Question

Given an opportunity to align business decisions with operations functions, apply a sales and operations plan (S&OP) to increase in supply chains.

Analyze the relevant costs in creating an aggregate plan.

Compare and contrast the different types of aggregate production strategies.

Develop aggregate production plans for both service and manufacturing companies

Answer 1

Ans:- Sales and operations plan talks about tactical analysis on regular basis along with top management to analyse whether everything is going as per overall business plan. For ex:- If sales voulme is to be increased then production should also focus on increasing the output. Hence production an operation department should be in sync to produce certain number of quantity which should be supported by supply chain of the company so that it can reach to every retailer or distributor.

There are different cost variables involved in aggregate plan:-

a). There might be scenario where cost of production is very high but cost of holding the inventory is low. For ex: In Oil industry. In this case level production plan is used in which production remains same but inventory is used to balance the difference between sales and production cost.

b). In chase production plan, the production qualtities are changed to match the sales forecast. In these cases inventory holding is expensive hence production plan is changed to match the demand.

c). In a mixed plan for inventory and production level are changed as per sales forecast.

For a service company there are challenges of time period to finish the inventory. For ex: In a hotel industry, the vacant rooms are of no profit to the company. So strategy should be made to book all the rooms based on pricing and promotion strategies.

Whereas in manufacturing industry the produtcs are having a shelf life under which it can be sold at reduced price.