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 hori- zons help alleviate Patricia's concerns? Are there still advantages to S&OP, even though the forecasts may change? CASE STUDYCOVOLO DIVING GEAR, PART 2June 15, 2009.–It has been two weeks since their con-tentious semiannual planning meeting, and the senior staffmembers for Covolo Diving Gear are getting ready to starttheir first monthly S&OP meeting. Gina Covolo, CEO, getsthe ball rolling:I know it's been a busy two weeks for all of you, and Iappreciate you working extra time to get ready for thismeeting. Production is already set for the next two months, Mary passes out the following information to all of theattendees:MONTHSALES FORECASTSeptember 200630,000 gauge setsOctober31,500November35,000December37,000January 2007February22,00018,000March17,500AprilMay27,00038,000June40,000JulyAugust42,00040,000Manufacturing cost per gauge set: $74.50Holding cost: $8 per gauge set per monthAverage labor hours required per gauge set:0.25 hoursLabor hours available per employee per month: 160Plant capacity: 35,000 gauge sets per monthCost to hire and train a new employee: $1250# Cost to lay off an employee: $500Beginning and ending workforce is 50Beginning inventory is 10,000單

The montly S&OP update with rolling planning horizons helps alleviate Patricia's concerns as…

Answered: 2. Patricia Rodriguez, vice president…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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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 hori- zons help alleviate Patricia's concerns? Are there still advantages to S&OP, even though the forecasts may change?

CASE STUDY
COVOLO DIVING GEAR, PART 2
June 15, 2009.–It has been two weeks since their con-
tentious 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,

Mary passes out the following information to all of the
attendees:
MONTH
SALES FORECAST
September 2006
30,000 gauge sets
October
31,500
November
35,000
December
37,000
January 2007
February
22,000
18,000
March
17,500
April
May
27,000
38,000
June
40,000
July
August
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: $1250
# Cost to lay off an employee: $500
Beginning and ending workforce is 50
Beginning inventory is 10,000
單

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