Table of Contents

Instructor Guide

2011 APICS Confidential and Proprietary

Principles of Operations Planning

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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 MidTerm Examination
Session 7 Aggregate Operations Planning
Session 8 Master Scheduling Foundations
Session 9 Master Scheduling Processes
Session 10 Operations Systems
Session 11 Final Exam

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Principles of Operations Planning

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

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Principles of Operations Planning

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

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Principles of Operations Planning

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

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Principles of Operations Planning

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

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Principles of Operations Planning

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

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