S pecia l Lecture : Maste r Pla nning of Resources The Bus ine s s P la nning Pro c e s s

S e s s io n 1. The Bus ine s s P la nning Pro c e s s

O bje c tiv e s :
・ Ide ntify a nd describe the e le me nts of Maste r Pla nning of Resources .
・ Ide ntify a nd describe the pa rts of the pla nning hie ra rchy.
・ Describe a nd distinguis h the pa rts in the pla nning process that product volume a nd product mix play.
・ Describe the e le me nts of bus iness pla nning.
・ Ide ntify a nd describe the inputs to a bus iness pla n.
・ Ide ntify a nd briefly describe seve ra l product de live ry strategies .

1. W ha t is the Ma s te r P la nn ing o f Re s o urc e .

The Ma s te r P la nn ing o f Re s o u rc e : C la s s ific a tio n .
1. De ma nd Ma na ge me nt.
・ Fo re ca sting de ma nd .
・ The distribution pla n.
・ The s e rvicing of custo me r o rde rs .
2. Sa le s a nd Ope rations Pla nning.
・ The s a le s a nd ope rations pla n includ ing s a le s pla nning, o pe ra tio ns pla nning, inve nto ry,
a nd ba cklog pla nning.
・ The re s ou rce pla n.
3. Ma ste r Sche duling.
・ The ma ste r p roduction s che dule .
・ The rough- cut ca pa city pla n.
・ The fina l a s s e mbly pla n.

Fig u re 1. Ma s te r P la nn ing o f Re s o u rc e Mo de l

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S pecia l Lecture : Maste r Pla nning of Resources The Bus ine s s P la nning Pro c e s s

De ma nd Ma na g e me nt.
- Input : The a pprove d bus ine s s pla n.
- Ele me nts
・ The fo re ca sting of s a le s fo r a ll p roducts a nd s e rvice s .
・ The pla nning of distributions .
・ The ma na ge me nt of a ctua l custo me r o rde r de ma nd .
- Output : The a pp rove d s a le s a nd distributio n pla n a nd o rde r s e rvice po licie s .

Fig u re 2 . De ma nd Ma na g e me nt

S a le s a nd O pe ra tio n P la nn ing .
- A fo rma l mo nthly proce s s fo r expre s s ing the bus ine s s goa ls of the o rga nizatio n in p roduct
g ro up vo lume leve ls .
- The prima ry o bje ctive s of S&O P.
・ To e sta blis h s upply rate s tha t will a chieve ma na ge me nt's ta rgets fo r proje cte d inve nto ry
o r ba cklog leve l, with define d s upply constra ints .
- The output of S&O P.
・ The s a le s pla n.
・ The ope ration (p roductio n) pla n.
・ Inve nto ry/ba cklog pla n.

Fig u re 3 . S a le s a nd O pe ra tio ns P la n .

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S pecia l Lecture : Maste r Pla nning of Resources The Bus ine s s P la nning Pro c e s s

Ma s te r S c he d u ling .
- The proce s s of ta king the a pprove d s a le s a nd o pe ra tions pla n fro m the product g roup leve l
into a ma ste r s c he dule fo r the productio n o r a cquis ition of s pe cific products a nd s e rvice s to
me et the sta te d p roduct g ro up vo lume .
- The proce s s of ma ste r s che duling is ite rative in a s imulation mode .
- Ro ugh- c ut ca pa c ity pla nning.
・ To te st a pre limina ry ma ste r s che dule a ga inst the constra ints of c ritica l re s ource s .
・ If ove rloa de d, the ma ste r s che duling is revis e d a nd rete ste d us ing rough- cut ca pa city
pla nning.
- The fina l a s s e mbly s c he dule .
・ A s ubs et of the MPS re pre s e nting the way in whic h p roducts will be finis he d to
c usto me r re quire me nts .

Fig u re 4 . Ma s te r S c he d u ling .

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S pecia l Lecture : Maste r Pla nning of Resources The Bus ine s s P la nning Pro c e s s

2 . The P la nn ing P ro c e s s : Co ns ide rat io ns .

