Ch3 SCM Spring 2025

What is Supply Chain Planning?

Supply Chain Planning determines how best to satisfy demand while balancing financial and service objectives.

What are the key elements of Supply Chain Planning?

Business Planning, Aggregate Production Planning (APP), Sales & Operations Planning (S&OP), Master Production Scheduling (MPS), Materials Requirement Planning (MRP), Capacity Planning, Distribution Requirements Planning (DRP), and Advanced Planning and Scheduling (APS).

What are the three levels of supply chain planning?

Long-Range (Strategic), Intermediate-Range (Tactical), and Short-Range (Operational).

What is Business Planning?

A long-term plan (2-10 years) that provides company direction and objectives for profitability, growth, and return on investment.

What is Aggregate Production Planning (APP)?

A hierarchical process that translates business and marketing plans into a production plan for a product family.

What is the planning horizon for Aggregate Production Planning (APP)?

At least one year, typically updated quarterly. Includes labor, inventory, and equipment cost considerations.

What are the goals of Aggregate Production Planning (APP)?

Meet demand, use capacity efficiently, follow inventory policies, and minimize costs related to labor, inventory, and equipment.

How can demand be adjusted in Aggregate Production Planning?

Influencing demand through advertising, promotions, pricing, and backordering during high demand periods.

How can supply be adjusted in Aggregate Production Planning?

Changing inventory levels, varying workforce size, adjusting production rates, using part-time workers, and subcontracting.

What is Sales & Operations Planning (S&OP)?

A process that aligns supply and demand with company strategy through monthly planning reviews at an aggregate level.

What are the benefits of Sales & Operations Planning (S&OP)?

Reconciles all business plans, provides a coordinated response to customer requirements, and ensures supply and demand balance.

What are the steps in the monthly S&OP cycle?

Review/revise sales forecasts, hold demand review meetings, review supply plans, and conduct an executive S&OP meeting.

What is the Master Production Schedule (MPS)?

A detailed production plan specifying which products will be produced, in what quantities, and when.

How does MPS relate to demand?

MPS is a production plan, not a demand plan. It considers forecasts, backlogs, material availability, and capacity constraints.

What is Time Fencing in MPS?

A policy that separates planning into a Firmed Time Period (fixed, requires approval) and a Planned Time Period (adjustable by the system).

What are the three basic production strategies?

Level Production Strategy, Chase Production Strategy, and Hybrid Production Strategy.

What is the Level Production Strategy?

A strategy that maintains a constant production rate while allowing inventory and backlog levels to vary based on demand.

What is the Chase Production Strategy?

A strategy where production is adjusted to exactly match demand, avoiding excess inventory but requiring workforce adjustments.

What is the Hybrid Production Strategy?

A strategy combining elements of both Level and Chase strategies by varying production, inventory, and labor as needed.

What is Material Requirements Planning (MRP)?

A computer-based system that calculates the materials and components needed for production based on MPS.

What are the advantages of MRP?

Ensures material availability, lowers inventory levels, and optimizes resource utilization.

What are the disadvantages of MRP?

Ignores capacity constraints, lacks visibility in complex supply chains, and may not work well for Make-to-Order products.

What does MRP require to function properly?

A Master Production Schedule (MPS), a Bill of Materials (BOM), inventory status, and planned receipts.

What is a Bill of Materials (BOM)?

A list of all raw materials, components, and assemblies required to produce a final product.

What are the two types of BOMs?

Single-Level BOM (shows direct components of a product) and Multilevel BOM (shows all components across multiple production stages).

What are the key terms used in MRP?

Gross Requirement, Net Requirement, Projected Available Inventory, Planned Order Release, Firmed Planned Order, Scheduled Receipt, and Lead Time.

What is Gross Requirement in MRP?

The total demand for an item before accounting for on-hand inventory and lead-time considerations.

What is Net Requirement in MRP?

The required quantity of an item after considering on-hand inventory and scheduled receipts.

What is a Planned Order Release?

A scheduled order for materials that is triggered by MRP calculations.

What is Capacity Planning?

The process of determining the production capacity needed to meet demand efficiently.

What are the three types of capacity planning?

Resource Requirements Planning (RRP - long-range), Rough-Cut Capacity Planning (RCCP - medium-range), and Capacity Requirements Planning (CRP - short-range).

What is Distribution Requirements Planning (DRP)?

A method for determining the replenishment of finished goods inventory across a distribution network.

What are the key elements of DRP?

Forecasted demand, current inventory levels, safety stock targets, replenishment quantities, and lead times.

What is Enterprise Resource Planning (ERP)?

A software system that integrates business functions such as finance, HR, supply chain, and manufacturing into a single platform.

What are the major ERP providers?

SAP, Oracle, and Microsoft.

What are the two types of ERP implementation approaches?

Best-of-breed (selecting the best software for each function) and Single Integrator Solution (using one vendor for all functions).

What are the advantages of ERP systems?

Increases visibility, reduces inventory costs, standardizes business processes, and improves decision-making.

What are the disadvantages of ERP systems?

High implementation costs, complexity, and the need for significant training and change management.

What is Supply Chain Digital Transformation?

The process of integrating digital technologies, automation, and AI into supply chain operations to improve efficiency and responsiveness.

How does a digital supply chain differ from a traditional one?

A digital supply chain is dynamic and data-driven, using real-time analytics, while a traditional supply chain follows a linear process with limited flexibility.

What is Data Management in supply chains?

The collection, storage, organization, and security of data to ensure accuracy and accessibility.

What is Data Analytics in supply chains?

The process of analyzing data to identify patterns, trends, and insights for better decision-making.