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, Ive got to tell you all that Im pretty comfortable with the forecasts for September through November, but after that, a lot could change. Its 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 alleviate Patricias 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 OK, but you know what bugs me about it? The assumption that if a worker is available, that worker has to be making gauge sets, even if we dont 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 asso- ciated 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.)

July August CASE STUDY Covolo Diving Gear, Part 2 June 15, 2020-Two weeks have passed since Covolo Diving Gear's contentious semiannual planning meeting, and the senior staff members for Covolo Diving Gear are getting ready to start their first monthly S&OP meeting, Gina Covolo, CEO, gets the ball rolling: I know it's been a busy two weeks for all of you, and I appreciate you working extra time to get ready for this meeting Production is already set for the next two months, so we're going to start by planning for this Sep- tember through the following August. I've had Patricia from marketing develop a sales forecast for these 12 months, and I've also had David from manufacturing estimate manufacturing costs and labor requirements, as well as capacity in the plant. Mary from HR was good enough to come up with some estimates of how much it costs to hire and train new workers, as well as the cost of laying off folks. Finally, Jack from supply management was able to get the accounting folks to estimate the cost of holding a gauge set in inventory for a month. So let's see what we've got. Mary passes out the following information to all of the attendees MONTH SALES FORECAST September 2020 30,000 gauge sets October 31,500 November 35,000 (Continued) MONTH SALES FORECAST December 37,000 January 2021 22,000 February 18,000 March 17,500 April 27,000 May 38,000 June 40,000 42,000 40,000 Manufacturing cost per gauge set: $74.50 Holding cost: $8 per gauge set per month Average labor hours required per gauge set: 0.25 hours Labor hours available per employee per month: 160 Plant capacity: 35,000 gauge sets per month Cost to hire and train a new employee: $1,250 Cost to lay off an employee: $500 Beginning and ending workforce: 50 Beginning inventory: 10,000 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