S&OP Example

Demand Forecast: Quarter Demand $($units$)$

$19,000$

$212,000$

$315,000$

$412,000$

Constraints:

Start inventory $=1000$ units

Ending inventory must be

$=>1000$ units per quarter

Max number of Workers $=13$

$($Assume we start with $12)$

Regular time capacity $=13,000$

units$/$quarter

Costs:

Inventory Holding Cost $=$

$$2$ per unit per quarter

Production Costs:

Regular time $=$ $$7\mathrm{.}50/$unit

Overtime $=$ $$10\mathrm{.}00/$unit

Hire$/$Fire Cost $=$ $$550/$employee