The Ba la nc ing o f S upp ly a nd De ma nd .
- The pla nning p roce s s involve s a ba la ncing a ct be twe e n de ma nd a nd s upply.
- The de ma nd s ide of ba la nce .
・ Sa le s fo re ca sts : pre d ictions of the leve l of future s a le s a ctivity.
・ Actua l o rde rs : Re ce ive d they a re matche d the fo re ca st.
- The s upply s ide of ba la nce .
・ P rod uction o rde rs : c re a te d to a utho rize the ma nufa cture of p roducts a cco rding to the
a pprove d pla n.
・ Purcha s e o rde rs : is s ue d to s upplie s a s a utho rity to de live r products o r s e rvice s in
a cco rda nce with the a pp rove d pla ns .
- Some cha lle nge s .
・ Sa le s fo re ca sts e rro rs .
・ C usto me rs cha nge o rde rs .
・ P rod uction a nd s upplie rs nume rous pro ble ms on a da ily ba s is .

Fig u re 5 . The Ba la nc ing Ac t.

P ro d uc t Vo lume a nd P ro d uc t Mix .
- P roduct Volume .
・ The leve l of p roduct vo lume e sta blis he s the big picture of de ma nd pla ce d on a s upply
o pe ra tion.
・ It is typica lly expre s s e d in rate s of de ma nd at the p roduct g ro up leve l.
・ It is pla nne d by Sa le s a nd Ope rations Pla nning.
- P roduct Mix.
・ A me a s ure of the diffe re nt type s of prod uct that ca n be g ro upe d within a pa rticula r
p roduct g ro up.
・ Mix va riatio n is typica lly a proble m fo r s upply ope rations that have inflexible proce s s .
・ P rod uct mix dete rmine s the s pe cific a mo unts of e a ch type s to be p roduce d.
・ Setup re duction prog ra ms a nd the a do ption of s ma ll wo rk ce lls have e na ble d s ome
s upplie rs to re s po nd to va riatio n in prod uct mix with re lative e a s e .

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S pecia l Lecture : Maste r Pla nning of Resources The Bus ine s s P la nning Pro c e s s

The P la nn ing Hie ra rc hy .

- The pla nning hie ra rchy sta rts with a n o rga nizatio n defining the strate gic d ire ction.
1. A define d vis ion state me nts .
2. A mis s ion state me nt.
3. A Va lue state me nt.
4. Ana lys is of o rga niza tio na l stre ngths a nd we a kne s s e s .
5. Ide ntifie d o ppo rtunitie s , pe rce ive d o rga niza tiona l thre a ts .
- The stra te gic pla n s ets the ove ra ll dire ctio n fo r o rga nization.
- The stra te gic pla n is expre s s e d in te rms of s pe cific goa ls a nd ta rgets in the bus ine s s .
- The s e goa ls te nd to be broa dly define d a nd ma inly fina nc ia l in nature .

Fig u re 6 . The P la nn ing Hie ra rc hy .

The P la nn ing Ho riz o n .

- The a mount of time a pla n exte nds "into the pla n."
- The long- ra nge strate gic pla n : The ho rizo n is us ua lly s et at le a st five ye a rs .
- The s a le & ope rations pla n : The ho rizo n is us ua lly to cove r the next two ye a rs .
- The a nnua l budget a nd fina ncia l pla n : The ho rizon is us ua lly set to cove r a s pecific fisca l ye a r.
- The ma ste r s che duling : The ho rizo n is no rma lly s et to cove r the minimum of cumulative
le a d- time plus time fo r lot s izing low- le ve l compo ne nts a nd fo r ca pa city c ha nge s of prima ry
wo rk ce nte rs o r of ke y s upplie rs .

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S pecia l Lecture : Maste r Pla nning of Resources The Bus ine s s P la nning Pro c e s s

3 . The Bus ine s s P la n .

