Covolo Diving Gear Team 3: Neiko Jennings, Patricia Iseley, Michael Davis, Kenneth Fleck, Wesam...
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Transcript of Covolo Diving Gear Team 3: Neiko Jennings, Patricia Iseley, Michael Davis, Kenneth Fleck, Wesam...
Covolo Diving Gear
Team 3: Neiko Jennings, Patricia Iseley, Michael Davis, Kenneth Fleck, Wesam Hoblos
SALES AND OPERATIONS PLANNING
AUGUST 2013 – SEPTEMBER 2014
Introduction
Covolo Diving Gear is a prestigious manufacturer of diving equipment that utilizes secial German made parts.
As of late, Covolo has experienced manufacturing quandaries. In order to resolve their dilemmas, Sales and Operations planning will be used to help coordinate their efforts.
This presentation will demonstrate the most effective solution for Covolo Diving Gear.
TOP-DOWN BOTTOM UP
Single, aggregate sales forecast
Consistent product mix from one period to the next
Products must have similar resource requirements
Separate estimates of requirements for each product added up to find forecast
Unstable product mix from one period to the next
Products/services have different resource requirements
TOP-DOWN VS. BOTTOM UP
TOP-DOWN PLANNING
Top Down Planning Sequence:Corporate Strategic PlanningBusiness PlanTactical or Production PlanDetailed Planning and Control: Master Schedule
Consensus Production Plan for Sept. 2013 – Aug 2014
Sales and Operations PlanningLevel vs. Chase Production Plan
Recommendation: Chase Plan
Why?Cost / Benefit
Total Cost
Level Production Plan = $30,996,000
Chase Production Plan = $29,084,090
Total Cost Breakdown - Where do the numbers come from?
2 Major differences in the costs of each planCost of changing production levels (Hire/Layoff
costs)Cost of holding additional inventory
By The Numbers
Regular Production Costs Level Plan = $28,608,000Chase Plan = $28,083,520
Hiring and Layoff Costs Level Plan = $0Chase Plan = $66,650
By The Numbers
Inventory Holding Costs Level Plan = $2,388,000Chase Plan = $933,920.00
SALES AND OPERATIONS PLANNING
How will a monthly S&OP update with roll ing planning horizons help alleviate Patricia’s concerns?
Monthly meetings will allow the company to stay organized and on the same page
Efficient Communication and Coordination with Management and Department Heads
Allows you to forecast upcoming months thus making sure production is up to speed or notified
Allows you to plan and see Short term and long term goals and expectations
Keeping Idle Workers or Hiring and Firing?
Full production = 160 hoursAverage labor hours/gauge set = 0.25Holding cost = $8/gauge set/month
160 hours x 4 gauge sets/hr = 640 gauge sets
640 gauge sets x $8 = $5, 120 per month
$5,120 x 12 = $61,440 per year
Keeping Idle Workers or Hiring and Firing?
Hiring/Firing cost for Chase Plan = $66,650
Savings for idle workers = $5,210
Advantages After Plan Change
Are there still advantages to S&OP, even though the forecasts may change a couple of months after the plan is created?
It allows everyone to see the goals they must reach
Advantages After Plan Change
It can help the company in both the short run and the long run
Allows them to know what spending limit and sales will be for that certain time period