30 Questions
According to the text, what is the purpose of Elevating the constraint in TOC?
To increase the capacity of the constraint
Based on the text, what is the solution to the problem with the paint shop?
Keep the paint line full
According to the text, which demand pattern is often predictable and can be simplified?
Stable demand pattern
Based on the text, what is the purpose of Integrated Business Planning?
To aggregate large amounts of data for planning
According to the text, what is the main function of an ERP system?
Planning and control across the entire business
Which of the following is a possible measure of forecast error?
Mean Absolute Percentage Error (MAPE)
What is one of the biggest challenges in building an S&OP plan?
Gaining the support of the Executive team
What is the purpose of adjusting the baseline forecast in demand planning?
To improve the accuracy of the forecast
What is the underlying trend in time series analysis?
Level & Trend
What is the formula for calculating the forecast range?
Forecast Range = Baseline Forecast ± Expected Error
According to the Theory of Constraints, what is the first step to benefit from identifying the constraint?
Subordinate all other processes
Which sequencing approach considers customer priority as a key factor?
Due date
What is the total work content in days for the jobs in the current plan period?
17
Which option for sequencing the jobs in the current plan period has the lowest average lateness?
Option 3: Shortest Op.n Sequence
According to the text, what is the main premise of the Theory of Constraints?
Every operation has a single step that constrains the desired outcome
Which of the following is NOT a benefit that can be achieved through successful S&OP implementation?
Decreased customer service and decreased revenues
When is the S&OP process typically conducted?
Monthly
Who is involved in the S&OP process?
All functional areas of the business
What is the purpose of S&OP?
To align demand and supply plans
What is the first step in the S&OP process?
Demand planning
Which of the following best describes Sales & Operations Planning (S&OP)?
A process that engages all functions to produce an integrated set of plans
What is the purpose of Sales & Operations Planning (S&OP)?
To balance demand & supply
Which of the following is true about Sales & Operations Planning (S&OP)?
It can be implemented at a market, regional or global level
What is the core component of Sales & Operations Planning (S&OP)?
A single set of numbers
What is the role of IT in Sales & Operations Planning (S&OP)?
To support the collaborative cross functional process
Which of the following is NOT a potential benefit of implementing Sales and Operations Planning (S&OP) for Company ABC?
Reduced stock outs in vital products
What is the Return on Capital Employed (ROCE) for Company ABC before implementing S&OP?
13.4%
What is the potential impact on the Asset Turnover ratio if Company ABC implements S&OP and realizes the stated benefits?
1.67
What is the net profit margin for Company ABC before implementing S&OP?
8%
What is the out-of-pocket cost saved by the reduction in stock equal to, as a percentage of the inventory value?
5%
Study Notes
Sales and Operations Planning: An Overview
- Sales and Operations Planning (S&OP) is a collaborative process that aims to balance demand and supply by aligning operational plans with high-level business and strategic plans.
- S&OP is performed periodically, either monthly or weekly, and can be implemented at different levels, such as market, regional, or global.
- S&OP can lead to various benefits, including improved forecast accuracy, lower inventories, reduced operating costs, increased customer service, increased revenues, increased profits, and increased Return on Capital Employed (ROCE).
- The S&OP process involves various steps, from demand planning and supply planning to executive meetings and decision-making.
- S&OP occurs at multiple levels within the company, including the executive in charge of the business unit, decision president, business unit general manager, or CEO of a smaller company.
- The process is typically conducted monthly, with exceptions made for major adjustments to the plan.
- Key functions involved in S&OP include marketing, sales, supply planning, production, financial planning, inventory management, distribution, and purchasing.
- S&OP requires a staged approach, starting with executive buy-in and establishing high-level process ownership.
- Key challenges in building an S&OP plan include gaining support from the executive team, clarifying the supply chain strategy, and implementing the right technology to support the process.
- Demand planning is a crucial component of S&OP and involves building a robust demand plan through adjustments to the baseline S&OP and consensus forecasting.
- Time series analysis is commonly used in demand planning to project trends, account for seasonality, and estimate forecast ranges.
- Forecast error metrics, such as Mean Absolute Percentage Error (MAPE) and Average Absolute Error (MAD), are used to measure forecast accuracy and bias. Human adjustments to the baseline forecast should be evaluated to determine if they add value.
Test your knowledge of statistical forecasting and error analysis with this quiz. Explore concepts such as total forecast value, actual sales, and error percentage. Challenge yourself to calculate and interpret forecast errors based on given data. Sharpen your statistical forecasting skills with this quiz!
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