BUSI 2603U Chapter Notes - Chapter 14: Master Production Schedule, Operations Plan, Production Planning
2 Oct 2016
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Document Summary
Sales and operations planning (s&op) is an aggregate planning process that determines the resource capacity a firm will need to meet its demand over an intermediate time horizon 6 to 12 months in the future. An aggregate operations plan might specify how many bicycles are to be produced, but would not identify them by colour, size, tires, or type of brakes. Sales and operations planning has two objectives: to establish a company wide game plan for allocating, to develop an economic strategy for meeting demand. The first objective refers to the long-standing battle between the sales and operations functions within a firm. Operations personnel who are evaluated on keeping manufacturing costs down may refuse to accept orders that require additional financial resources (such as overtime wage rates) or hard-to-meet completion dates. The company needs to determine if the extra cost is worth the increased revenue from the sale, and if the sale is consistent with the strategy of the firm.
