OPRE 4320 Exam 2 UTD

The Primary goal of Sales & Operations Planning is to create an operationally feasible production plan: True or False

True

When SOP performs an aggregation of a forecast it will:

Sum up forecasts from individual members into a parent level forecast.

The SOP planning table is primarily organized around:

Characteristics and Key Figures

A forecast profile will tell SOP:

What forecasting technique to use, Historical and future time periods

All replenishment planning systems answer the following questions Except:

How to store the material made or purchased

Dependent demand is:

calculated from higher demand

Examples of independent demand in SAP include:

Forecasts, customer orders

The value in the MRP Type field on the Material Master that will allow standard MRP to run is:

PD

If a fixed order quantity of 50 is defined as a lot size date value and there is a net requirement of 150 with no existing inventory then MRP will create:

3 planned orders for 50 each

Using Basic Scheduling what master data object below is read:

Material Master

The results of an MRP run may be viewed through the MD04 transaction. True or False

True

Forecasts are more accurate in the long term than short term. True or False

False

Forecasting may be performed in SAP using:

Manual Entry, sales & operations planning, APO - Demand Planning

If a forecast is only expressed in financial terms (revenue, profit, etc.) it fails which element:

Meaningful

A time series is a series of observations taken at irregular intervals. True or false

false

For the data below, what would be the forecast for April using a 3 month moving average? Jan 250, Feb 200, Mar 275

(250+200+275)/3 =241.66 or 242

What would be the forecast for May if 220 units were sold in April? (Jan 250, Feb 200, Mar 275), April 220

(242+220)/2=232 ish

Demand Management in SAP primarily works with the following types of demand

independent

The potential inputs into the Demand Management function in SAP include:

Material forecasts, sales plan, production plan, manual entry

The output(s) from Demand Management are:

Planned independent requirements (PIR), Net quantities, Required dates

The output from Demand Management will feed:

MRP or MPS

A strategy group in SAP that will consume the forecast is:

Strategy 40

What is the primary objective of the Material Planning Process S&OP

to identify and resolve material shortages before they impact production.

Forecasting basics are:

an estimate of demand in the future.

Are forecast ever 100% accurate?

No

Forecast can be inaccurate in two ways:

random variation and bias variation

Steps in the forecasting process are:

1. determine the purpose of the forecast

2. establish a time horizon

3. obtain, clean and analyze appropriate data

4. select a forecasting technique

5. make the forecast

What is the 6th and final step?

monitor the forecast

Qualitative forecasting techniques:

permit the inclusion of soft information such as human factors, personal opinions and hunches

Quantitative forecasting techniques:

involve either the projection of historical data or the development of associative methods that attempt to use causal variables to make a forecast (rely on hard data)

Time-Series Forecast are:

a time-ordered sequence of observations taken at regular time intervals

Naive Forecast use:

a single previous value of a time series as the basis for a forecast. The forecast for a time period is equal to the previous time periods value

Demand Management entails:

planning of requirement quantities and requirement dates for finished products and important assemblies, and definition of the strategy for planning and producing or procuring a particular finished product.

What are characteristics of Demand management?

acts as a funnel to translate requirements or forecasts from a number of different sources to which Material Requirements Planning and Master Production Scheduling (PS) can plan. The result or output of Demand Management is a Net Requirement to MRP.

Make to stock

inventories must be on-hand before the demand arrives. The retail industry and many other industries use this strategy.

Make to order

inventories are not planned until an order arrives. The aerospace & defense industry use this.

Assemble to order

semi-finished and raw materials inventories must be on hand prior to the arrival of actual demands

Sales orders

a contractual agreement between a company and a customer to deliver material or services at an agreed price at a specific time.

Demand Management will:

never "consume" a sales order

Available to Promise (ATP)

is the calculated warehouse stock that is available to promise to any future customer (sales order)

Stock/Requirements list

a very important transaction for supply chain management. it will display in ascending time sequence all the demands (requirements) and supplies (stocks) for a material.

What is MRP's major function?

replenishment planning. What materials should be purchased or produced? How many should we produce or buy, when will the new supplies be needed, who should we buy from or where should we produce the material are all answered by MRP

Basic techniques in MRP include:

Visual, re-order point, Master Production Schedule, Material Requirements Planning (MRP), Distribution Requirements planning (DRP), Kanban

Advanced Techniques in MRP include:

Linear Programing, Other heuristic-based techniques

Independent demand is:

generated by customer orders for finished product, fairly stable, after allowances for seasonal variations, requires inventory to be carried continually

Historical handling of Dependent Demand

difficulty of ordering & scheduling assembled products, enormous task of setting up schedules, keeping track of large numbers of parts and components, coping with schedule & order changes, excessive inventories

