Sales and Operations Planning for Covolo Diving Gear
Covolo Diving Gear
Team 3
: Neiko Jennings, Patricia Iseley, Michael
Davis, Kenneth Fleck, Wesam Hoblos
SALES AND OPERATIONS PLANNING
AUGUST 2013 – SEPTEMBER 2014
Introduction
Covolo Diving Gear is a prestigious manufacturer of
diving equipment that utilizes secial German made
parts.
As of late, Covolo has experienced manufacturing
quandaries. In order to resolve their dilemmas, Sales
and Operations planning will be used to help
coordinate their efforts.
This presentation will demonstrate the most effective
solution for Covolo Diving Gear.
TOP-DOWN
BOTTOM UP
Single, aggregate sales
forecast
Consistent product mix
from one period to the
next
Products must have
similar resource
requirements
Separate estimates of
requirements for each
product added up to find
forecast
Unstable product mix
from one period to the
next
Products/services have
different resource
requirements
TOP-DOWN VS. BOTTOM UP
TOP-DOWN PLANNING
Top Down Planning Sequence:
Corporate Strategic Planning
Business Plan
Tactical or Production Plan
Detailed Planning and Control:
Master Schedule
Consensus Production Plan for Sept. 2013 – Aug 2014
Sales and Operations Planning
Level vs. Chase Production Plan
Recommendation: Chase Plan
Why?
Cost / Benefit
Total Cost
Level Production Plan = $30,996,000
Chase Production Plan = $29,084,090
Total Cost Breakdown - Where do the numbers come
from?
2 Major differences in the costs of each
plan
Cost of changing production levels (Hire/Layoff
costs)
Cost of holding additional inventory
By The Numbers
Regular Production Costs
Level Plan = $28,608,000
Chase Plan = $28,083,520
Hiring and Layoff Costs
Level Plan = $0
Chase Plan = $66,650
By The Numbers
Inventory Holding Costs
Level Plan = $2,388,000
Chase Plan = $933,920.00
SALES AND OPERATIONS PLANNING
How will a monthly S&OP update with rolling
planning horizons help alleviate Patricia’s
concerns?
Monthly meetings will allow the company to stay
organized and on the same page
Efficient Communication and Coordination with
Management and Department Heads
Allows you to forecast upcoming months thus making sure
production is up to speed or notified
Allows you to plan and see Short term and long term goals
and expectations
Keeping Idle Workers or Hiring and Firing?
Full production = 160 hours
Average labor hours/gauge set = 0.25
Holding cost = $8/gauge set/month
160 hours x 4 gauge sets/hr = 640 gauge sets
640 gauge sets x $8 = $5, 120 per month
$5,120 x 12 = $61,440 per year
Keeping Idle Workers or Hiring and Firing?
Hiring/Firing cost for Chase
Plan = $66,650
Savings for idle workers =
$5,210
Advantages After Plan Change
Are there still advantages to S&OP,
even though the forecasts may
change a couple of months after the
plan is created?
It allows everyone to see the goals
they must reach
Advantages After Plan Change
It can help the company in both the
short run and the long run
Allows them to know what spending
limit and sales will be for that certain
time period
Appendix 1
Appendix 1 continued...
Appendix 2
Appendix 2 continued...
SCM 301 Fall 2014
Covolo Case
TEAM 3
Score: ___________________
Date Submitted: ___________
Team Members:
Ken Fleck kaf5573@psu.edu
Michael Davis
Wesam Hoblos
Patricia Iseley
Neiko Jennings
Covolo Diving Gear, a prestigious manufacturer of diving equipment, is utilizing Sales and Operations Planning to address manufacturing challenges. The presentation compares top-down vs. bottom-up approaches, outlines consensus production plans, and evaluates cost breakdowns between level and chase production plans, providing insights for the company's strategy.
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Presentation Transcript
Covolo Diving Gear SALES AND OPERATIONS PLANNING AUGUST 2013 SEPTEMBER 2014 Team 3: Neiko Jennings, Patricia Iseley, Michael Davis, Kenneth Fleck, Wesam Hoblos
Introduction Covolo Diving Gear is a prestigious manufacturer of diving equipment that utilizes secial German made parts. As of late, Covolo has experienced manufacturing quandaries. In order to resolve their dilemmas, Sales and Operations planning will be used to help coordinate their efforts. This presentation will demonstrate the most effective solution for Covolo Diving Gear.
TOP-DOWN VS. BOTTOM UP BOTTOM UP TOP-DOWN Separate estimates of requirements for each product added up to find forecast Unstable product mix from one period to the next Products/services have different resource requirements Single, aggregate sales forecast Consistent product mix from one period to the next Products must have similar resource requirements
TOP-DOWN PLANNING Top Down Planning Sequence: Corporate Strategic Planning Business Plan Tactical or Production Plan Detailed Planning and Control: Master Schedule
Consensus Production Plan for Sept. 2013 Aug 2014 Sales and Operations Planning Level vs. Chase Production Plan Recommendation: Chase Plan Why? Cost / Benefit
Total Cost Level Production Plan = $30,996,000 Chase Production Plan = $29,084,090
Total Cost Breakdown - Where do the numbers come from? 2 Major differences in the costs of each plan Cost of changing production levels (Hire/Layoff costs) Cost of holding additional inventory
By The Numbers Regular Production Costs Level Plan = $28,608,000 Chase Plan = $28,083,520 Hiring and Layoff Costs Level Plan = $0 Chase Plan = $66,650
By The Numbers Inventory Holding Costs Level Plan = $2,388,000 Chase Plan = $933,920.00
SALES AND OPERATIONS PLANNING How will a monthly S&OP update with rolling planning horizons help alleviate Patricia s concerns? Monthly meetings will allow the company to stay organized and on the same page Efficient Communication and Coordination with Management and Department Heads Allows you to forecast upcoming months thus making sure production is up to speed or notified Allows you to plan and see Short term and long term goals and expectations
Keeping Idle Workers or Hiring and Firing? Full production = 160 hours Average labor hours/gauge set = 0.25 Holding cost = $8/gauge set/month 160 hours x 4 gauge sets/hr = 640 gauge sets 640 gauge sets x $8 = $5, 120 per month $5,120 x 12 = $61,440 per year
Keeping Idle Workers or Hiring and Firing? Hiring/Firing cost for Chase Plan = $66,650 Savings for idle workers = $5,210
Advantages After Plan Change Are there still advantages to S&OP, even though the forecasts may change a couple of months after the plan is created? It allows everyone to see the goals they must reach
Advantages After Plan Change It can help the company in both the short run and the long run Allows them to know what spending limit and sales will be for that certain time period
