principlesofoperationsplanning toc
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Table of Contents
Instructor Guide
© 2011 APICS Confidential and Proprietary
Principles of Operations Planning
© 2011 APICS Instructor Guide Version 1.0 ii
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Table of Contents
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______________________________________________________________________________________ Instructor Guide Version 1.0 © 2011 APICS iii
Brief Table of Contents
Session 1 Operations Management Foundations Session 2 Planning Foundations Session 3 Forecasting Session 4 Demand Management Session 5 Sales and Operations Planning (S&OP) Session 6 Mid–Term Examination Session 7 Aggregate Operations Planning Session 8 Master Scheduling Foundations Session 9 Master Scheduling Processes Session 10 Operations Systems Session 11 Final Exam
Principles of Operations Planning
© 2011 APICS Instructor Guide Version 1.0 iv
Table of Contents
Session 1: Operations Management Foundations
Principles of Operations Management Overview............................................... 1-3
Session Learning Objectives............................................................................. 1-9
Why Study Operations Management?............................................................... 1-11
Operations Management Definition................................................................... 1-21
What Does Operations Management Do?......................................................... 1-25
Operations Management in the Organization.................................................... 1-27
Operations Management and Competitive Advantage...................................... 1-35
Trends in Operations Management................................................................... 1-39
Career Opportunities.......................................................................................... 1-41
Planning Concepts Self-Assessment................................................................. 1-45
Terms Check...................................................................................................... 1-57
Discussion Questions......................................................................................... 1-61
Performance Check............................................................................................ 1-65
Suggested Additional Readings......................................................................... 1-68
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Session 2: Planning Foundations
Planning Foundations Overview……………....................................................... 2-3
Session Learning Objectives.............................................................................. 2-5
Defining Planning…............................................................................................ 2-7
Planning Levels……………………………........................................................... 2-11
The Planning and Control Environment……...................................................... 2-13
The Planning Process – Shewart Cycle............................................................. 2-19
The Closed-Loop Planning Cycle……................................................................ 2-21
The Principles of Planning….............................................................................. 2-23
Boundaries of Enterprise Strategies................................................................... 2-27
Defining Business Planning................................................................................ 2-31
Business Planning Process................................................................................ 2-33
Business Area Strategies................................................................................... 2-49
Planning Architecture in the MPC System.......................................................... 2-51
Planning Review…………………………............................................................. 2-53
Terms Check…………........................................................................................ 2-57
Discussion Questions......................................................................................... 2-63
Case Study………..………................................................................................. 2-66
Performance Check………………...................................................................... 2-69
Suggested Additional Readings…...................................................................... 2-74
Principles of Operations Planning
© 2011 APICS Instructor Guide Version 1.0 vi
Session 3: Forecasting
Forecasting Overview......................................................................................... 3-3
Session Learning Objectives.............................................................................. 3-5
Defining Forecasting........................................................................................... 3-7
Four Levels of Forecasting…….......................................................................... 3-11
What is Demand?............................……...…..................................................... 3-19
Universal Principles of Forecasting.................................................................... 3-19
The Forecasting Process…..……....................................................................... 3-23
General Forecasting Techniques……................................................................ 3-31
Forecasting Data Sources……….…................................................................... 3-33
Forecasting Categories………………................................................................. 3-37
Qualitative Forecasting Overview....................................................................... 3-39
Qualitative Forecasting Models.......................................................................... 3-41
Quantitative Intrinsic Techniques....................................................................... 3-45
Exponential Smoothing…………...………………………..................................... 3-51
Time Series Decomposition…………….…………………..………………………. 3-55
Quantitative Causal Techniques......................................................................... 3-59
Why Forecasts Fail…......................................................................................... 3-65
Terms Check…………........................................................................................ 3-69
Discussion Questions......................................................................................... 3-73
Case Study………..………................................................................................. 3-77
Performance Check………………...................................................................... 3-79
