Covolo Diving Gear
SALES AND OPERATIONS PLANNING
AUGUST 2013 – SEPTEMBER 2014
Team 3: Neiko Jennings, Patricia Iseley, Michael
Davis, Kenneth Fleck, Wesam Hoblos
Introduction
Covolo Diving Gear is a prestigious manufacturer of
diving equipment that utilizes secial German made
parts.
As of late, Covolo has experienced manufacturing
quandaries. In order to resolve their dilemmas, Sales
and Operations planning will be used to help
coordinate their efforts.
This presentation will demonstrate the most effective
solution for Covolo Diving Gear.
TOP-DOWN VS. BOTTOM UP
TOP-DOWN
BOTTOM UP
 Single, aggregate sales
 Separate estimates of
forecast
 Consistent product mix
from one period to the
next
 Products must have
similar resource
requirements
requirements for each
product added up to find
forecast
 Unstable product mix
from one period to the
next
 Products/services have
different resource
requirements
TOP-DOWN PLANNING
 Top Down Planning Sequence:
Corporate
Strategic Planning
Business Plan
Tactical or Production Plan
Detailed Planning and Control:
Master Schedule
Consensus Production Plan for Sept. 2013 – Aug 2014
Sales and Operations Planning
Level vs. Chase Production Plan
Recommendation: Chase Plan
Why?
Cost / Benefit
Total Cost
 Level Production Plan = $30,996,000
 Chase Production Plan = $29,084,090
Total Cost Breakdown - Where do the numbers come
from?
 2 Major differences in the costs of each
plan
 Cost
of changing production levels (Hire/Layoff
costs)
 Cost
of holding additional inventory
By The Numbers
 Regular Production Costs
 Level
Plan = $28,608,000
 Chase
Plan = $28,083,520
 Hiring and Layoff Costs
 Level
Plan = $0
 Chase
Plan = $66,650
By The Numbers
Inventory Holding Costs
Level
Plan = $2,388,000
Chase
Plan = $933,920.00
SALES AND OPERATIONS PLANNING
 How will a monthly S&OP update with rolling
planning horizons help alleviate Patricia’s
concerns?
 Monthly meetings will allow the company to stay
organized and on the same page
 Efficient Communication and Coordination with
Management and Department Heads
 Allows you to forecast upcoming months thus making sure
production is up to speed or notified
 Allows you to plan and see Short term and long term goals
and expectations
Keeping Idle Workers or Hiring and Firing?
 Full production = 160 hours
 Average labor hours/gauge set = 0.25
 Holding cost = $8/gauge set/month
 160 hours x 4 gauge sets/hr = 640 gauge sets
 640 gauge sets x $8 = $5, 120 per month
 $5,120 x 12 = $61,440 per year
Keeping Idle Workers or Hiring and Firing?
Hiring/Firing cost for Chase
Plan = $66,650
Savings for idle workers =
$5,210
Advantages After Plan Change
 Are there still advantages to S&OP,
even though the forecasts may
change a couple of months after the
plan is created?
 It
allows everyone to see the goals
they must reach
Advantages After Plan Change
 It
can help the company in both the
short run and the long run
 Allows
them to know what spending
limit and sales will be for that certain
time period
Appendix 1
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Appendix 2
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