Case Study - Covolo Diving Gear, Part 2

Questions

1. Develop a level production plan for Covolo Diving Gear. What are the advantages and disadvantages of this plan? Could Covolo implement a pure chase plan, given the current capacity? Why? If sales continue to grow, what are the implications for production capacity at Covolo?

2. Patricia Rodriguez, vice president of marketing, states, "I've got to tell you all that I'm pretty comfortable with the forecasts for September through November, but after that, a lot could change. It's just very hard to forecast for four or more months out in this kind of market." How will a monthly S&OP update with rolling planning horizons help alle-viate Patricia's concerns? Are there still advantages to S&OP, even though the forecasts may change?

3. After looking over the level production plan, David Griffin, vice president of manufacturing, speaks up: "This looks okay, but you know what bugs me about it? The as what bugs me about it? The assumption that if a worker is avail-able, that worker has to be making gauge sets, even if we don't need any more. It might make sense in some cases to just have the worker not produce rather than lay off a worker in one month and hire someone else back the next." Do you agree? What are the holding costs associated with having an extra worker produce gauge sets for one month? How do these compare to the layoff and hiring costs? How might a strategy of keeping extra workers idle affect the estimated manufacturing costs for the gauge sets? (Hint: Labor costs have to be accounted for somewhere.)