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Planning

The group discussed sales and operations planning. Jun L. Pericon discussed how sales and operations planning fits into operations management philosophy and described the sales and operations planning process. Rafi Silerio discussed aggregation in sales and operations planning and the relationship between sales/operations plans and other plans. Karen M. Bondoc discussed plan objectives and aggressive alternatives in sales and operations planning. The group then discussed various reactive alternatives, planning strategies, constraints and costs, the master production schedule process, and concepts in aggregate planning like forecasting, capacity, and production rates. They explained why aggregate planning is necessary to match supply with demand.

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Stella Nguyen
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86 views33 pages

Planning

The group discussed sales and operations planning. Jun L. Pericon discussed how sales and operations planning fits into operations management philosophy and described the sales and operations planning process. Rafi Silerio discussed aggregation in sales and operations planning and the relationship between sales/operations plans and other plans. Karen M. Bondoc discussed plan objectives and aggressive alternatives in sales and operations planning. The group then discussed various reactive alternatives, planning strategies, constraints and costs, the master production schedule process, and concepts in aggregate planning like forecasting, capacity, and production rates. They explained why aggregate planning is necessary to match supply with demand.

Uploaded by

Stella Nguyen
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Group 4

Leader: Hieu Le Thanh Nguyen


M e m b e r : J u n L . P e r ic o n
Pe t e r P a t u g a la n
R a f i S ile r io
R . K M a r in a s
Ka r e n M . B o n d o c
N e l s o n M a r c e li n o
J o i e De Ra m a
TOPIC: PLANNING

Sales and
Aggregate
Operation
Planning
Planning
Jun L. Pericon

1. How Sales and Operations


Planning fits the Operations
management Philosophy
2. Sales and Operations
Planning
Sales and
Operations Planning
How Sales and Operations Planning
fits the Operations Management Philosophy

Operations As a
Competitive
Process Strategy
Weapon Process Analysis
Operations Strategy Process Supply Chain Strategy
Project Management
Performance and Location
Quality Inventory
Constraint Management
Management Forecasting
Process Layout Sales and Operations
Lean Systems Planning
Resource Planning
Scheduling
Sales and
Operations Planning

Sales and operations planning (S&OP): The process


of planning future aggregate resource levels so that
supply is in balance with demand.
Staffing plan: A sales and operations plan of a
service firm, which centers on staffing and other
human resource–related factors.
Production plan: A sales and operations plan of a
manufacturing firm, which centers on production rates
and inventory holdings.
Rafi Silerio

1. Aggregation
2. The Relationship of Sales and Operations
Plans to Other Plans
3. Managerial Inputs from Functional Areas
to Sales and Operations Plans
Aggregation

The sales and operations plan is useful because it focuses on a


general course of action, consistent with the company’s strategic
goals and objectives, without getting bogged down in details.
Product family: A group of customers, services, or products that
have similar demand requirements and common process, labor,
and materials requirements.
A company can aggregate its workforce in various ways as well,
depending on its flexibility.
The company looks at time in the aggregate – months, quarters,
or seasons—rather than in days or hours.
The Relationship of
Sales and Operations Plans
to Other Plans
Managerial Inputs from Functional
Areas to Sales and Operations Plans
Karen M. Bondoc

1. Plan Objectives
2. Aggressive Alternatives
Plan Objectives

Six objectives usually are considered during development of a


plan:

1. Minimize Costs/Maximize Profits


2. Maximize Customer Service
3. Minimize Inventory Investment
4. Minimize Changes in Production Rates
5. Minimize Changes in Workforce Levels
6. Maximize Utilization of Plant and Equipment
Aggressive Alternatives

Aggressive alternatives are actions that attempt to


modify demand and, consequently, resource
requirements.
Complementary products: Services or products that
have similar resource requirements but different
demand cycles.
Creative Pricing: Promotional campaigns designed to
increase sales with creative pricing.
Joie De Rama

Reactive Alternatives
Reactive Alternatives

Reactive alternatives are actions that can be taken to


cope with demand requirements.
Anticipation inventory is inventory that can be used to
absorb uneven rates of demand or supply.
Workforce adjustment: Hiring and laying off to match
demand.
Workforce utilization: Use of overtime and undertime.
Vacation schedules: Use of plant-wide vacation
period, vacation “blackout” periods.
Reactive Alternatives

Subcontracting: Outsourcing to overcome short-term


capacity shortages.
Backlogs, Backorders, and Stockouts:
 Backlog:An accumulation of customer orders that have
been promised for delivery at some future date.
 Backorder: A customer order that cannot be filled
immediately but is filled as soon as possible.
 Stockout: An order that is lost and causes the customer
to go elsewhere.
Nelson Marcelino