De fin itio ns
- A state me nt of long ra nge strate gy a nd reve nue , cost, a nd profit obje ctive s us ua lly
a cco mplis he d by budgets , a proje cte d ba la nce s he et, a nd a ca s h flow state me nt.
- A bus ine s s pla n is us ua lly sta te d in te rms of do lla rs a nd g ro upe d by product fa mily.

Co m mo n Fe a tu re s o f the Bus ine s s p la n .

- The bus ine s s pla n s ets the ove ra ll a ctivitie s fo r the bus ine s s a nd a dd re s s e s s pe cific is s ue s
a nd conce rns tha t typica lly re la te d to :
1. The nature of the firm.
2. The locatio ns a nd fa cilitie s of the e nte rpris e .
3. The type of o rga nization a nd the s kills of the pe o ple re quire d.
4. Leve ls of proce s s ing te chnology.
5. The type s a nd nature of ca pita l re s o urce s re quire d.
6. The inte re sts of prima ry sta ke ho lde rs .

The ma rke t a nd the Bus ine s s Env iro nme nt.

- The ma rket definitio n s ho uld inc lude :
・ The location of custo me rs a nd the na ture of the ir re lations hip with the s upplying
o rga nization.
・ Info rmation a bo ut proje cte d ma rke t g rowth.
・ De mog ra phic info rma tion a bo ut future custo me rs .
・ Impa ct of s ocia l cha nge s including cha nging ne e ds of custo me rs .
・ Globa l a nd re gio na l e cono mic cons ide rations a nd bus ine s s cond itions .
- The bus ine s s e nviro nme nt definitio n s hould be include :
・ Info rmation a bo ut curre nt a nd futu re pote ntia l competito rs .
・ P roje ctions of bus ine s s g rowth.
・ Info rmation o n the ava ila bility of fina ncia l re s ou rce s .
・ Info rmation o n pote ntia l a nd e me rging te c hnologie s .

Ke y Go a ls fo r Bus ine s s Pe rfo rma nc e .

- Some of the me a s ure s of bus ine s s pe rfo rma nce that a re like ly to be define d a s key goa ls .
・ P roje cte d bus ine s s g rowth.
・ Ta rgete d profita bility.
・ Anticipa te d re turn o n inve stme nt.
・ De s ire d ma rke t s ha re .
・ A sta te me nt of a nticipate d s ha re ho lde r va lue .
・ C usto me r s e rvice .
・ Re putation.
・ Compa ny va lue .

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S pecia l Lecture : Maste r Pla nning of Resources The Bus ine s s P la nning Pro c e s s

Bus ine s s S ta ke ho ld e rs .
- All thos e g roups affe cte d by the ope rations of the o rga nizatio n.
・ A community.
・ The ma na ge me nt te a m.
・ The bus ine s s owne rs a nd s ha re ho lde rs .
・ The me mbe rs of a n a s s ociation.
・ The wo rke rs .
・ The custome rs a nd the s upplie r of the o rga nizatio n.
- Ea ch g roup re ga rd the o rga nization diffe re ntly.
- Ea ch of the bus ine s s sta ke ho lde r g ro ups must be cons ide re d in the deve lo pme nt of a
bus ine s s pla n.

Be nc hma rking .
- One of the vita l ing re die nts of the bus ine s s pla nning p roce s s is the co lle ctio n a nd / o r
compa ris on of be nchma rking data from co mpetito rs a nd othe r o rga niza tio n.
- Be nchma rking is the proce s s of co mpa ring ma ny a s pe cts of ope ratio na l pe rfo rma nce with
pe rfo rma nce of othe r o rga nizations .
・ Strate gie s .
・ Ca pa bilitie s .
・ P roce s s e s .
・ Costs .
・ Logistics .
・ Syste ms
- The re comme nde d wa y to do be nchma rking is by compa ring a n o rga nizatio n's pe rfo rma nce
with othe rs that have cle a rly de mo nstrate d tha t they a re the "bets in cla s s ."
・ Ho nda fo r s ma ll e ngine de s ign.
・ Fe de ra l Expre s s fo r custo me r s e rvice .
・ Wa lMa rt fo r info rmatio n te chno logy.
・ No kia fo r product de s ign.

