Module 2 - Sales and Operations Planning Flashcards
What constrains the production plan?
Resource Plan
A resource plan is based on which of the following components?
One unit of a typical product.
A bill of resources lists the requires capacity and key resources needed to manufacture one unit of a selected item or family.
Which manufacturer would be most likely to use a chase strategy?
- compression socks mfg
- paint mfg
- seasonal glassware mfg
-seasonal ice cream candy bar mfg
The seasonal ice cream candy bar manufacturer sells perishable products that also have distinct seasonality. Because perishable products cannot be produced long in advance of need, they cannot use a level strategy and may need to use a chase strategy.
For the purposes of production planning, product families can be established on the basis of
simularities in the mfg process. Manufacturing needs to know what products share the same manufacturing processes. The availability of materials and machinery, affect production capacity but are not the basis for establishing product families. New product introductions could fit best in an existing product family or be in a new one, but each new product would not necessarily be in a new family.
In demand driven materials requirements planning (DDMRP) systems how is the size of a replenishment order determined?
Difference between the top of the green zone and the net flow position. DDMRP buffers are segmented into three color zones (green, yellow, and red). Each zone serves a specific role in the buffering process. The green zone dictates the size and timing of replenishment orders. The yellow zone typically defines the average amount of replenishment in transit. The red zone is the defined safety stock amount in the buffer. The top of the green zone level (red + yellow + green) is the “order up to” level. A replenishment order is triggered by a net flow position (on hand plus on order minus qualified sales order demand) that is below the green zone level (at or below just red + yellow). The size of the replenishment order is the difference between the top of the green zone level (red + yellow + green) and the net flow position.
An MTO company would like to cut a product’s backlog from six to four months. If annual demand is 360 units, the production plan for this year should be how many units?
- In an MTO environment, reducing the backlog by two months requires producing and shipping two additional months worth of units. The annual demand of 360 units equals a monthly average of 30 units, so 60 additional units would be required. The annual demand of 360 plus the 60 additional units to reduce the backlog would equal 420 units.
Which of the following actions to improve the validity of the master schedule is most under the master’s schedule control?
improving the accuracy of the resource bills of material. Maintaining the resource bills of material to reflect current conditions has an ongoing impact on the validity of the master schedule.
A demand driven material requirements planning (DDMRP) system detect a qualified spike as part of its net flow position calculation for a strategic buffer zone. What will the system’s logic propose?
Making an order to return the net flow position to the top of the green zone. The net flow position is the current on hand inventory plus inventory on order minus qualified sales order demand. Qualified sales order demand is the sum of orders due today plus qualified spikes. Qualified spikes are the accumulated day’s demand relative to a threshold typically specified as a percentage of the red zone. Identifying qualified spikes is important because these are areas of unusually high demand that would consume the buffer and remove its benefits. Instead when a spike or other variable lowers the net flow position to the bottom of the green zone, the system will propose making an order to return the net flow position to the top of the green zone.
A company defines the critical parameters for a component of a new product and then lets a supplier partner design the component. What is the most significant advantage of this approach?
It simplifies internal project coordination. The practice of subcontracting work to suppliers with whom the organization has developed a close relationship has the advantage of simplifying the amount of internal project coordination required, which can result in shorter lead times and higher development efficiencies.
Which of the following is true of an aggregate forecast of a group of items?
It is usually a better forecast than the SKUs forecasted individually. Forecasting product families is more reliable than forecasting individual items.
A company is ready to introduce a new product family that has many of the criteria the market is demanding. Which of the following production strategies is most applicable for the introduction phase of the new product family?
Hybrid. Demand is unknown, but the company believes that sales will be good. Some inventory buildup enables the company to be somewhat flexible for the actual timing and quantity of demand. For this reason, chase is not the best option. Level is not the best option either because the amount of demand for the year is not yet known.
A company produces toys that can be personalized with a predetermined set of options. Delivery is quoted as ten days from receipt of the order. Which of the following sales and operations planning elements is most likely to be of little use to management?
- production plan
-inventory plan
- demand forecast
- backlog plan
Backlog plan. This is an assemble to order (personalized toys) environment; it would not have a backlog plan.
An MTS company would like to cut its physical inventory from four to two months. If annual demand is 360 units, the production plan for this year should be how many units?
300 Units. In an MTS environment, the objective to decrease finished goods inventory by two months requires producing two months’ less inventory than annual demand requirements. There are currently 4 months of physical inventory in stock (360 units/12 = 30 units; 30 units x 4 months = 120 units) the objective is to reduce to 2 months (60 units). To do this, they must sell off 60 current inventory units to reduce backlog. Next year they need to sell 360 units, so they only need to produce 300 units as 60 units are already in inventory.
