CPIM Module 1 Fundamentals of Sales and
Operations Planning questions and answers with
solutions
Sales and Operations Planning (S&OP) - ANSWER A process to develop
tactical plans that provide management the ability to strategically direct
its businesses to achieve competitive advantage on a continuous basis
by integrating customer-focused marketing plans for new and existing
products with the management of the supply chain. The process brings
together all the plans for the business (sales, marketing, development,
manufacturing, sourcing, and financial) into one integrated set of plans.
Backlog - ANSWER All the customer orders received but not yet shipped.
Sometimes referred to as open orders or the order board.
Bullwhip Effect - ANSWER An extreme change in the supply position
upstream in a supply chain generated by a small change in demand
downstream in the supply chain. Inventory can quickly move from being
backordered to being excess. This is caused by a serial nature of
communicating orders up the chain with the inherent transportation
delays of moving product down the chain. This can be eliminated by
synchronizing the supply chain.
Sales Plan - ANSWER A time-phased statement of expected customer
orders anticipated to be received (incoming sales, not outgoing
shipments) for each major product family or item. Represents sales and
, marketing management's commitment to take all reasonable steps
necessary to achieve this level of actual customer orders. Is a necessary
input to the production planning process (or sales and operations
planning process). Expressed in units identical to th ose used for the
production plan (as well as in sales dollars).
Demand Planning - ANSWER The process of combining statistical
forecasting techniques and judgement to construct demand estimates
for products or services (both high and low volume; lumpy and
continuous) across the supply chain from the suppliers' raw mater ials to
the consumer's needs. Items can be aggregated by product family,
geographical location, product life cycle, and so forth, to determine an
estimate of consumer demand for finished products, service parts, and
services. Numerous forecasting models are tested and combined with
judgment from marketing, sales, distributors, warehousing, service
parts, and other functions. Actual sales are compared to forecasts
provided by various models and judgments to determine the best
integrations of techniques and judgment to minimize forecast error.
Production Planning - ANSWER A process to develop tactical plans based
on setting the overall level of manufacturing output and other activities
to best satisfy the current planned level of sales, while meeting general
business objectives of profitability, productivity, competitive customer
lead times, etc., as expressed in the overall business plan.
Make-to-Stock (MTS) - ANSWER A production environment where
products can be and usually are finished before receipt of a customer
order. Customer orders are typically filled from existing stocks, and
production orders are used to replenish these stocks.
Operations Planning questions and answers with
solutions
Sales and Operations Planning (S&OP) - ANSWER A process to develop
tactical plans that provide management the ability to strategically direct
its businesses to achieve competitive advantage on a continuous basis
by integrating customer-focused marketing plans for new and existing
products with the management of the supply chain. The process brings
together all the plans for the business (sales, marketing, development,
manufacturing, sourcing, and financial) into one integrated set of plans.
Backlog - ANSWER All the customer orders received but not yet shipped.
Sometimes referred to as open orders or the order board.
Bullwhip Effect - ANSWER An extreme change in the supply position
upstream in a supply chain generated by a small change in demand
downstream in the supply chain. Inventory can quickly move from being
backordered to being excess. This is caused by a serial nature of
communicating orders up the chain with the inherent transportation
delays of moving product down the chain. This can be eliminated by
synchronizing the supply chain.
Sales Plan - ANSWER A time-phased statement of expected customer
orders anticipated to be received (incoming sales, not outgoing
shipments) for each major product family or item. Represents sales and
, marketing management's commitment to take all reasonable steps
necessary to achieve this level of actual customer orders. Is a necessary
input to the production planning process (or sales and operations
planning process). Expressed in units identical to th ose used for the
production plan (as well as in sales dollars).
Demand Planning - ANSWER The process of combining statistical
forecasting techniques and judgement to construct demand estimates
for products or services (both high and low volume; lumpy and
continuous) across the supply chain from the suppliers' raw mater ials to
the consumer's needs. Items can be aggregated by product family,
geographical location, product life cycle, and so forth, to determine an
estimate of consumer demand for finished products, service parts, and
services. Numerous forecasting models are tested and combined with
judgment from marketing, sales, distributors, warehousing, service
parts, and other functions. Actual sales are compared to forecasts
provided by various models and judgments to determine the best
integrations of techniques and judgment to minimize forecast error.
Production Planning - ANSWER A process to develop tactical plans based
on setting the overall level of manufacturing output and other activities
to best satisfy the current planned level of sales, while meeting general
business objectives of profitability, productivity, competitive customer
lead times, etc., as expressed in the overall business plan.
Make-to-Stock (MTS) - ANSWER A production environment where
products can be and usually are finished before receipt of a customer
order. Customer orders are typically filled from existing stocks, and
production orders are used to replenish these stocks.
