SERVICE SERVICE MIX LABOR HOURS PER JOB a.) b.)
Light Cleaning 20% 0.2 0.04 10% 0.02
Medium Cleaning 60% 0.25 0.15 65% 0.16
a.) b.)
Machine Labor Mix Machine Labor
A20 60% 0.20 0.15 0.12 0.09 45% 0.09 0.07
a.) The weighted planning values are the weighted average of the machine hours
b.) The weighted planning values changed because of the change to the product
MACHINE HOURS
PER UNIT
LABOR HOURS
PER UNIT
GAUGE
SET
a.) b.)
Machine Labor Mix Machine Labor
Deluxe Models 45% 10.0 5.0 4.50 2.25 30% 3.00 1.50
a.) The assumptions that must be made in order to use the weighted per-unit
planning values for labor and machine time are that the averages of machine
Model
PRODUCT
MIX
MACHINE
HOURS
LABOR
HOURS
October 44,000 39600 880 248 6
November 52,000 46800 1040 293 7
December 68,000 61200 1360 383 9
WORKERS
NEEDED
MACHINES
NEEDED
MONTH
SALES
FORECAST
WORKER
HOURS
MACHINE
HOURS
January 3500 700 4200 10010
February 3300 1000 4300 10050
c.) Bottom-up planning would be better suited for S&OP in this situation because the product mix
b.) Although the total number of products forecasted increases from January to June, the product
MONTH
FORECAST
PRODUCT A
FORECAST
PRODUCT B
a.) COMBINED
FORECAST
b.) TOTAL LABOR
HOURS REQUIRED
a.) If the combined forecast was the only information available, an increase in resource
requirements from January to June would be expected.
227 1,000
March 1,592 31,840 199 252 2,016 0 25 1,424
September 2,504 50,080 313 252 2,016 0 0 3,920
October 2,504 50,080 313 252 2,016 0 0 3,432
November 3,000 60,000 375 252 2,016 0 0 2,448
December 3,000 60,000 375 252 2,016 0 0 1,464
MONTH
FORECASTE
D SALES
SALES IN
WORKER
HOURS
WORKERS
NEEDED TO MEET
SALES AVERAGE =
ENDING
INVENTORY
ACTUAL
WORKERS
ACTUAL
PRODUCTION
LAYOFFS
HIRINGS
July 1,504 30,080 188 188 1,504 0 63 1,000
August 1,992 39,840 249 249 1,992 0 61 1,000
September 2,504 50,080 313 313 2,504 0 64 1,000
October 2,504 50,080 313 313 2,504 0 0 1,000
MONTH
FORECASTE
D SALES
SALES IN
WORKER
HOURS
WORKERS
NEEDED TO MEET
SALES AVERAGE =
ENDING
INVENTORY
ACTUAL
WORKERS
ACTUAL
PRODUCTION
LAYOFFS
HIRINGS
50 500
March 2,000 8,000 50 47 1,880 3 0 380
April 1,920 7,680 48 47 1,880 0 0 340
August 1,800 7,200 45 47 1,880 0 0 620
September 1,750 7,000 44 36 1,440 11 0310
Information: Layoff Hiring Inventory
Totals: 14 14 3,140
Costs: $2,800 $4,200 $12,560
Cost of plan: $19,560
Planning values
Starting inventory: 500
ENDING
INVENTORY
ACTUAL
WORKERS
ACTUAL
PRODUCTION
LAYOFFS
HIRINGS
MONTH
FORECASTE
D SALES
SALES IN
WORKER
HOURS
WORKERS
NEEDED TO MEET
SALES AVERAGE =
227 1,000
March 1,592 31,840 199 252 2,016 0 25 1,424
July 1,504 30,080 188 252 2,016 0 0 4,384
August 1,992 39,840 249 252 2,016 0 0 4,408
September 2,504 50,080 313 252 2,016 0 0 3,920
October 2,504 50,080 313 252 2,016 0 0 3,432
Totals 24,192 24,192 25 25 32,224
Costs Information: Layoff Hiring Inventory
Hiring: $75,000 Totals: 25 25 32,224
Layoff: $50,000 Costs: $50,000 $75,000 $193,334
Inventory: $193,344 Cost of plan: $318,334
Cost of plan: $318,344
Planning values
Starting inventory: 1000
ENDING
INVENTORY
ACTUAL
WORKERS
ACTUAL
PRODUCTION
LAYOFFS
HIRINGS
MONTH
FORECASTE
D SALES
SALES IN
WORKER
HOURS
WORKERS
NEEDED TO MEET
SALES AVERAGE =
Part a.)
20 0
Nov-16 650 3,048 3,698 11,834 74 75 3,750 055 52
Dec-16 676 2,899 3,575 11,440 72 75 3,750 0 0 227
Jun-17 819 2,409 3,228 10,330 65 75 3,750 0 0 1,660
Jul-17 754 3,381 4,135 13,232 83 75 3,750 0 0 1,275
Aug-17 982 3,965 4,947 15,830 99 75 3,750 0 0 78
20 55 0
Totals 37,422 37,500 55 55 6,858
Costs Information:
Part b.)
