Table of Contents

Instructor Guide

© 2011 APICS Confidential and Proprietary

Principles of Operations Planning This page left intentionally blank © 2011 APICS ii Instructor Guide Version 1.0 .

0 © 2011 APICS iii .Table of Contents Page 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 Mid–Term Examination Session 7 Aggregate Operations Planning Session 8 Master Scheduling Foundations Session 9 Master Scheduling Processes Session 10 Operations Systems Session 11 Final Exam ______________________________________________________________________________________ Instructor Guide Version 1.

....................................................................................... 1-57 Discussion Questions....................................................... 1-68 © 2011 APICS iv Instructor Guide Version 1.. 1-61 Performance Check.......................................... 1-3 Session Learning Objectives...................................................................................................................................................... 1-35 Trends in Operations Management...................................................................................................................................................... 1-9 Why Study Operations Management?........................................ 1-27 Operations Management and Competitive Advantage............................................ 1-11 Operations Management Definition..............................Principles of Operations Planning Table of Contents Session 1: Operations Management Foundations Principles of Operations Management Overview............................................0 .................................................................................................................................. 1-65 Suggested Additional Readings.............................................. 1-21 What Does Operations Management Do?........................................ 1-45 Terms Check................................................................................................. 1-25 Operations Management in the Organization....... 1-39 Career Opportunities................ 1-41 Planning Concepts Self-Assessment.

...................... 2-66 Performance Check………………............ 2-69 Suggested Additional Readings…............................................................................................ 2-74 ______________________________________________________________________________________ Instructor Guide Version 1...... 2-53 Terms Check…………....................................... 2-5 Defining Planning….......0 © 2011 APICS v .................................. 2-7 Planning Levels……………………………............................... 2-21 The Principles of Planning…..................................................... 2-63 Case Study………........................... 2-11 The Planning and Control Environment……................................................................................................................................................................................................................................................................................................... 2-31 Business Planning Process..................................................Table of Contents Page Session 2: Planning Foundations Planning Foundations Overview……………................................................................................................................................................................................................................................ 2-33 Business Area Strategies............... 2-57 Discussion Questions.........................................................………...................... 2-51 Planning Review…………………………................................................. 2-3 Session Learning Objectives............................................................................................................................................................................... 2-23 Boundaries of Enterprise Strategies........... 2-13 The Planning Process – Shewart Cycle.............. 2-27 Defining Business Planning................................................................ 2-49 Planning Architecture in the MPC System............................................... 2-19 The Closed-Loop Planning Cycle……..............................

.........................…...............................................................................................0 ............................ 3-79 Suggested Additional Readings…............................................................................ 3-19 The Forecasting Process…........................………………………..........…...... 3-65 Terms Check…………......................................................... 3-69 Discussion Questions................Principles of Operations Planning Session 3: Forecasting Forecasting Overview......................................................................................................................... 3-33 Forecasting Categories………………......................................................................... 3-7 Four Levels of Forecasting……................ 3-45 Exponential Smoothing…………....................…….................... 3-51 Time Series Decomposition……………............ 3-19 Universal Principles of Forecasting............................................... 3-39 Qualitative Forecasting Models........ 3-5 Defining Forecasting...................... 3-23 General Forecasting Techniques……........................................................................................................................................................... 3-31 Forecasting Data Sources……….......................................................................... 3-73 Case Study………......... 3-59 Why Forecasts Fail…............. 3-77 Performance Check……………….............. 3-55 Quantitative Causal Techniques.............................................. 3-41 Quantitative Intrinsic Techniques...............................................................………………….......………………………............................... 3-37 Qualitative Forecasting Overview................................................. 3-3 Session Learning Objectives...................................... 3-11 What is Demand?................... 3-82 © 2011 APICS vi Instructor Guide Version 1..........................................................................................................................................................................................................................................................................................................................……….........................................................…….............