MRP assumptions:

infinite capacity, fixed lead times

Cumulative lead time:

sum of lead times that sequential phases of a process require, from ordering of parts or raw materials to completion of final assembly

Bill of Materials (BOM) is the:

listing of raw materials, parts, subassemblies and assemblies needed to produce one unit of a product

Product structure tree

visual depiction of the requirements in a bill of materials, where are components are listed by levels

Inventory records include

Gross requirements, schedule receipts (make and buy parts), amount on hand, lead times, lot sizes, and more

Projected on-hand inventory

expected amount of inventory that will be on hand at the end of each period

Gross requirements

total expected demand for item or raw material in a time period without regard to amount on hand

Planned order receipts

quantity expected to be received by the beginning of the period in which it is shown

Lot-for-lot

produces exactly the net required quantity. Guaranties the lowest inventory cost but may cause economy of scale issues.

Fixed order quantity

always produces or procures a fixed quantity regardless of the net required quantity

Replenish to maximum stock level

produces or procures a quantity that will bring inventory to a maximum stock level as defined i the MM.

Periodic lot-sizing procedures

the system groups several requirement quantities within a time interval together to form a lot. Time periods lengths can be either days, weeks, or months.

Optimizing lot-sizing procedures

optimize the total costs resulting from lot size fixed (order and setup costs) and storage costs.

Running MRP

can be run as a background job at regularly scheduled intervals or any time.

MRP has two basic approaches for scheduling:

Basic scheduling, lead time scheduling

Planning time fence

specifies a period within which no automatic changes are to be made to the master plan. The planning time fence is maintained in workdays. When replanning orders, frozen time, time fence, rescheduling horizon is the path for new required date moves.

Firm Planned orders

a planned order will essentially freeze the order quantity, and scheduling dates. A MRP run will not reschedule a firm planned order. It will, however, produce reschedule exception messages.

Schedule receipt

is items due to be received in a particular time period. It's like an old order that is about to arrive at a specific date.

Process flow

is a picture of the separate steps of a process in sequential order

Explain the role of the routing master in supply chain management.

The routing master's role is to define the production process for a material. It will define the sequence of work centers used along with the operational times (setup, machine, labor, teardown, move) for each operation. The operational times along with the data from the work center master will be used to create schedules.

List the hierarchical levels of the routing master:

Material>routing group>sequence or group counter>operations

Component scrap

is defined on the BOM and will increase the quantity required for the component

Assembly scrap

is defined on the material master and will increase the required quantity of all components on the BOM

Operational scrap

is defined on the routing level and will reduce the operations quantity for all subsequent or downstream operations

MRP code E stands for:

items required are in house productions

MRP code F stands for:

items required are procured externally

Materials Requirement Planning overall process consist of three primary steps:

taking inventory of materials and components on hand, identifying which additional ones are needed and then scheduling their production or purchase

Inputs for MRP are:

the master production schedule, the product structure records and the inventory status records

Outputs for MRP are:

planned order schedules, order release and changes to planned orders. MRP also outputs performance control reports, planning reports and exception reports for identifying major problems like later orders or excessive scrap rates.

Rough cut capacity planning:

run at the highest level to run calculations for insight into the resources needed to complete a given run

Demand Management

is used to forecast, manage and plan the demand of goods and has defined set of processes and capabilities to produce goods

Forecasting models:

First order exponential smoothing, second-order exponential smoothing, moving average, linear regression, seasonal trend model, seasonal trend model with fixed period groupings, intermittent forecast model, dynamic moving average. Multiply the weights and divide by the total for a moving average.

Forecast consumption:

replaces forecasted demand with actual sales order demand

Forecast accuracy

statistical error analysis is a technique used in forecast accuracy reporting. A series of pervious forecasts for a particular period is stored and each deviation of this series is compared to the actuals for the same period.

Stock requirements list:

contains planned orders, purchase requisitions, production orders, purchase orders, plant stock/storage location stock, sales orders, planned industry requirements

SAP ERP allows safety stock to be specified in three different ways:

absolute safety stock, safety days' supply, automatic calculation of safety stock

Sales and Operations Planning:

a method companies use to align production with demand by merging tactical and strategic planning methods across functional areas of the business

Lot size policy:

should take into consideration the trade-offs of the costs of excess inventory against the efficiency of economies of scale and packaging requirements

Scheduling techniques, Basic:

separate scheduling for planned orders, exact to days, basic dates are calculated, opening date is a date in the future where that planned order should be converted to production order, no calculation of capacity requirements.

Scheduling techniques, Lead time scheduling:

used for production orders and routing, exact to seconds, target dates are calculated, capacity requirements are calculated, in house production time and float before and float after production time is taken, lead time scheduling is calculated using time from routing, within lead time there are two types: backward and forward scheduling.

Type of data in SAP system:

System relevant data, application relevant data - application data, customizing data; master data, transaction data