Mar-20 696 2,919 3,615 11,568 72 72 3,600 0 6 -5
Apr-20 475 3,102 3,577 11,446 72 72 3,600 0 0 18
May-20 566 2,964 3,530 11,296 71 71 3,550 1 0 38
Inventory: $4,620 Hours worked per month per worker: 160
Part c.)
LAYOFFS
HIRINGS
ENDING
INVENTORY
SALES IN
WORKER
HOURS
WORKERS NEEDED
TO MEET SALES
AVERAGE = 75
ACTUAL
WORKERS
ACTUAL
PRODUCTION
AGGREGATE
FORECAST
If hiring and layoff costs increased dramatically the level plan would be less expensive than the
ENDING
INVENTORY
ACTUAL
WORKERS
ACTUAL
PRODUCTION
LAYOFFS
HIRINGS
MONTH
AGGREGATE
FORECAST
SALES IN
WORKER
HOURS
WORKERS NEEDED
TO MEET SALES
AVERAGE = 75
DEUTSCHLANDER
FORECAST
BEEFEATER
FORECAST
MONTH
BEEFEATER
FORECAST
DEUTSCHLANDER
FORECAST
July 910 840 0300 $2,548,000 $1,692,000 $856,000 $4,057,600
August 910 840 0230 $2,548,000 $1,689,200 $858,800 $4,916,400
September 910 840 0160 $2,548,000 $1,686,400 $861,600 $5,778,000
October 880 840 0120 $2,464,000 $1,684,800 $779,200 $6,557,200
CASH
OUTFLOWS
NET
FLOW
CUMULATIVE
NET FLOW
When comparing this option to the mix strategy shown in Table 10.10, finance would
MONTH
SALES
FORECAST
REGULAR
PRODUCTION
OVERTIME
PRODUCTION
INVENTORY /
BACKORDERS
CASH
INFLOWS
Part a.)
March 1200 1150 0450 $600,000 $407,000 $193,000 $279,500
April 1400 1150 0200 $700,000 $404,500 $295,500 $575,000
MONTH
SALES
FORECAST
REGULAR
PRODUCTION
OVERTIME
PRODUCTION
CUMULATIVE
NET FLOW
ENDING
INVENTORY
CASH
INFLOWS
CASH
OUTFLOWS
NET
FLOW
S&OP Spreadsheet
Labor hrs. per unit: 24
Total plan cost
Production cost per unit: $475.00 $5,700,000
Hiring cost: $400.00 $64,000
Month
Sales
Forecast
Sales (in
labor hrs.)
Sales (in
workers)
Actual
Workers
Actual
Production
Hirings Layoffs
Ending
Inventory /
Back Orders
100 100
January 500 12,000 80.0 80.00 500.00 0.00 20.00 100.00
February 600 14,400 96.0 96.00 600.00 16.00 0.00 100.00
March 700 16,800 112.0 112.00 700.00 16.00 0.00 100.00
April 800 19,200 128.0 128.00 800.00 16.00 0.00 100.00
May 900 21,600 144.0 144.00 900.00 16.00 0.00 100.00
June 1,000 24,000 160.0 160.00 1,000.00 16.00 0.00 100.00
Sales & Operations Planning Spreadsheet for Kumquats Unlimited
(with solver optimization)
Cost to start up a line: $25,000 Inventory holding costs: $144,000
Cost to shut down a line: $6,000
Inventory holding cost: $300 per batch, per month Grand total: $14,964,000
Month
Sales
Forecast
Sales
(in line hours)
Sales (in
production
lines)
Actual
Production
Lines
Actual
Production
Production Line
Start-ups
Production Line
Shutdowns
Ending
Inventory
55 100
March 1,200 19,200 60 55.00 1,100 0 0 0
January-21 22,000 5,500 34 49 31,360 0 0 11,300
February-21 18,000 4,500 28 49 31,360 0 0 24,660
March-21 17,500 4,375 27 49 31,360 0 0 38,520
April-21 27,000 6,750 42 49 31,360 0 0 42,880
Costs Information:
Hiring: $1,250 Starting inventory: 10,000
Layoff: $500 Starting and ending workforce: 50
ENDING
INVENTORY
ACTUAL
WORKERS
ACTUAL
PRODUCTION
LAYOFFS
HIRINGS
Question 2.) Monthly S&OP updates will rolling planning horizons will help alleviate Patricia’s concerns because
there will be an opportunity to adjust the sales forecast every month. Significant advantages to S&OP, even
though forecasts may change, include bringing marketing, operations, and finance together to agree upon the
Question 3.) I agree with David Griffin *if* the cost of retaining an employee while not producing is less or equal
to the cost of a layoff plus a new hire. Holding costs of an existing employee include their salary and benefits
paid, while producing an extra gauge results in materials and inventory costs. If workers are idle, the production
Question 1.) Advantages to a level production plan are that the hiring and layoff costs are very low and the
company is able to meet overall sales forecast without expanding current plant capacity. Covolo could not
implement a pure chase plan because capacity is currently 35,000 per month. If sales continue to grow, Covolo
MONTH
SALES
FORECAST
SALES IN
WORKER HOURS
WORKERS NEEDED
TO MEET SALES
AVERAGE = 49