......................................................................... 4-5 Defining Demand Management................................ 4-27 Mean Absolute Percentage Error (MAPE)............................ 4-25 Forecast Bias………………………………....................................................................................... 4-33 Defining CRM….............…………………................................................................................................................................................................ 4-21 Standard Deviation………………………………................ 4-11 Evaluating Forecast Performance………...............................………………………................................................... 4-73 Suggested Additional Readings…………………………………………………….............................................. 4-17 Calculating Forecast Error................. 4-55 Terms Check…………............ 4-35 Order Management…………………………………………………………………. 4-59 Discussion Questions... 4-23 Normal Distribution of Forecast Error…………............…........................................................ 4-70 Performance Check………………..............................….................. 4-29 Tracking Signal………………….................................................................…………………………………….................................. 4-76 ______________________________________________________________________________________ Instructor Guide Version 1............................Table of Contents Page Session 4: Demand Management Demand Management Overview................................................................................. 4-3 Session Learning Objectives..... 4-41 Order Promising……. 4-7 Components of Demand Management…………….............................................................................................. 4-39 Order Management Process........................ 4-67 Case Study……….......... 4-51 Performance Measurement…………………………………………………………..........…………….....0 © 2011 APICS vii .......……….................................................. 4-45 Information Technologies………………………................................... 4-15 Measures of Forecast Error………........................................................................................................................................... 4-43 Customer Service Management....................................................................... 4-19 Mean Absolute Deviation (MAD) of the Forecast Error.........................................................…..... 4-31 Limits of Forecasting……………...............................................................

.............................................…...........................…………………............. 5-5 Sales and Operations Planning Definition…….......................................... 5-15 S&OP Process………………………........................................................ 5-35 Monthly S&OP Planning Process………....... 5-29 S&OP Exercise……………….........................…........ 5-51 Terms Check.............………....…………………………………………………………......................... 5-17 Determining product Families……......................................................................................... 5-41 Demand Planning………….................................................................................................... 5-55 Discussion Questions………………………...........................………………............................................................... 5-3 Session Learning Objectives…..... 5-45 Pre-S&OP Meeting…….......…..........………………………........................... 5-13 S&OP Detail Planning Process……..........................................................……………………………………................. 5-27 Understanding the S&OP Grid…………………….............................................. 5-33 Understanding the MTO S&OP Grid….................. 5-7 S&OP in the MPC System…....... 5-19 S&OP Planning Inputs………………………........................Principles of Operations Planning Session 5: Sales and Operations Planning (S&OP) Sales and Operations Planning (S&OP) Overview …………...................................................................................................... 5-69 Suggested Additional Readings……………………………………………………........................................... 5-49 Benefits of S&OP............…............. 5-23 Summary of S&OP Outputs…………………....................................................................................... 5-43 Supply Planning………............................................................................................................ 5-39 Data Gathering……………………………............0 ...... 5-61 Case Study……….... 5-72 © 2011 APICS viii Instructor Guide Version 1.....…………......……………........................................................... 5-64 Performance Check………………........…………………………………………………………… 5-47 Executive S&OP Meeting.................................

.......................Definition………………………………………………........................... 7-47 Terms Check..................................................... Horizons...................... 7-37 Resource Planning Exercise…………………………............................... 7-31 Resource Planning – Levels.............................. 7-27 Resource Planning ....... 7-35 Resource and Load Profiles……………………….......... and Methods............... 7-15 Forecast Disaggregation………….........................…….................. 7-64 Performance Check……………….............. 7-11 Product Life Cycle Dynamics…………….............................................. 7-33 Resource Planning Process……………………….......... 7-13 Product Volume/Profit Analysis….................. 7-17 Production Plan – Operations Questions…….... 7-21 Production Strategies………..................................................................................... 7-19 Production Planning Process……………………………………………………….................... 7-67 Suggested Additional Readings……………………………………………………................................................ 7-55 Discussion Questions………………………........................................................... 7-3 Session Learning Objectives…....................... 7-39 Inventory Planning Process………………………................................................. 7-7 Marketing/Sales Planning – Key Questions………………………………………............................…............. 7-61 Case Study………..................... 7-41 Distribution Planning Process…………………...................…...... 7-9 Marketing and Sales Planning Process....…………….........………………………………...……..........................................Table of Contents Page Session 6: Mid-Term Exam Session 7: Aggregate Operations Planning Aggregate Operations Planning Overview……....... 7-5 Detail S&OP Planning – Review……………………………………………………..........................................0 © 2011 APICS ix ........ 7-23 Level production Strategy…….......................................………………………………...............………........................................................ 7-25 Chase Production Strategy.......................……………........………….................................. 7-70 ______________________________________________________________________________________ Instructor Guide Version 1.............................................................................................................