Bus ine s s P la n S tra te g ic Da ta S o u rc e s .

- The majo r a re a s of input into the bus ine s s pla n.
・ Environme nta l s ca n.
: De mog ra phics .
: Like ly cha nge s in re gula tio n.
: Ma rket g rowth pote ntia l.
: Ge ne ra l e cono mic conditio ns .
: Cu rre nt ma rket playe rs .
: Pote ntia l co mpetito rs .
: Cu rre nt custo me r p refe re nce s a nd s a tisfa ction leve ls .

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S pecia l Lecture : Maste r Pla nning of Resources The Bus ine s s P la nning Pro c e s s

・ Compa ny ca pa bilitie s .
: The s kill of wo rkfo rce .
: The co re co mpete ncie s of the o rga nizatio n.
: The ava ila ble re s o urce s .
: The a pplicatio n of info rmation te chno logy fo r competitive a dva nta ge .
・ Fina ncia l ta rge t.
: P roje cte d e a rning leve l.
: Bus ine s s g rowth.
: Ma rket pe netration.
: Ca s h flow ge ne ratio n.
: Return on inve stme nt.
: P roduct vo lume ta rgets .
・ Strate gic goa ls .
: De s ire d leve ls of custo me r s e rvice .
: Pla nne d q ua lity imp rove me nts .
: Cost re duction goa ls .
: Le a d- time re ductio n.
: P roductivity improve me nt.

4 . P ro d uc t Life Cyc le .
Impo rta nc e a nd Fo u r pha s e s o f P LC .
- The cons ide ration of p roduct life cycle is impo rta nt from the sta ndpo int that diffe ring s upply
strate gie s a re re quire d de pe nd ing on whe re a p roduct is in its life cycle .
- Fo re pha s e s of P LC.
・ The introductio n pha s e .
・ The g rowth pha s e .
・ The ma tu rity pha s e .
・ The de cline pha s e .
- The s lop a nd duratio n of e a ch pha s e will be diffe re nt fro m p roduct to product, from industry
to industry, a nd eve n fro m ge og ra phic location to ge og ra phic location.
- Outs ide fa cto rs affe cting the le ngth of e a c h sta ge .
・ Public a cce pta nce .
・ Soc ia l a nd e cono mic conditio ns .
・ Ra te of de ve lopme nt of co mpa ring te chnica l products .
・ Ra te of innovatio n.

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S pecia l Lecture : Maste r Pla nning of Resources The Bus ine s s P la nning Pro c e s s

Fig u re 7 . P ro d uc t Life Cy c le

- Activitie s .
・ The introductio n pha s e .
: Co mpone nts , pa rts , a nd p roduct e le me nts a re a s s e mble d.
: P rototype s a re de ve lope d fo r the ma rketpla ce o r s pe cific custo me r.
: A numbe r of e ngine e ring cha nge s may be re quire d.
: Ma rketing ha s a la rge ro le in this pha s e in ide ntifying s pe c ific custome r
re quire me nts a nd p roviding input to the de s ign a nd initia l ma nufa ctu ring.
・ The g rowth pha s e .
: De ma nd fo r the product o r s e rvice inc re a s e s .
: A mo re fle xible ma nufa cturing/s e rvice e nvironme nt is re quire d to ha ndle expa nding
ma rke ts .
・ The ma tu rity pha s e .
: This is no rma lly whe n a co mpa ny e njoys the maximum return o n inve stme nt fro m
a product.
: De ma nd a nd s upply rate s a re highe st, the product is sta ble , a nd high volume s
refle ct ste a dy reve nue stre a ms .
・ The de cline pha s e .
: Re quire me nts fo r this product o r s e rvice will diminis h o r ce a s e .
: A compa ny will find its e lf fulfilling only re pla ce me nt pa rts re quire me nts .

