Chapter 10 Vocabulary

Question 1

Example used in class for beginning of planning

Answer 1

Ice cream

Question 2

A process to develop tactical plans by integrating marketing plans for new and existing products with the management of the supply chain. The process brings together all the plans for the business into one integrated set of plans

Answer 2

Sales and Operations Planning (Aggregate Planning)

Question 3

Determining the quantity and timing of production for intermediate future (3-18 months)

Answer 3

Sales and operations planning

Question 4

Objective of sales and operations planning

Answer 4

Minimize cost over the planning period

Question 5

4 things needed for aggregate planning

Answer 5

A logical overall unit for measuring sales and output
A forecast of demand for intermediate planning period in these aggregate units
A method for determining costs
A model that combines forecasts and costs so that scheduling decisions can be made for the planning period

Question 6

Three type of planning in the S/OP Planning Cycle

Answer 6

Strategic
Tactic
Detailed planning and control

Question 7

Planning that takes place at the highest levels of the firm, addressing needs that might not arise for years into the future (2yrs +)

Answer 7

Strategic planning

Question 8

Planning that covers a shorter period, usually 12-24 months out (1-2yrs) although the planning horizon may be longer in industries with very long lead times (ex/ engineer to order firms)

Answer 8

Tactical planning

Question 9

Planning that cover time periods ranging from weeks down to just a few hours out (days/weeks)

Answer 9

Detailed planning and control

Question 10

In the planning cycle, this plan has limited ability to adjust capacity and has the lowest risk

Answer 10

Detailed planning and control

Question 11

In the planning cycle, this plan focuses on workforce, inventory, subcontracting, and logistics decisions; hire and fire; moderate risk; planning numbers somewhat aggregated

Answer 11

Tactical planning

Question 12

In the planning cycle, this plan involves “bricks and mortar” and major process choice decisions; planning done at a very high level; highest risk

Answer 12

Strategic planning

Question 13

S/OP strikes a balance between the

Answer 13

Various needs and constraints of the supply chain partners

Question 14

S/OP serves as a

Answer 14

Coordinating mechanism for the various supply chain partners

Question 15

S/OP expresses the business’s plans in

Answer 15

Terms that everyone can understand

Question 16

Major approaches to supply and operations planning

Answer 16

Level production plan
Chase production plan
Mixed production plan

Question 17

An approach to S/OP in which a single, aggregates sales forecast drive the planning process; the mix of products or services must be essentially the same from one period to the next or they must have very similar resource requirements

Answer 17

Top-down planning

Question 18

An approach to S/OP that is used when the product or service mix is unstable and resource requirements vary greatly across the offerings; under such conditions managers will need to estimate the requirements for each set of products or services separately and then add them up to get an overall picture of the resource requirements

Answer 18

Bottom-up planning

Question 19

Values that decision makers use to translate a sales forecast into resource requirements and determine the feasibility and costs of alternative sales and operations plans

Answer 19

Planning values

Question 20

Three steps in top-down planning

Answer 20

Develop the aggregate sales forecast and planning values
Translate the sales forecast into resource requirements
Generate alternative production plans

Question 21

A sales and operating plan in which production is held constant and inventory is used to absorb differences between production and the sales forecast

Answer 21

Level production plan

Question 22

Advantage of the level production plan

Answer 22

Smooth, level production avoids labor costs of demand matching

Question 23

Disadvantage of the level production plan

Answer 23

Buildup of inventory (cost and space)

Requires accurate forecast

Question 24

A sales and operations plan in which production is changed in each time period to match the sales forecast; make exactly what we need in each period

Answer 24

Chase Production Plan

Question 25

Advantages of Chase Production Plan

Answer 25

Stable inventory (never touch it) 
Varied production to meet sales requirements

Question 26

Disadvantages of chase production plan (4)

Answer 26

Cost of hiring, training, overtime and extra shifts
Costs of layoffs and impact on employee morale
Possible unavailability of needed work skills
Maximum capacity needed

Question 27

A sales and operations plan that varies both production and inventory levels in an effort to develop the most effective plan (mixes level and chase plans)

Answer 27

Mixed Production Plan

Question 28

Four things to consider when doing either of the production plans/ strategies

Answer 28

The number of workers
Plant capacity (regular vs OT)
Starting and ending inventory level requirements
Costs (production: reg/OT, inventory holding, hiring/firing)

Question 29

A display of future capacity requirements based on released and/or planned orders over a given span of time

Answer 29

Load profile

Question 30

The net flow of dollars into or out of a business over some period of time

Answer 30

Net cash flow (inflows-outflows)

Question 31

A planning approach in which an organization updates its sales and operations plan regularly, such as on a month or quarterly basis

Answer 31

Rolling planning horizon

Question 32

Goal of planning in services

Answer 32

Align resources with demand

Question 33

Two options for aligning resources with demand

Answer 33

Make sales match capacity 
Make capacity (usually the workforce) match sales

Question 34

To make sales match capacity we use

Answer 34

Yield management

Question 35

To make capacity match sales we use

Answer 35

Tiered workforce
Offloading

(Chase plan)

Question 36

An approach that services commonly use with highly perishable products, in which prices are regularly adjusted to maximize total profit; manipulating customers to come in when you have excess capacity to make sure you’re covering all the costs you have

Answer 36

Yield management

Question 37

Allocating the right type of capacity to the right type of customer at the right price and time to maximize revenue or yield

Answer 37

Yield management

Question 38

Yield management started being studied where

Answer 38

In the airline industry

Question 39

Example of yield management

Answer 39

Airline tickets (day and time of week affects prices)

Question 40

A strategy used to vary work-force levels, in which additional full-time or part-time employees are hired during peak demand periods, while a smaller permanent staff is maintained year round; getting more people when needed

Answer 40

Tiered work force

Question 41

A strategy for reducing and smoothing out workforce requirements that involves having customers perform part of the work themselves

Answer 41

Offloading

Question 42

Example used with offloading

Answer 42

IKEA

Question 43

Yield management is most effective when

Answer 43

Demand can be segmented by customer 
Fixed costs are high and variable costs are low 
Inventory is perishable (services)
Product can be sold in advance 
Demand is highly variable

Question 44

A class of mathematical models used when the user seeks to optimize some objective function subject to some constraints

Answer 44

Optimization model

Question 45

A quantitative function that an optimization model seeks to optimize (maximize or minimize)

Answer 45

Objective function

Question 46

A quantifiable condition that places limitations on the set of possible solutions; the solution to an optimization model is acceptable only if it does not break any of this

Answer 46

Constraint

Question 47

Pricing structure must appear

Answer 47

Logical to the customer

Question 48

4 ways to operating yield management systems

Answer 48

Rate fences
Handling variability in arrivals, duration and time between customers
Managing the service process
Training workers to deal with overbooking and price changes

Question 49

Two types of rate fences

Answer 49

Physical (room w a view)

Non-physical (unlimited internet access)

Question 50

Examples of handling variability in arrivals, duration and time between customers

Answer 50

Check in and check out times