.. 8-17 Scheduling Approaches………………....... 8-9 Master Scheduling Process Flow…………............ 8-41 ATP and the Master Schedule Grid…………............................. 8-66 Performance Check………………................... 8-39 MPS Generation Order Policies.......................................................................... 8-51 Discussion Questions………………………...……….... 8-3 Session Learning Objectives.............................................. 8-7 Master Scheduling in the MPC System……………....................... 8-23 Product Family Planning Bill of Material…………………………………………… 8-25 Planning BOM Exercise…………………………………………………………….. 8-35 Net Requirements and the Master Schedule Grid....... 8-68 Suggested Additional Readings……………………………………………………...................... 8-19 Inputs to the Master Schedule…………………................................................................................................................... 8-45 Terms Check...............0 ............................................................. 8-13 Marketplace/Customer Expectations……….........................................................…...................................…………………………………..........Principles of Operations Planning Session 8: Master Scheduling Foundations Master Scheduling Foundations Overview…………………………............................….................….... 8-21 S&OP and the Master Schedule.............….......... 8-29 Understanding Master Schedule Demand………………………………………… 8-31 PAB and the Master Schedule Grid……………......................………......................……………............. 8-15 Manufacturing Requirements …............ 8-27 Introduction to the MPS Grid………………………………………………………. 8-43 Master Schedule Grid Time Fences and Zones…………………………………......... 8-72 © 2011 APICS x Instructor Guide Version 1........................................ 8-5 Master Schedule Definitions……….........................................………………….................................................... 8-11 What the Master Schedule is NOT………….................................................……….....…..........….................................…………………………………….............................................. 8-37 MPS Planned Order Generation..........................................………. 8-61 Case Study……….................................................

... 9-9 Master Schedule Management Process………............................. 9-11 Master Schedule Generation ……………………….…........................................... 9-3 Session Learning Objectives…………............ 9-7 Causes of master Schedule Change ……………................... 9-49 Terms Check............................................................ 9-33 Calculating the Product Load for RCCP…………………………………………........................................... 9-43 Performance Policies and Methods………………………………………………........................................................... 9-25 Safety Stock and the Master Schedule.... 9-35 RCCP Calculation……………………....... 9-53 Discussion Questions..................………………………......................................... 9-15 Managing Order Requirements…. 9-17 Time Fence Review….......................…........……..................................... 9-31 RCCP Processing Steps…………………………………............……………………………....................... 9-61 Case Study................... 9-29 Capacity Planning – Levels.................. 9-41 MPS Process – Closing the Loop………………………………………………….......................................................Revisited……………….... Horizons and Methods ................…..................................... 9-65 Performance Check………………………..........……………..............................................................................................................0 © 2011 APICS xi ..............………...............……………………………… 9-39 RCCP Rebalancing…………………………………………………………………. 9-5 Role of the Master Scheduler…………………………………………………….......................................... 9-67 Suggested Additional Readings…………………………………………………… 9-70 ______________________________________________________________________________________ Instructor Guide Version 1...…………....... 9-13 Managing the Forecast…………………………. 9-23 Action Messages…………................................... 9-37 Overload and Underload Solutions……………….......................... 9-19 Types of Master Schedule Orders………………………...Table of Contents Page Session 9: Master Scheduling Processes Master Scheduling Processes Overview………..................….............…............ 9-45 MPS Performance Measurements………………………………….............……………………………………….................

........... 10-11 Technology Strategic Triangle……………………….................. 10-55 Case Study.......................................................0 ..................................... 10-37 Information Technology and Systems Thinking…………………………………...................................................... 10-3 Session Learning Objectives………….... 10-49 Discussion Questions………………………………………………………………..............................................………….................... 10-5 Technology Terms Matching Exercise…………………………………………….................. 10-61 Suggested Additional Readings…………………………………………………… 10-64 Session 11: Final Exam © 2011 APICS xii Instructor Guide Version 1.............Principles of Operations Planning Session 10: Operations Systems Operations Systems Overview ………………………………………………….................. 10-7 Importance of Information Technology......................... 10-39 Enterprise Business System Components………………………………………… 10-41 Enterprise System Maturity Model…………………………………………………........................................................ 10-13 Organizational Framework Assumptions…………………………………………........... 10-15 Purpose of Information Systems…………………………………………………… 10-19 How Systems Technology Benefits Planning……………………………………. 10-33 Evolution of ERP – Stage 5….......... 10-21 What is an ERP System?............................................ 10-9 Role of Information Technology……………………………………………………............... 10-45 Terms Check…………………………………………………………………………............. 10-43 Benefits Summary……………………………………………………………………...................................... 10-27 Evolution of ERP – Stage 2…................................................................ 10-29 Evolution of ERP – Stage 3…................ 10-35 ERP and Best-of-Breed Systems…………………………………………………......... 10-23 Evolution of ERP – Stage 1…………………………………………………………............................. 10-31 Evolution of ERP – Stage 4…............................................................................... 10-58 Performance Check……………………….…………………....