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S pecia l Lecture : Maste r Pla nning of Resources The Bus ine s s P la nning Pro c e s s

5 . P ro d uc t De liv e ry S tra te g ie s .
S t ra te g ie s to Me e t C us to me r De ma nd .
- The re a re s eve ra l stra te gie s tha t o rga niza tions ca n us e fo r the s upply of p roducts a nd s e rvice
to c usto me rs .
- They a re d istinguis he d by the po int at which the custo me r o rde r e nte rs the s upply proce s s
a nd include :
・ Engine e r- to- o rde r.
・ Ma ke - to- o rde r.
・ As s e mble - to- o rde r.
・ Ma ke - to- stock.
・ Ma s s custo mization.
・ P roce s s industry.
・ Se rvice industry.
・ Distributio n industry.
・ Multiple e nvironme nts with the s a me fa cility.

Fig u re 8 . P ro d uc t De liv e ry S t ra te g ie s

S upp ly P ro c e s s a nd P ro d uc t De liv e ry S tra te g y .

- P roduct de live ry strate gy.
・ MTS : A co mpa ny s hip finis he d units fro m finis he d goods stock.
・ ATO : A compa ny a s s e mble majo r stocke d a s s e mblie s into finis he d prod ucts a nd s hip
upon re ce ipt of a custome r o rde r.
・ MTO : A firm o rde r be re ce ive d fro m the custome r befo re a ny a utho rizatio n to a cquire
o r produce the product is ma de .
・ ETO : A s upplie r wo rk with a custo me r du ring the de s ign pha s e of new p roduct
deve lo pme nt, pa rticipating in the joint deve lo pme nt of a s pe cia l product.

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S pecia l Lecture : Maste r Pla nning of Resources The Bus ine s s P la nning Pro c e s s

S e rv ic e De liv e ry S tra te g ie s .
- Engine e r- to- O rde r.
・ ETO stra te gy a ccommodate s product whos e c usto me r s pe cifica tions re quire a unique
e ngine e ring de s ign, s ignifica nt customiza tion, o r new purcha s ing ma te ria ls .
・ Each custome r orde r res ults in a unique set of pa rt numbe rs , bills of mate ria l, a nd routings .
・ ETO strategy requires that product a nd se rvice des ign does not become until a contra ct or
a n orde r has a rrived.
・ ETO typica lly e mploy a proje ct s upply proce s s .
・ Definitio n of proje ct :
An e nde avo r with a s pe cific obje ctive to be met within the p re s c ribe d
time a nd dolla r limitations a nd tha t ha s be e n a s s igne d fo r definitio n o r exe cutio n.
・ An exa mple : A s pe cific type of s pa ce p robe o n the pla net J upite r.

- Ma ke - to- O rde r.
・ Ite ms a re p roduce d a s custo me r o rde rs a re re ce ive d.
・ Finis he d ite ms a re us ua lly a combination of sta nda rd pa rts a nd custom- de s igned pie ces .
Acce s s o rie s a re s o me time s stocke d in a ntic ipatio n of custome r o rde rs .
・ Compa ny goa ls include the ba c klog leve ls a nd de s ire d custo me r s e rvice leve l.
・ MTO p roducts typica lly e mploy batch proce s s fo r productio n of a s pe cific lot- s ize
qua ntity of units . Thes e units may be produce d in a disc rete o r inte rmitte nt batch proce ss .

- As s e mble - to- O rde r.

・ ATO produce p roducts that a re custo m built o r that have virtua lly limitle s s numbe r of
configuratio ns , a ll of which a re ma de with a co mbina tion of ba s ic compo ne nts o r
s uba s s e mblie s .
・ S uba s s e mblie s , co mpone nts a nd a cce s s a rie s a re ofte n stocke d in a nticipation of
fo re ca ste d o rde rs .
・ Ofte n, ATO ma nufa cturing time s a re lo nge r tha n the de live ry re q uire me nts a llow, s o
s uba s s e mbly p roductio n be gins in a nticipation of fo re ca ste d o rde rs .
・ Compa nies that e mploy the ATO ma nufacturing strategy include Automobile ma nufa cturing
compa nies like Toyota , Fo rd, a nd Da imle r Chrys le r.
・ An inte rmitte nt ba tc h is p roce s s e d.

