Assignment:
Case Study
Read the case study Covolo Diving Gear and respond to the following questions:
1. Develop a level production plan for Covolo Diving Gear. Explain the advantages and disadvantages of this plan.
2. Explain if Covolo would be able to or not be able to implement a chase plan?
3.Patricia Rodriguez, vice president of marketing states, "I have got to tell you that I am pretty comfortable with the forecasts for Sep through Nov, but after that, a lot could change. It's just very hard to forecast for four or more months out in this kind of market".
a) Explain how a monthly S&OP update with rolling planning horizons help alleviate Patricia's concerns
b) Explain the advantages in using S&OP, even though the forecasts may change?
Additional guidance:
- Marks will be awarded on the basis of appropriateness of analysis and clarity in articulation
COVOLO DIVING GEAR - CASE STUDY
It has been two weeks since Covolo Diving Gear's contentious semi annual planning meeting, and the senior staff members for Covolo Diving Gear are getting ready to start their first monthly S&OP meeting. Gina Covolo, CEO, gets the ball rolling:
I know it's been a busy two weeks for all of you, and I appreciate you working extra time to get ready for this meeting. Production is already set for the next two months, so we are going to start by planning for this September through the following August. I have had Patricia from Marketing develop a sales forecast for these 12 months, and I have also had David from manufacturing estimate manufacturing costs and labour requirements, as well as capacity in the plant. Mary from HR was good enough to come up with some estimates of how much it costs to hire and train new workers, as well as the cost of laying off folks. Finally, Jack from purchasing was able to get the accounting folks to estimate the cost of holding a gauge set in inventory for a month. So let's see what we have got.
Mary passes out the following information to all the attendees:
|
MONTH
|
SALES FORECAST
|
|
Sep 2013
|
30,000
|
|
Oct
|
31,500
|
|
Nov
|
35,000
|
|
Dec
|
37,000
|
|
Jan 2014
|
22,000
|
|
Feb
|
18,000
|
|
Mar
|
17,500
|
|
Apr
|
27,000
|
|
May
|
38,000
|
|
Jun
|
40,000
|
|
Jul
|
42,000
|
|
Aug
|
40,000
|
- Manufacturing cost per gauge set: £74.50
- Holding cost: £8 per gauge set per month
- Back order cost: 0
- Average labour hours required per gauge set: 0.25 hours
- Labour hours available per employee per month: 160
- Plant capacity: 35,000 gauge sets per month
- Cost to hire and train a new employee: £1,250
- Cost to lay off an employee: £500
- Beginning and ending workforce: 50
- Beginning inventory: 10,000