1. Planning Strategy
2. Constraints and Costs
3. Sales and Operation Planning as a
Process
Planning Strategies
Chase strategy: A strategy that involves hiring and laying
off employees to match the demand forecast.
Level-utilization strategy: A strategy that keeps the
workforce constant, but varies its utilization to match the
demand forecast.
Level-inventory strategy: A strategy that relies on
anticipation inventories, backorders, and stockouts to
keep both the output rate and the workforce constant.
Mixed strategy: A strategy that considers and implements
a fuller range of reactive alternatives than any one “pure”
strategy.
Constraints and Costs

The planner usually considers several types of costs when preparing sales
and operations plans.
1. Regular-Time Costs: These costs include regular-time wages plus
contributions to benefits, Social Security, retirement funds, and pay
for vacations and holidays.
2. Overtime Costs: Overtime wages typically are 150 percent of
regular-time wages.
3. Hiring and Layoff Costs: Include the costs of advertising jobs,
interviews,training programs, exit interviews, severance pay, and
lost productivity.
4. Inventory Holding Costs

5. Backorder and Stockout Costs


Sales and Operations Planning as a Process

 Sales and operations planning is a decision-making process,


involving both planners and management.
 The process itself, typically done on a monthly basis, consists of
six basic steps.
Peter Patugalan

1. Aggregate Planning
2. Objectives in Aggregate Planning
Aggregate Planning
22
 Long term range planning: top management
 2 – 8 years ahead TOP
 strategic planning
CEO, President,
 vision, mission, business goals
MD, VC, Board of
and directions, products,
Directors
technology, competition

 Mid term range planning: middle management


 6 -18 months ahead MIDDLE
 tactical panning MD, GM,
 product design, location & layout Aggregate Planning Directors
strategies, job design, process
strategies, capacity planning

 Short term range planning: line management LINE /FRONT


 daily – weekly schedule Manager,
 operational planning Executive,
 Recruit workers, production scheduling, Officer,
change set ups, deliveries and schedules,
quality control
supervisor
Aggregate Planning
23

To determine quantity and timing of production schedule, labor and


materials requirements for mid range planning (6 – 18 months
ahead)
To match demand for products with capacity to supply
To do aggregate planning, one need to have
 forecast demand quantity for a product
 production output quantity to meet forecast demand
 production capacity figures: machine, subcontract, overtime
 manpower requirements (to hire, to lay off, part time)
 inventory quantity level and costs
 total planning costs for production, manpower costs, inventory
Objectives of Aggregate Planning
24

To determine the best combination of


monthly/quarterly production amount, manpower
requirement, inventory level with minimum total
production costs over the planning period to
meet the forecast demand for product.
To produce the Master Production Schedule
(MPS)
R.K Marinas

1. Master Production Schedule


(MPS)
2. MPS functions
Master Production Schedule

MPS sets the quantity of each finished product


to be completed in each time period of the short
range planning horizon.
MPS is developed by reviewing market
forecasts, customer orders, inventory levels,
facility loading & capacity information regularly.
MPS Functions

Translating aggregate plans


Evaluating alternative master schedules
Generating material requirements
Generating capacity requirements
Facilitating information processing
Maintaining valid priorities
Utilizing capacity effectively
Hieu Le Thanh Nguyen

1. Concepts in Aggregate Planning


2. Aggregate Planning Strategies
3. Why Aggregate Planning is
necessary
Concepts in Aggregate Planning
29

 Forecast demand
 To estimate products and demand quantity by market: demand management
 To serve as Master Production Schedule for the organization.
 MPS
 To establish production schedule for 6 – 18 months ahead of time for final
products to be ready for market demand
 Capacity planning
 To determine production capacity, machine capacity, warehouse capacity,
vendors capacity, manpower capacity
 Production rate
 To determine production rate or output
 Manpower level
 To determine number of workers needed
 Inventory level
 To plan how much level of inventory to keep, use
Customer survey R & D research
Market survey
- product design

Forecast demand
Suppliers capacity Subcontractors
- materials capacity
-deliveries
-manpower Aggregate Inventory
Planning capacity
Capacity
Operations Production
-machines Capacity
-manpower -output
-materials
Master Production
Schedule

Production Purchasing Store Quality Engineering

30
Aggregate Planning Strategies
31

Forecast Demand
Forecast Demand
increase/decrease

Capacity Strategies
- change inventory levels Demand Strategies
- influencing demands
- vary workforce
- vary production rates - backordering
- counter seasonal
- subcontract
- part time workers product mix

Mixed Strategies Level Scheduling


- combination strategies - constant output
Why Aggregate Planning Is Necessary

Fully load facilities and minimize overloading and


underloading
Make sure enough capacity available to satisfy
expected demand
Plan for the orderly and systematic change of
production capacity to meet the peaks and valleys of
expected customer demand
Get the most output for the amount of resources
available
The End!

Thank You

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