(1) What are the differences between sales and operations planning and budgeting
ID: 461710 • Letter: #
Question
(1) What are the differences between sales and operations planning and budgeting?
(2) A gear manufacturer schedules production of one of the gears in batches of 200 units whenever the projected ending inventory balance in a month falls below 30 units. It takes one month to make a batch of 200 units. The company currently has 90 units on hand. The sales forecast for the next six months is:
Month
1
2
3
4
5
6
Forecast
170
90
90
215
85
70
(a) Prepare a time-phased MPS record showing the sales forecast and MPS for the toy product.
(b) What are the inventory balances at the end of each month?
(c) During the first month, no units were sold. The revised forecast is as follows:
Month
2
3
4
5
6
Forecast
90
170
90
185
110
How does the MPS change?
Month
1
2
3
4
5
6
Forecast
170
90
90
215
85
70
Explanation / Answer
(1) Difference between Sales and Operations Planning and Budgeting that while budgeting is an annual exercise of static time bound projection of the annual sales plan and the required cost structure to fulfill the sales plan, Sales and Operations Planning is a periodic exercise usually on a monthly rolling basis process of demand and supply planning review in which variances are identified and incremental changes are made in the plan on an ongoing basis throughout the year. S&OP process usually involves statistical forecast base and sales and marketing overrides that determine the supply plan.
(2) (a) , (b) Time phased MPS record and inventory balance at the end of the month is given below
(c) The MPS will change as below
MPS Table Month 1 2 3 4 5 6 Forecast demand 170 90 90 215 85 70 Customer orders booked Projected on-hand inventory 120 30 140 125 40 170 Master schedule 200 200 200 200 Available to promise 290 0 200 200 0 200Related Questions
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