- Ma ke - to- Stock.
・ This fo rm of p roduction is co mmonly us e d fo r high- vo lume sta nda rd products .
・ The compa ny produce s ite ms in batche s a nd inve nto rie s stock fo r most o r a ll ite ms
p roduce d befo re re ce iving custome r o rde rs .
・ MTS goa ls a re ta rgete d to finis he d goods inve nto ry leve ls a nd de s ire d custo me r
s e rvice leve ls .
・ Ite ms a re ofte n co ns ume r goods a nd s o me high- vo lume industria l s upply goods .
・ MTS prod uct de live ry stra te gy re quire s a flow proce s s fo r productions .
・ This is a n a s s e mbly line o r a high- vo lume re petitive o pe ratio n.
・ Food ma nufa cture rs , ove r- the - counte r pha rma ce utica l ma nufa cture rs , a nd light bulb
s upplie rs .

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S pecia l Lecture : Maste r Pla nning of Resources The Bus ine s s P la nning Pro c e s s

- Ma s s Customiza tion.
・ C ha ra cte ristics .
: High- volume p roduct.
: La rge va riety.
: Custo m may s pe cify his o r he r exa ct mode l o ut of a la rge volume .
: Ma nufa cturing cost is low be ca us e of the la rge volume .
・ Exa mple : De ll o r Gatewa ry compute r a s s e mble r.

- P roce s s Industry.
・ The ma nufa cturing ope ratio n is pe rfo rme d us ing a ba tch o r continuo us proce s s to
p roduce products .
・ Exa mple s of proce s s industry include the ma nufa cture r of liquids , che mica ls , a nd
ga s e ous p roducts .
・ The ba s ic na ture of p roce s s ma nufa ctu ring is tha t a pa rticula r ra w ma te ria l ca n be
c ha nge d by a che mica l p roce s s s uc h a s mixing, ble nding, ste rilizing, fe rme nting,
coo king, ba king, o r co mbining.
・ P roce s s industrie s ca n e mploy a ny product de live ry strate gy, de pe nd ing on whe re they
fit in the p roduct/p roce s s mix.

- Se rvice De live ry Stra te gie s .

・ Se rvice industry is one in which the p roduct is de live re d dire ct to the custome r without
the pos s ibility of be ing sto re d in a dva nce .
・ Se rvice ca n be de live re d in one of two wa ys .
: Sta nda rd s e rvice s a re thos e that a re provide d in the s a me way to a ll custo me rs .
: Custo mize d s e rvice s a re provide d uniq ue ly fo r e a ch custome r.
・ Exa mple of s ome s e rvice p rovide d to custome r a re
: A food ba nk co lle cts food fro m do no rs a nd d istribute s food to the ne e dy.
: A ministe r provide s a c hurch s e rvice fo r the co ng re gation.
: A s u rge on pe rfo rms a he a rt bypa s s p roce dure .
: A ticket a ge nt provide s a vo uche r fo r a irline tra ve l.
: A ba nk p rovide s s a fe ty de pos it boxe s fo r custome rs .
: An inve stme nt broke r provide s fina ncia l pla nning a dvice to a n inve sto r.
: A s e curity gua rd provide s prote ctio n fo r compa ny a s s e ts .
: An Inte rnet s e rvice provide r provide s a s e a rch e ngine fo r a brows e r.

- Distributio n Industry.
・ A distributo r.
: A bus ine s s tha t doe s not ma nufa cture its own products , but purc ha s e s a nd re s e lls
the s e prod ucts .
: The s e include a ge nts , broke rs , re ta ile rs , who le s a le rs , a nd a ny othe r kind of de a le r
betwe e n the p roduct o r s e rvice provide r a nd the co ns ume r.
: A method of d istribution : Ta ke - from- stock.

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S pecia l Lecture : Maste r Pla nning of Resources The Bus ine s s P la nning Pro c e s s

- Ma nufa cturing Enviro nme nts .

