Operations Planning and Scheduling – Important Points – Summary – Krajewski – 12th Edition

Levels in Operations Planning and Scheduling

  • Explain the rationale behind the levels in the operations planning and scheduling process.
S&OP Supply Options
  • Describe the supply options used in sales and operations planning.
S&OP Strategies
  • Compare the chase planning strategy to the level planning strategy for developing sales and operations plans.
Spreadsheets for Sales and Operations Planning
  • Use spreadsheets for sales and operations planning.
  • Develop workforce and workstation schedules.


Cooper Tire and Rubber Company mini case

Operations planning and scheduling is the process of making sure that demand and supply plans are in balance, from the aggregate level down to the short-term scheduling level. Operations planning and scheduling lies at the core of supply chain integration, around which plans are made up and down
the supply chain, from supplier deliveries to customer deliveries as per due dates and required quantities. 

Levels in Operations Planning and Scheduling
Level 1: Sales and Operations Planning
Level 2: Resource Planning
Level 3: Scheduling

Three levels of operations planning and scheduling are discussed in the book:
(1) sales and operations planning (S&OP), (2) resource planning, and (3) scheduling.

The sales and operations plan is useful because it focuses on a general course of action, consistent with the company’s budgeted goals and objectives for the year ahead, without getting bogged down in details.

In general, companies perform aggregation along three dimensions: (1) products (planning done for a group of products), (2) workforce, and (3) time.

Inputs from marketing and sales, finance and accounts, human resources, procurement, engineering and operations management are combined to arrive at the sales and operations plan that satisfies the budget goals of the company with respect to revenues and profits.
The next planning level is resource planning, which is a process that takes sales and operations plans;
process time standards, routings, and other information on how services or products are produced; and then plans the timing of equipment capacity and material requirements.
Scheduling takes the resource plan and translates it into specific operational tasks on a detailed job stating time basis. Facility schedules can be developed by assigning activities to facilities so as to utilize them efficiently.

S&OP Supply Options

There are six supply options that can
be used singly or in combination to arrive at a plan.

  1.  Anticipation Inventory
  2. Workforce count Adjustment
  3. Workforce Utilization
  4. Part-Time Workers
  5. Subcontractors
  6. Vacation Schedules

S&OP Strategies
Chase Strategy
Level Strategy
Constraints and Costs

Chase Strategy: The chase strategy involves hiring and laying off employees to match the demand forecast over the planning horizon.

The level strategy involves keeping the workforce constant over the planning horizon. It can vary its utilization to match the demand forecast via overtime, undertime (paid or unpaid), and vacation planning (i.e., paid vacations when demand is low).
Constraints and Costs: An acceptable sales and operations plan must be feasible under the relevant constraints or cost targets. Constraints can be either physical limitations or related to managerial policies. While physical constraints are machine capacities and warehouse storage space, policy constraints might include limitations on the number of backorders or the use of subcontractors or overtime, as well as the minimum inventory levels as desired safety stocks. Ethical issues may also be involved, such as excessive layoffs. 

Sales and Operations Planning as a Process

Step 1. Begin to “roll forward” the plan for the new planning horizon. Start preliminary work right after the month’s end. Update files with actual sales, production, inventory, costs, and constraints.
Step 2. Participate in the forecasting and demand planning process to create the authorized demand forecasts. 
Step 3. Update the sales and operations plans for each family, recognizing relevant constraints and costs including availability of materials from suppliers, training facilities capable of handling only so many new hires at a time, machine capacities, or limited storage space.Typically, many alternative plans can satisfy the given  set of constraints.The planner evaluates plans to find the best that best balances costs, customer service, and workforce stability. 
Step 4. Have one or more consensus meetings with the stakeholders on how best to balance supply with demand.Participants could include the supply chain manager, plant manager, controller, purchasing manager, production control manager, or logistics manager. The goal is to reach an agreement and   present  one set of recommendations to  the firm’s executive sales and operations planning (S&OP) meeting. Where agreement cannot be reached, proposed alternative plans will be presented. An updated financial view of the total business projected for the proposed S&O  plan is to be created in a spreadsheet and has to be presented along with production and sales quantities.  
Step 5. Present recommendations by product family at the executive S&OP meeting, which typically includes the firm’s president and the vice presidents of functional areas. The plan is reviewed relative to the business plan, new product issues, special projects, and other relevant factors. The committee  may suggest changes to the plan  to balance conflicting objectives better or for taking care of strategic issues of interest. 

Step 6. Finalize  the plans to reflect the outcome of the executive S&O meeting
and communicate them to the stakeholders concerned for implementation. Important recipients include those who do resource planning.

Spreadsheets for Sales and Operations Planning
Spreadsheets for a Manufacturer
Spreadsheeets for a Service Provider

Various spreadsheets can be used, including ones that are developed in house or by individual planners. In the book, Sales and Operations Planning exercises were done with Spreadsheets Solver in OM Explorer.

Job and Facility Scheduling
Workforce Scheduling
Managerial Practice 10.1 Scheduling Major League Baseball Umpires
Sequencing Jobs at a Workstation
Software Support

Scheduling is generating a schedule for the supply of resources or materials to meet the needs determined in resource planning. Job and facility scheduling, workforce scheduling, job sequencing at a workstation, and software support are discussed for this topic.

Schedules can be displayed by simply listing the job start and due dates  shown in a table their or as  a graph on a time scale showing their start and finish times. The Gantt chart  is used as the third approach.

Workforce Scheduling: Workforce scheduling, which is a type of scheduling that determines when employees work. Of particular interest are situations when not all employees work the same five days a week, and same eight hours per day. For example, schedule needs to be given for airplane pilots and flight attendants.  

Another aspect of scheduling is sequencing work at workstations. Sequencing determines the order in
which jobs waiting for processing are selected at a workstation. In this regard, the term “job” refers to either production orders or human customers. Number of priority rules can be used to reduce delay time of jobs, reduce overall through put and other objectives. For example First-Come, First-Served and Earliest Due Date are two popular sequencing priority rules.

Performance Measures The quality of a schedule can be judged in various ways. Two commonly
used performance measures are flow time (through put time in case of job shops) and past due.

Computerized scheduling systems are available to cope with the complexity of workforce scheduling.
Software is also available for sequencing jobs at workstations. They help firms design and manage the linkages between customers and suppliers in the supply chain. True integration requires the manipulation of large amounts of complex data in real time because the customer order work flow must be synchronized with the required material, manufacturing, and distribution activity. Coupled with the Internet and improved data storage and manipulation methods, now advanced planning and scheduling (APS) systems, which seek to optimize resources across the supply chain and align daily operations with strategic goals. A firm’s ability to change its schedules quickly,  keep the goods and services flowing smoothly through the supply chain and deliver to customer requirements to the maximum extent provides  competitive edge to the company through a pathway termed ‘Operational Excellence‘.

Learning Goals in Review

Video Case Sales and Operations Planning at Starwood
Case Memorial Hospital

Index to Summaries of all Chapters of Krajewski’s Book

Operations Management – Krajewski – 12th Edition – Chapter Summaries – Important Points

SUPPLEMENT D Linear Programming
Characteristics of Linear Programming Models
Formulating a Linear Programming Model
Graphic Analysis
Plot the Constraints
Identify the Feasible Region
Plot the Objective Function Line
Find the Visual Solution
Find the Algebraic Solution
Slack and Surplus Variables
Sensitivity Analysis
Computer Analysis
Simplex Method
Computer Output
The Transportation Method
Transportation Method for Sales and Operations Planning
Learning Goals in Review