SOP

Question 1

SOP

Answer 1

Sales and Operations

Planning

Question 2

Sales
and operations planning (SOP)
develops

Answer 2

sales and operations plans at an aggregate

level.

Question 3

The SOP process is used to develop

Answer 3

an overall
business plan that integrates and coordinates
the various planning efforts in a business.

SOP is top management’s handle on the business.

Question 4

Outputs of SOP

Answer 4

Sales plans

Production and inventory plans 

Plans on adjustable capacities 
•
e.g.) Hiring and laying off workers, overtime, part-time 
workers

Question 5

SOP provides the key communication

Answer 5

links for top
management to coordinate the various planning
activities in a business

Question 6

The role of SOP is

Answer 6

to balance supply and demand

at the volume level

Question 7

Values of SOP

Answer 7

The SOP process provides visibility of the
interactions between sales, marketing,
production, and finance

Critical trade-off decisions are documented

Manufacturing performance is controlled in a
clear fashion

This leads to better integration among
functional areas and better response to the
marketplace

Question 8

Monthly SOP

Process

Answer 8

1. Run 
sales 
forecast 
reports
2. Demand 
planning 
phase
3. Supply 
planning 
phase
4. Pre-SOP 
meeting
5. Executive 
SOP 
Meeting

Question 9

SOP Process – Key

Activities

Answer 9

Updating the sales forecast

Reviewing the impact of operations plan
changes

Identifying alternatives where problems exist

Formulating recommendations for top 
management

Communicating the information to top 
management

Question 10

AOP
Aggregate operations planning develops an
operations plan at an aggregate level

Answer 10

To meet a

given sales plan

Question 11

Outputs of aggregate operations planning

Answer 11

Production and inventory plans 

Plans on adjustable capacities 
•
e.g.) Hiring and laying off workers, overtime, part-time 
workers

Question 12

Strategies for Aggregate

Operations Planning

Answer 12

Chase 
strategy
\: Production output is changed 
to match sales quantities

Level strategy
\: Production 
output is 
constant, 
resulting in inventory build-up and depletion 
over time

Mixed strategy: Combination of chase and level 
strategies designed 
to result in acceptable 
levels of flexibility and inventory

Question 13

The chase or level plan may not

Answer 13

not guarantee

the minimum possible cost

Question 14

The aggregate operations planning problem

can be solved by using

Answer 14

linear programming

or mixed integer programming

Question 15

Critical

Issues in SOP

Answer 15

Management obligations

Functional roles

Defining product families

Integrated planning

Question 16

Management Obligations

Answer 16

Commit to the SOP process

Establish the SOP framework

Put the right team together

Set meetings

Participate in the process

Modify performance measures and reward 
structures to align with the plan

Force resolution of trade-offs between 
functions

Lead the cultural change

Question 17

Functional Roles

The primary obligation for all functions
involved is to

Answer 17

“hit the plan”

Question 18

A cross-functional team approach is important

Answer 18

Executive champion/sponsor: Keep top
management focused on the process, clear
major obstacles, and acquire resources

SOP process owner: Provide leadership for the
SOP process and implementation

Question 19

Demand planning team: sop

Answer 19

Provide demand data
and represent forecasting, marketing, and
sales functions

Question 20

Supply planning team:

Answer 20

Provide supply system
information and represent manufacturing and
purchasing functions

Question 21

Pre-SOP team:

Answer 21

Manage cross-functional

development of SOP

Question 22

Integration among

Answer 22

sales, marketing, and 
production is key

Sales and marketing need to sell what is 
planned
•
Overselling 
is just as bad as underselling
•
Opportunities 
need to be evaluated via changes to the SOP

Manufacturing’s job is to achieve the plan–exactly 
•
Overproduction 
and underproduction are equally 
bad

The end result is good customer 
service with low costs

Breakdowns in the plan must be quickly reported by 
the functional area responsible