Suggested Additional Readings…...................................................................... 3-82
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Session 4: Demand Management
Demand Management Overview........................................................................ 4-3
Session Learning Objectives.............................................................................. 4-5
Defining Demand Management.......................................................................... 4-7
Components of Demand Management……………............................................. 4-11
Evaluating Forecast Performance………...…..................................................... 4-15
Measures of Forecast Error………..................................................................... 4-17
Calculating Forecast Error...….…....................................................................... 4-19
Mean Absolute Deviation (MAD) of the Forecast Error...................................... 4-21
Standard Deviation……………………………….................................................. 4-23
Normal Distribution of Forecast Error…………................................................... 4-25
Forecast Bias……………………………….......................................................... 4-27
Mean Absolute Percentage Error (MAPE).......................................................... 4-29
Tracking Signal………………….......................................................................... 4-31
Limits of Forecasting……………...………………………..................................... 4-33
Defining CRM….…………….………………….……………………………………. 4-35
Order Management………………………………………………………………….. 4-39
Order Management Process.............................................................................. 4-41
Order Promising…….......................................................................................... 4-43
Customer Service Management......................................................................... 4-45
Information Technologies………………………................................................... 4-51
Performance Measurement…………………………………………………………. 4-55
Terms Check…………........................................................................................ 4-59
Discussion Questions......................................................................................... 4-67
Case Study………..………................................................................................. 4-70
Performance Check………………...................................................................... 4-73
Suggested Additional Readings……………………………………………………. 4-76
Principles of Operations Planning
© 2011 APICS Instructor Guide Version 1.0 viii
Session 5: Sales and Operations Planning (S&OP)
Sales and Operations Planning (S&OP) Overview …………............................. 5-3
Session Learning Objectives….…………........................................................... 5-5
Sales and Operations Planning Definition……................................................... 5-7
S&OP in the MPC System…..………………………............................................ 5-13
S&OP Detail Planning Process……...…............................................................. 5-15
S&OP Process………………………................................................................... 5-17
Determining product Families……...….….......................................................... 5-19
S&OP Planning Inputs………………………....................................................... 5-23
Summary of S&OP Outputs…………………...................................................... 5-27
Understanding the S&OP Grid……………………............................................... 5-29
S&OP Exercise……………….…………….......................................................... 5-33
Understanding the MTO S&OP Grid…............................................................... 5-35
Monthly S&OP Planning Process………............................................................ 5-39
Data Gathering…………………………….………………..................................... 5-41
Demand Planning…………...………………….……………………………………. 5-43
Supply Planning………..….…………………………………………………………. 5-45
Pre-S&OP Meeting……...…………………………………………………………… 5-47
Executive S&OP Meeting................................................................................... 5-49
Benefits of S&OP................................................................................................ 5-51
Terms Check...................................................................................................... 5-55
Discussion Questions………………………......................................................... 5-61
Case Study………..………................................................................................. 5-64
Performance Check………………...................................................................... 5-69
Suggested Additional Readings……………………………………………………. 5-72
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Session 6: Mid-Term Exam
Session 7: Aggregate Operations Planning
Aggregate Operations Planning Overview…….……………............................... 7-3
Session Learning Objectives….…………........................................................... 7-5
Detail S&OP Planning – Review……………………………………………………. 7-7
Marketing/Sales Planning – Key Questions………………………………………. 7-9
Marketing and Sales Planning Process.............................................................. 7-11
Product Life Cycle Dynamics……………............................................................ 7-13
Product Volume/Profit Analysis…....................................................................... 7-15
Forecast Disaggregation…………..…..……....................................................... 7-17
Production Plan – Operations Questions…….................................................... 7-19
Production Planning Process……………………………………………………….. 7-21
Production Strategies………..…………….......................................................... 7-23
Level production Strategy……............................................................................ 7-25
Chase Production Strategy................................................................................. 7-27
Resource Planning - Definition……………………………………………….…….. 7-31
Resource Planning – Levels, Horizons, and Methods........................................ 7-33
Resource Planning Process………………………............................................... 7-35
Resource and Load Profiles………………………...………………………………. 7-37
Resource Planning Exercise………………………….......................................... 7-39
Inventory Planning Process………………………............................................... 7-41
Distribution Planning Process………………….…...………………………………. 7-47
Terms Check...................................................................................................... 7-55