・ The re a re ma ny exa mple s of co mpa nie s that have multiple e nvironme nts within the
s a me fa c ility.
・ A typica l exa mple wo uld be a ma nufa cture r of p rinte d circuit boa rds .
・ The product de live ry stra te gy may va ry ove r the product life cycle of a pa rticula r
p roduct.
: During the introduction sta ge - ETO.
: During the g rowth sta ge - MTO o r ATO.
: During the maturity sta ge - ATO o r MTS .
: During the de cline sta ge - a ga in MTO

Ma nufa c tu ring Env iro nme nts

Fig u re 9 . Ma n ufa c tu ring Env iro nme nts

- MTS
・ The re is mo re pro life ratio n of ite m numbe rs at the ra w ma te ria l sta ge tha n the re is at
the finis he d p roduct sta ge .
・ This me a ns tha t a compa ny is offe ring a fa irly limite d ra nge of finis he d goods that a re
p roduce d from a multitude of pote ntia l ra w ma te ria ls .
- MTO o r ETO
・ Compa ny is ca pa ble of producing a la rge ra nge of pote ntia l finis he d units from a
re lative s ma ll numbe r of diffe re nt ra w ma te ria ls .
- ATO
・ P rod ucts a re ma de - to- stock a t the s uba s s e mbly leve l a nd the n custo mize d in
a cco rda nce with a ctua l custome r o rde rs fro m the s uba s s e mbly leve l.

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S pecia l Lecture : Maste r Pla nning of Resources The Bus ine s s P la nning Pro c e s s

6 . S a le s a nd O pe rat io n P la nn ing .
S a le s a nd O pe ra tio ns P la nn ing .
- Definitio n.
・ Sa le s a nd Ope ra tions Pla nning is a bus ine s s p roce s s that he lps compa nie s ke e p
de ma nd a nd s upply in ba la nce . It doe s that by focus ing o n a gg re ga te vo lume s -
p roduct fa milie s a nd g roups - s o that mix is s ue s - individua l p roducts a nd custome r
o rde rs - ca n be ha ndle d mo re re a d ily.
It occurs o n a mo nthly cycle a nd dis plays info rmation in both units a nd dolla rs .
- Fo ur a dva nta ge s .
1. S&O P provides the link betwee n the bus ine s s pla n a nd the ope ration of ea ch de pa rtme nt.
2. S&O P provide s a me a ns to get a ll de pa rtme nts wo rking towa rd a co mmon goa l.
3. S&O P yie lds a re a listic pla n ca pa ble of a chieving the o rga nizatio n obje ctive s .
4. S&O P e liminate s "hidde n de cis ion."

P ro d uc t G ro u ps / Fa m ilie s .
- The product g rouping must re pre s e nt the way in which the product is pre s e nte d to the ma rket.
- This me a ns tha t the re is a logica l conne ctio n betwe e n the wa y the prod uct o r s e rvice is s o ld,
a nd the wa y in which it is produce d .
- Ide a lly the re s hould be no mo re tha n 6 to 12 product g roupings pe r s e pa rate bus ine s s unit.
- Co ns ide ra tions fo r g rouping products .
・ S imila r ma nufa cturing re quire me nts .
・ S imila r s a le s re quire me nts .
・ P ropo rtio nate cost a nd reve nue effe cts .
- The exce ption to the g rouping rule s may be new prod ucts . Compa nie s fre que ntly choos e to
pla ce ne w p roducts in a s e pa ra te fa mily.

P ro d uc t/ S e rv ic e Hie ra rc hy .

Fig u re 10 . P ro d uc t/ S e rv ic e Hie ra rc hy .

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S pecia l Lecture : Maste r Pla nning of Resources The Bus ine s s P la nning Pro c e s s

Re s o u rc e P la nn ing .
- Re s ource pla nning is ca pa city pla nning conducte d at the bus ine s s pla n a nd S&OP pla n leve ls .
- Re s o urce pla nning de cis ions a lways re q uire to top ma na ge me nt a pprova l.
- Re s o urce pla nning provide s the fe a s ibility che ck on the S&O P p roce s s .
- Ste ps .
1. Ide ntify key re s ource s .
・ Bottle ne ck a re a s .
・ Flexible is s ue s .
・ Lo ng le a d time fo r cha nge .
2. Dete rmine the ca pa city impa ct on c ritica l re s ou rce .
・ Fa mily leve l pla nning.
・ Ma ste r s che d ule leve l pla nning.
3. Dete rmining timing/Offs et le a d time .

