SC T9

Chapter 9:
Sales and operations planning: Planning

supply and demand in a supply chain
Presented by:
NA SZE CHING LOW SHIN YHING HARVARD TEOH EDWARD SIEW JUN HONG
IBU1709653 IBU1709660 IBU1709695 IBU1709771
CHAN YI LING ZHAO XINYUE CHONG SIN ER WONG YI SHUEN
IBU1709749 IBU1709524 IBU1702013 IBU1709612
ANG ZI EN TAN CHEE KIN LIM JING KEN
IBU1709736 IBU1709696 IBU1709722
What are some obstacles to creating a flexible workforce?
What are the benefits?
1.
Discuss why subcontractors can often offer products and services to
a company more cheaply than if the company produced them
themselves?
2.
2
Part
Why subcontractors can often offer products and services to a company
more cheaply than if the company produced them themselves?
Able to satisfy
peaks in demand
Take advantage of from some of their Handle the
the zero-sum clients production more
nature of business
cheaply simply
competition
3
Specialist in the 2 4 Expensive to
area and is more operate a
flexible, hence system at
cheaper excess capacity
1 5
In what industries would you tend to see dual facility types (some facilities
focusing on only one type of product and others able to produce a wide
variety)? In what industries would this be relatively rare? Why?
3.
Dual
Facilities
- Produce stable
Part
Specialized Facilities Flexible Facilities
- Produce variety of
output of product product
3 In what industries would you tend to
see dual facility types
Legal Hospitality
Profession Examples of
Industry
Healthcare Construction
Industry
3 In what industries would this be
relatively rare
Alcoholic Sawmills
beverages Examples of
Industry
Tobacco Chemicals
products
The continuous flow nature
of the non-dual producers
If processing requirements
dictate that the product stream
Conclusion must visit the same steps of a
process in the same sequence,
then the higher volume and low
process flexibility combination
results in dedicated production
facilities that simply can’t have
a broad product range
4. What does it mean to
incorporate product
flexibility in the production
processes? Give an example.
Product Flexibility
1
The ease of responsiveness in
product design towards changing
market
Both plant and staff responsibilities

2 are set out by product, product line/
market segment
3
Management authority is highly
decentralized
Suitable for organization where

4 dominant prospect is a particular
consumer group where flexibility
and innovation are important
Ford Plant in Highland
Park, Michigan
• An old plant that made large sport utility

vehicles(SUVs) is transformed into a assembles fuel-
efficient small cars
• Invested $550 million to make the first assembly plant
in the world capable of building 3 different types of
electrified vehicles alongside traditional gas-powered
cars
• Ford make small cars profitably while adjusting
production volume and production mix based on
market demand
• Reprogrammable tooling in the body shop,
standardized equipment in the paint shop and a
common-build sequence in final assembly that make
Ford the most flexible plant
5. As a hat manufacturer producing
caps for (1) retail sales to the public and
(2) correctional services as uniforms,
which production should be completed
first? Why?
Depends on condition
Produce to the correctional services first if demand in public is in

peak period.
Because if the promotion is done in the peak period , the inventory

of the company will increase and the profit will also decrease
Then produce the hats for retail sales to the public during the off
peak period to decrease the inventory and increase the profit.
6. Discuss how a company can get
marketing and operations to work
together with the common goal of
coordinating supply and demand to
maximize profitability.
Marketing and Operations
• Marketing often has incentives based on revenue
• Operations has incentives based on cost
Regular planning meetings must include

full cross-functional participation and
critical information Having common
performance measures
Open Rewarding them jointly for

communication achieving the goals
7.
How can a firm use
pricing to change
demand patterns?
Firm can collect data on the
1 impact of price changes on
demand
2
Use the correlation as an
input into supply chain
aggregate planning.
3 In the absence of such coordination,

it is virtually guaranteed that supply
chain partners will face demand
levels they had not anticipated and
will be unable to satisfy
4
The increase in demand results from a combination of:
a) market growth
b) stealing share
c) forward buying
8.
Why would a firm want to
offer pricing promotions in
its peak-demand periods?
8 Why would a firm want to offer pricing
promotions in its peak-demand periods?
• Pricing promotion serves to increase demand.

• Promotion today results in an order that both the supply
chain and customer recognize will be filled in the future,
perhaps during an low demand period.
• If product that is at the end of its life cycle, there may be
incentive to exhaust accumulated materials and labour skills
that are dedicated to its production.
Identify and suggest the
major steps required in
9. implementing sales and
operations planning in
supply chain management.
CASE STUDY
Q1
Which option delivers the maximum profit
for the supply chain: Sandra’s plan, Bill’s
plan, or no promotion plan at all? Assume
starting and ending inventory of 0.
CASE STUDY
Q2
How does the answer change if a discount of
$10 must be given to reach the same level of
impact that the $5 discount received?
• Both plan suffer from the additional discount
• Bill’s plan on a percentage basis is a slightly

larger decline than Sandy’s
2 floor perspective, Bill’s plan

• From a production
switches to a virtually level labor force with a
shortfall of 40 units made up by subcontracting
in the last month.
• Sandra’s plan also features greater labor

stability with far less subcontracting until
December, when 200 units are subcontracted.
CASE STUDY
Q3
Suppose Sandra’s fears about increasing
outsourcing costs come to fruition and the
cost rises to $22/unit for subcontracting.
Does this change the decision when the
discount is $5?
• Sandra’s plan rings up $48,903,800 by laying off
43 workers in July, hiring 75 in November and
another 3 in December, and subcontracting 200
units in December.
• Bill’s plan results in a profit of $49,966,611 and

has significant fluctuations in the labor pool;
174 workers are2 laid off in July, 103 and 206 are
hired back in September and October
respectively.
• Overtime production exceeds subcontracting

production throughout the planning period.
THANKS

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Chapter 9:

Sales and operations planning: Planning

Both plant and staff responsibilities

Suitable for organization where

• An old plant that made large sport utility

Produce to the correctional services first if demand in public is in

Because if the promotion is done in the peak period , the inventory

Regular planning meetings must include

Open Rewarding them jointly for

3 In the absence of such coordination,

• Pricing promotion serves to increase demand.

• Bill’s plan on a percentage basis is a slightly

2 floor perspective, Bill’s plan

• Sandra’s plan also features greater labor

• Bill’s plan results in a profit of $49,966,611 and

• Overtime production exceeds subcontracting

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