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80 Cards in this Set

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  • Back
A grouping of the business processes that includes the following activities:

Demand management
Sales and Operations planning
Master scheduling
Master Planning of Resources (MPR)
Includes forecasting, distribution planning and order serviceing
Demand management
Integrates the plans of the business - sales, marketing, development, manufacturing, sourcing and financial - and utilizes RESOURCE PLANNING
Sales and Operations Planning (S&OP)
Includes development of a Master Production Schedule and a Final Assembly Schedule as applicable and utilizes ROUGH CUT CAPACITY PLANNING
Master Scheduling
Management of actual customer demand occurs here
Demand Management
Typically expressed in rates of demand at the product family level
Product volume
Establishes the big picture
How much?
Rates (selling/production)
Product Families
Planned in S&OP
Product Volume
The Details
Which ones?
Customer orders
Individual products
Planned in master scheduling
Product Mix
Sets direction
Business Plan
A statement of:

Long range strategy
Revenue, cost and profit objectives
Usually accompanied by:
Projected balance sheet
Cash flow statement
Business Plan
Common features include:

The nature of the firm
Locations and facilities
Organazation and people
Levels of processing technology
The type and nature of capital resources required
Primary stakeholders interests
Business Plan
Usually stated in terms of dollars and grouped by product family.
Business Plan
Keys business goals (Metrics) (8)
Market Share
Customer Service (on-time delivery)
Company Value
Asset management

The location and nature of customers

Projected market growth rates and demographic information

Impact of societal changes

Global and regional economic considerations and business conditions
Market Definition
The Community
The Management Team
The Owners and Shareholders
The Members of Associations
The Employees
The Customers
The Suppliers
Business Stakeholders
Comparing many aspects of operational performance with operational performance of other organizations

Business Plan Stategic Data Source:

demographics, governemnt and business regulations, economic conditions, competitive enviroment
Enviromental Scanning
Business Plan Stategic Data Source:

Customer orders, market research, focus groups and forecasts
Marketplace needs
Business Plan Stategic Data Source:

Personnel skill levels, available resources
Company capabilities
Business Plan Stategic Data Source:

Profit, cash flow and revenue growth
Financial targets
Business Plan Stategic Data Source:

Levels of desired customer service, planned quality improvements, cost reduction goals and productivity improvements
Strategic Golas
Formal business process

Balances demand and supply

Product families (NOT ITEMS)

Volume, NOT MIX

Monthly review cycle

Both product and financial units
Sales and Operations Planning
Links Business Plan to departmental operations
Sales and Operations Planning
Provides a realistic production plan for meeting business objectives
Sales and Operations Planning
Represent how the product is presented to the market

Logical groupings based on similar sales and manufacturing requirements

Meaningful in terms of volume of sales generated

Ideally no more than 6 - 12 groupings per business unit
Product Families
Groups products logically
Product Families
Formal Business process

Balances demand and supply

For specific products and end items

Subject to independent demand

Used for order promising

Sets boundries for material and capacity planning
Master Scheduling
Formal Business process

Used to convert the MPS into load projections on critical workcenters and supply processes

Used to determine the feasibility of the MPS
Innvestment decisions

Capital equipment decisions

Inventory Planning

Capacity Planning

Operations budgets

Lead-time management
Areas Impacted by the Forecast
Based on intuitive or judgemental evaluation
Qualitative Techniques
Based on computational projection of a numeric relationship
Quantitative Techniques
Data sources based on historical patterns of the data itself from company data
Data sources based on external patterns from information outside the company
A need for a particular product or component
Sources of demand (7)
Service Parts
What is the formula for calculating the Seasonal Index?
The Seasonal Index=