Discussion Questions………………………......................................................... 7-61
Case Study………..………................................................................................. 7-64
Performance Check………………...................................................................... 7-67
Suggested Additional Readings……………………………………………………. 7-70
Principles of Operations Planning
© 2011 APICS Instructor Guide Version 1.0 x
Session 8: Master Scheduling Foundations
Master Scheduling Foundations Overview…………………………..……………. 8-3
Session Learning Objectives.............................................................................. 8-5
Master Schedule Definitions………...………...…................................................ 8-7
Master Scheduling in the MPC System……………............................................ 8-9
Master Scheduling Process Flow…………...….................................................. 8-11
What the Master Schedule is NOT………….……………………………………... 8-13
Marketplace/Customer Expectations………........…...….…................................ 8-15
Manufacturing Requirements …..………………….............................................. 8-17
Scheduling Approaches………………..…...………............................................. 8-19
Inputs to the Master Schedule…………………................................................... 8-21
S&OP and the Master Schedule..………............................................................ 8-23
Product Family Planning Bill of Material…………………………………………… 8-25
Planning BOM Exercise……………………………………………………………... 8-27
Introduction to the MPS Grid………………………………………………………... 8-29
Understanding Master Schedule Demand………………………………………… 8-31
PAB and the Master Schedule Grid…………….………………………………….. 8-35
Net Requirements and the Master Schedule Grid.............................................. 8-37
MPS Planned Order Generation......................................................................... 8-39
MPS Generation Order Policies......................................................................... 8-41
ATP and the Master Schedule Grid…………..................................................... 8-43
Master Schedule Grid Time Fences and Zones………………………………….. 8-45
Terms Check...................................................................................................... 8-51
Discussion Questions………………………......................................................... 8-61
Case Study………..………................................................................................. 8-66
Performance Check………………...................................................................... 8-68
Suggested Additional Readings……………………………………………………. 8-72
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Session 9: Master Scheduling Processes Master Scheduling Processes Overview……….…………................................. 9-3
Session Learning Objectives………….............................................................. 9-5
Role of the Master Scheduler…………………………………………………….... 9-7
Causes of master Schedule Change …………….............................................. 9-9
Master Schedule Management Process………...….......................................... 9-11
Master Schedule Generation ………………………..…………………………….. 9-13
Managing the Forecast…………………………..…...….…..................................... 9-15
Managing Order Requirements…..................................................................... 9-17
Time Fence Review…...………......................................................................... 9-19
Types of Master Schedule Orders……………………….................................... 9-23
Action Messages…………..……....................................................................... 9-25
Safety Stock and the Master Schedule.…......................................................... 9-29
Capacity Planning – Levels, Horizons and Methods - Revisited………………. 9-31
RCCP Processing Steps…………………………………...………………………. 9-33
Calculating the Product Load for RCCP………………………………………….. 9-35
RCCP Calculation……………………...………………………………………........ 9-37
Overload and Underload Solutions………………...……………………………… 9-39
RCCP Rebalancing…………………………………………………………………. 9-41
MPS Process – Closing the Loop…………………………………………………. 9-43
Performance Policies and Methods……………………………………………….. 9-45
MPS Performance Measurements………………………………….…………….. 9-49
Terms Check..................................................................................................... 9-53
Discussion Questions........................................................................................ 9-61
Case Study....................................................................................................... 9-65
Performance Check……………………….......................................................... 9-67
Suggested Additional Readings…………………………………………………… 9-70
Principles of Operations Planning
© 2011 APICS Instructor Guide Version 1.0 xii
Session 10: Operations Systems
Operations Systems Overview …………………………………………………...... 10-3
Session Learning Objectives…………................................................................ 10-5
Technology Terms Matching Exercise…………………………………………….. 10-7
Importance of Information Technology............................................................... 10-9
Role of Information Technology…………………………………………………….. 10-11
Technology Strategic Triangle……………………….…………………..…………. 10-13
Organizational Framework Assumptions………………………………………….. 10-15
Purpose of Information Systems…………………………………………………… 10-19
How Systems Technology Benefits Planning……………………………………... 10-21
What is an ERP System?................................................................................... 10-23
Evolution of ERP – Stage 1…………………………………………………………. 10-27
Evolution of ERP – Stage 2…............................................................................ 10-29
Evolution of ERP – Stage 3…............................................................................ 10-31
Evolution of ERP – Stage 4…............................................................................ 10-33
Evolution of ERP – Stage 5…............................................................................ 10-35
ERP and Best-of-Breed Systems…………………………………………………... 10-37
Information Technology and Systems Thinking…………………………………... 10-39
Enterprise Business System Components………………………………………… 10-41
Enterprise System Maturity Model…………………………………………………. 10-43
Benefits Summary……………………………………………………………………. 10-45
Terms Check…………………………………………………………………………. 10-49
Discussion Questions………………………………………………………………... 10-55
Case Study....................................................................................................... 10-58
Performance Check……………………….......................................................... 10-61
Suggested Additional Readings…………………………………………………… 10-64
Session 11: Final Exam