Meeting the customers’ needs is still paramount, but the massive warehouses and their associated costs are no longer needed. Explore the concept of inventory and some of the best practices companies use to keep overhead costs low, build flexibility within the system, and provide strong customer service. Understanding the costs of inventory allows companies to classify inventory and determine the right amount of cycle counting. Operational thinking along these lines helps reduce waste, such as high fuel costs and packaging that also have significant impact on the environment.
Aggregate planning begins with the understanding of strategic planning and the integration of marketing plans, sales plans, manufacturing plans, and purchasing plans to meet the needs of the customer over the short and long term. Anticipating the demand, along with the specific lead time to produce a product, is combined in the master production schedule (MPS). This tool incorporates the strategy into a document by which to guide the company in its production of the product or service. MPS is a communication tool for the whole company to utilize.
Sales forecasting is an integral piece in the success of a business. In this unit, you will review concepts utilized by most companies to do an accurate and reliable forecast. The basic types of forecasting are qualitative and quantitative. Most companies will use some form of both of these types. The main emphasis of forecasting is to deliver a document that allows a company to communicate where it is in relation to its plan. The forecast helps determine the work load and the scheduling of the resources. It is important to realize that forecasts are best guesses the company makes in regards to future sales. Forecasts are seldom 100 percent accurate, so it is important to constantly monitor the forecast in comparison to actual sales. Forecasts should be adjusted for unforeseen interruptions, when they occur. Forecasting changes in technology, process, legislation action, and other variables are critical to an organization’s achieving sustainability.
Scheduling is tied closely to the forecast. The two types of scheduling are finite and infinite loading. Each of these has rules that help prioritize how the workflow will be accomplished. Scheduling includes the requirements needed from both raw materials and manpower to accomplish the set sales goals. Companies often experience bottlenecks that limit their ability to deliver the products or service. The theory of constraints identifies those bottlenecks and strives to reduce them, thus improving efficiency and reducing costs of producing the product or service. Sustainability is another pressing issue for organizations; scheduling decisions can affect impacts to the organization’s cost to the environment. An example of such a cost might be carbon emissions.
Written communication: Written communication should be free of errors that detract from the overall message.
APA formatting: Any references and citations should be formatted according to APA (6th edition) style and formatting.