Period Average Demand
Average demand fo all periods
Expert Opnion
Market Research
Focus Groups
Historical analogy
Delphi method
Panel consensus
Qualitative Techniques
Opinions of experts in a particular area are sought
Expert Opinion
Usually conducted through surveys and is generally used to support product development and promotions
Market research
Consists of panels of customers who are asked to provide their opinions about a product or service
Focus Groups
Compares sales of a new product or service wih the sales of a previous similar product or service
Historical Analogy
Based on the knowledge and judgement of a small group of experts. A specific question is asked. Repsonses are collected from all the respondents and then compiled into a prediction of the future according to the experts
Delphi Method
A group of people provides opinions about the future and a facilitator brings the group to a concensus. The idea is that the group as a whole would make better decisions than would each member individually
Panel consensus
What are the four stages of Life-Cycle Managment?
Stage 1: Introductory phase

Stage 2: Growth phase

Stage 3: Maturity phase

Stage 4: Decline phase
Sales data and Forecast data shoulde be recorded in the same ___________
Periods (daily, weekly or monthly)
Monitor __________ not sales and or shipments
Record the circumstances of ___________ ___________.
Exceptional Demand
Record _________ separately from unique customers and market sectors
When monitoring demand, should you look at what was ordered or what was shipped?
What was ordered.
Used to detect Forecast Bias
Tracking Signal
Used to identify unusual demands that exceed a predetermined limit
Demand Filter
What is the formula for calculating standard deviation?
Standard deviation =

How can standard deviation be calculated using MAD?
Standard Deviation ~ MAD X 1.25
How can you calculate MAD if the stnadard deviation is known?
MAD ~ Standard deviation/1.25
The consistent deviation from the mean in one direction (high or low)
The tendancy of the forecast to be either above or below the actual observations
Accurate database

Easy and effective entry systems

Accurate product or service availability information

Rapid Processing


Order Confirmation

Reliable delivery
Customer Order Management
The activity of committing delivery dates to the customer based on the availability of product or capacity within the supply operation
Order Promising
Once the forecast at each final distribution point is determined, the sum of all of the final distribution points served by an area distribution center constitutes the forecast for the area stocking point
Forecasting by Aggregation
Determines a forecast at final distribution centers by forecasting the total nationwide or worldwide sales for the product, in terms of the number of units. (Forecasting total sales tends to yield a more accurate forecast). A second forecast is then used which involves the historical percentage of the total sales consumed by each regional center. Regional sales are then distributed, again by historical percentages, to area centers and so forth.
Forecasting by Allocation
The supply side of S&OP planning includes?
Production Orders
Purchase Orders
The Demand side of S&OP includes?
Demand Forecasts

Actual Orders
Links the strategic plan for the business with its execution and reviews performance measures for continuous improvement
The S&OP planning process
A measure of the different types of product that can be supplied within a particular product family
Product mix
typically expressed in rates of demand at the product family level
Product volume
Used to separate periods or groups of periods for planning purposes
Time Fence
that point in time inside of which the forecast is no longer included in total demand and projected available inventory calculations; inside this point, only customer orders are considered. Beyond this point, total demand is a combination of actual orders and forecasts depending on the forecast consumption technique chosen
Demand Time Fence
A point in time denoted in the planning horizon of the master scheduling process that marks a boundry inside of which changes to the schedule may adversely afect component schedules, capacity plans, customer deliveries and cost.
Planning Time Fence
PAB in first period=
On-hand qty + MPS - Customer Orders
PAB after first period and prior to DTF=
Prior period PAB+MPS - Customer Orders
PAB after the demand time fence =
Prior period PAB+MPS - (Greater of forecast or customer orders)
Non-cummulative ATP first period =
On-hand Qty+MPS - SUM of customer orders BEFORE next MPS
Non-cummulative ATP for each other period =

ATP = MPS Receipt Qty - SUM of customer orders BEFORE next MPS
An artificial grouping of items in bill of material format used to facilitate master scheduling and material planning
Planning Bill of Material
A quantity of stock planned to be in inventory to protect against fluctuationsin demand or supply.
Safety Stock
Inventory held in the event that the demand is greater than the forecast or that timing of demands is earlier than predicted by the forecast
Product volume hedges
Inventory held in the event that demand mix for components varies from the forecast than predicted by the forecast
Product mix hedges
Added time to ensure against delivery delays
Safety lead time
Provides reserve capacity at key work centers
Safety capacity