Bill o f Re s o u rc e s .
- A bill of re s ou rce is a listing of the re quire d a mo unt of constra ining re s ource ne e de d to
ma nufa ctu re one unit of a s e le cte d ite m o r fa mily.
- The s e could include :
・ La bo r.
・ Mate ria ls o r co mpone nts .
・ Fa cilitie s .
・ Eq uipme nt.
・ Re s e a rch a nd de ve lopme nt a s s e ts .
・ Fina nce s .

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S pecia l Lecture : Maste r Pla nning of Resources The Bus ine s s P la nning Pro c e s s

■ Pe rfo rma nc e Che c k

1. Which of the fo llowing is a n a ctivity inc lude d in the ma ste r pla nning of re s ource s ?
A. Bus ine s s pla nning. B. Stra te gic pla nning.
C. Sa le s a nd o pe ratio ns pla nning. D. Tota l qua lity ma na ge me nt.

2. Which of the fo llowing is a n e le me nt of de ma nd ma na ge me nt ?

A. Fo re ca sting s a le s . B. Se tting ove ra ll s upply leve ls .
C. Inve nto ry ta rgets . D. Ma ste r s che duling.

3. Which of the fo llowing proce s s e s s ets the proje cte d ba cklog leve l a t the product g roup leve l ?
A. Ma ste r s c he duling. B. Sa le s a nd ope rations pla nning.
C. Bus ine s s pla nning. D. De ma nd ma na ge me nt.

4. The pla nning ho rizo n is which of the following ?

A. The a mo unt of time it ta ke s to co nduct the pla nning p roce s s .
B. The maximum a mo unt of le a d time re quire d to o rde r a nd re ce ive a ll ma te ria ls re quire d.
C. 2 ye a rs .
D. The a mount of time a pla n exte nds into the future .

5. Which of the fo llowing is pa rt of a bus ine s s pla n ?

A. A state me nt of lo ng- ra nge strate gy a nd re ve nue , cost, a nd profit o bje ctive s .
B. The s a le s a nd ope ratio ns pla n.
C. Sho rt te rm s a le s o bje ctive s .
D. Ma ste r s che duling.

6. Which of the fo llowing include s a n a na lys is of the nature of the firm, the ma rke t, a nd the bus ine s s
e nviro nme nt ?
A. The s a le s a nd o pe ratio n pla n. B. Be nchma rking.
C. Product g roup a na lys is . D. The bus ine s s pla n.

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S pecia l Lecture : Maste r Pla nning of Resources The Bus ine s s P la nning Pro c e s s

7. In whic h of the following ma nufa cturing e nvironme nts wo uld the re be mo re p rolife ra tio n of ite m numbe rs
at the ra w ma te ria l sta ge tha n at the ra w mate ria l sta ge tha n at the finis he d p roduct sta ge ?
A. Ma ke - to- o rde r. B. Ma ke - to- stoc k.
C. As s e mble - to- stock. D. Engine e r- to- o rde r.

8. The s a le s a nd o pe ra tio ns pla nning proce s s occu rs a t whic h of the following leve ls ?
A. Individua l ite m. B. S ub- compo ne nt line ite ms .
C. Product g roups o r fa milie s . D. Se rvice pa rts .

9. Fo re ca sts a re mo re a ccurate at which leve l of the product/s e rvice hie ra rchy ?

A. Bus ine s s unit. B. P roduct Fa mily.
C. Mode l o r bra nd. D. S KU.

10. Re s ou rce pla nning ta ke s pla ce a t which of the following pla nning leve ls ?
A. Strate gic pla nning. B. Bus ine s s pla nning.
C. Ma ste r s che duling. D. Mate ria l pla nning.

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