficients so that capacities are equal to or
greater than workloads (do not use over capacity at this point).
Enter integer coefficients (without decimals), even though the
number of decimals of the resources has been set to 2. Do not
modify the initial coefficient. For the month of August, keep the
quantity of July.
Examine the new capacity utilization reports of resources.
Open the S&OP Valuation page. Review and record the costs
incurred.

Question 5: Overhead hours

Until now, the capability of working overtime has not been
used. Resource capabilities can now be modified using this
capability.
Open the Resource Capacity page, enter percentages on the %
over capacity line within the 20% limit to the available number
Attempt to adjust resource capacity accordingly.

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 Verify the consistency of the plan by examining the resource
load profiles.
Open the S&OP Valuation page. Review the costs incurred.

Question 6: Inventory Anticipation

Remove all resource capacity changes (report monthly initial
coefficients). Remove all over capacity.
We want to work at constant production (except in August when
the plant is closed).
For each family, calculate the daily quantity to be produced and
report it within eleven months. Attention, in this calculation,
take into account the number of working days in the month! In
this example, the year has 242 working days.
Enter the production plans of the three families (S&OP menu,
Sales and operations plans maintenance option).
Enter these quantities in the Production Plan line.
Examine the results using the Resource Load Profiles function.
Modify the production plans until a satisfactory result is
obtained.
Open the S&OP Valuation page. Review and record the costs
incurred.

Question 7: Search for the best production plan

The three plans established above are extreme plans: one plays
either on manpower or on inventory anticipation.
A mixed plan can find a better solution that leads to a lower
cost.
Attempt to establish this plan by modifying production plans
and adjusting the capacity of resources accordingly.
Open the S&OP Valuation page. Review the costs incurred.
If your course allows you to access the advanced level
(Administration page, Folder parameters, Options tab), select
Advanced level.
Call the Resource Item Maintenance page.
For each of the resources except MAT, tick the box Resource to
be used by the solver.
Call the S&OP Valuation and Optimization page and click
Optimization button. Confirm with OK. When the result
window is displayed, click the Forward Results button.
Review the resulting production plans and resource capacities.

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Question 8: S&OP Disaggregation
The sales and production plan have been defined (to simplify the
exercise, they are identical). The proportions of trucks in red and
blue vary by family. Examine this information from the Bill Of
Materials maintenance page.
The initial stock of items sold was also entered.
From the S&OP menu, start the S&OP disaggregation until the
30/06/2022. Choose the option Spread quantities over
working days
Open the Sales forecast table (Sales menu). Select an item and
click OK. Explain the figures in the table.
Open the Item Master Schedules page (Planning menu). View
the program of the MT100 item.
Explain the lines of Internal requirements.
Click the New Suggestions box. Review the suggested orders
projected and inventories lines.
Start a Material requirements planning (Planning menu) by
the March 31st 2022 end date.
Review planned orders.