Enterprise Operations Plan > Operations Planning Example
  
Operations Planning Example
Planning Relationships shows the operations planning relationships between sites. In addition to marketing, London is the central site for operations planning. Each of the other four sites plans its own activities, then provides the local planning data to the London master scheduler.
See Example of Organization Structure.

Planning Relationships
The London scheduler consolidates this data and calculates a weekly global operations plan for each product. This plan shows consolidated sales forecasts, target inventory levels, and production due.
London then distributes the global plan to all sites. The local site planners transform this plan into weekly production schedules.
In Global Sales Forecasts for London, London calculates a global operations plan. London, Geneva, and Paris generate sales forecasts. Milan and Dublin provide inventory required to satisfy these forecasts. London calculates global sales forecasts by consolidating its own forecasts with those from Geneva and Paris.

Global Sales Forecasts for London
 
Week
Geneva Forecasts
Paris Forecasts
Global Forecasts
1
0
0
0
2
4,000
6,000
4,000 + 6,000 = 10,000
3
7,000
5,000
7,000 + 5,000 = 12,000
4
4,500
6,500
4,500 + 6,500 = 11,000
5
4,500
4,500
4,500 + 4,500 = 9,000
6
5,000
5,000
5,000 + 5,000 = 10,000
7
6,000
5,000
6,000 + 5,000 = 11,000
8
6,000
6,000
6,000 + 6,000 = 12,000
9
8,000
5,000
8,000 + 5,000 = 13,000
London calculates global target inventory levels to support the next two weeks of sales forecasts from London, Geneva, and Paris. Therefore, the target inventory level is the total global forecast for the next two weeks.

Global Forecasts and Target Inventory Levels for London
 
Week
Global Forecasts
Global Target Inventory Levels
1
0
10,000 + 12,000 = 22,000
2
10,000
12,000 + 11,000 = 23,000
3
12,000
11,000 + 9,000 = 20,000
4
11,000
9,000 + 10,000 = 19,000
5
9,000
10,000 + 11,000 = 21,000
6
10,000
11,000 + 12,000 = 23,000
7
11,000
12,000 + 13,000 = 25,000
8
12,000
13,000 + 0 = 13,000
9
13,000
0
Production due is the consolidated production requirement, calculated with the following formula.
(Sales Forecast + Target Inventory) – Previous Week’s Projected Quantity on Hand
For week 1, the projected quantity on hand is the ending inventory balance from the previous week (or 3,000, in this example). For weeks 2 to 9, projected quantity on hand equals the target inventory level for the previous week.

Production Calculations
 
Wk
Forecasts
Target Inv
Prev QOH
Global Production Due
1
0
22,000
3,000
(0 + 22,000) – 3,000 = 19,000
2
10,000
23,000
22,000
(10,000 + 23,000) – 22,000 = 11,000
3
12,000
20,000
23,000
(12,000 + 20,000) – 23,000 = 9,000
4
11,000
19,000
20,000
(11,000 + 19,000) – 20,000 = 10,000
5
9,000
21,000
19,000
(9,000 + 21,000) – 19,000 = 11,000
6
10,000
23,000
21,000
(10,000 + 23,000) – 21,000 = 12,000
7
11,000
25,000
23,000
(11,000 + 25,000) – 23,000 = 13,000
8
12,000
13,000
25,000
(12,000 + 13,000) – 25,000 = 0
9
13,000
0
13,000
(13,000 + 0) – 13,000 = 0
London will use the operations plan to view the global picture of sales forecasts, target inventory, and production due for this item. Milan and Dublin will use it for site-level planning, scheduling, and manufacturing activities.

Production Calculations and Projected Quantities on Hand
 
Wk
Forecasts
Target Inventory
Production Due
Projected QOH
1
0
22,000
19,000
22,000
2
10,000
23,000
11,000
23,000
3
12,000
20,000
9,000
20,000
4
11,000
19,000
10,000
19,000
5
9,000
21,000
11,000
21,000
6
10,000
23,000
12,000
23,000
7
11,000
25,000
13,000
25,000
8
12,000
13,000
0
13,000
9
13,000
0
0
0