WEEK 5: SALES AND OPERATIONS 1
Week 5 Discussion: Supply Chain Sales and Operations Planning
Kelli Ware
School of Business, Liberty University
Sunday, June 15, 2025
What are some obstacles to creating a flexible workforce? What are the
benefits?
The workforce within any supply chain contributes directly to capacity and
must be managed properly to keep costs low while multiplying profits. The
greatest challenges in creating a flexible workforce centers around costs to
onboard such as hiring and training, layoff costs, and salary costs which can
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balloon out of control if the workforce is not managed well (Chopra, 2018).
Another challenge faced by leadership is the coordination of labor schedules
during periods of unpredictable demand which makes it difficult to ensure
operational efficiency. The benefits of a flexible include the ability to meet
consumer demand without overspending on labor, increase and decrease capacity
based on need, and optimize profitability by reducing the workforce during off-
peak season (Chopra, 2018). A combination of full-time and part-time employees
allows facility managers to capitalize on high demand periods of the day with a
larger staff presence and cut hours when production requirements are low
resulting in spare plant capacity for use during peak periods (Chopra, 2018).
Additional strategies such as the use of subcontractors and seasonal labor allows
companies to adjust to meet peak seasonal demand and align capacity with
demand without production disruptions
(Chopra, 2018).
Discuss why the use of subcontractors to handle peak demand can often allow a
company to meet demand at lower cost even though the subcontractor price
is higher than the average unit cost of the company.
Firms use subcontractors to augment their workforce during peak demand
periods as a cost-effective alternative to hiring permanent staff that mitigates
hiring and training costs as well as unnecessary costs of idle resources during off-
peak or low demand periods (Chopra, 2018). While subcontractors can be
beneficial for manufacturers, firms must balance to cost return ratio when using
them as their benefits are proportional to the amount of supply chain surplus
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profits achieved (Wang & Gao, 2023). According to Chopra (2018) the costs
associated with the use of subcontractors is a worthy investment during peak and
seasonal periods because the revenue accrued from the heightened demand and
capacity will yield a greater return on investment.
In which industries would you tend to see dual facility types (some facilities
focusing on only one type of product and others able to produce a wide
variety)? In which industries would this be relatively rare? Why?
Per Chopra (2018) the industries that tend to use dual facility types are the
digital electronics, computer, and automotive industries as they have multiple
parts to the final product that are manufactured in both specialized and flexible
facilities. In a study performed by Liu et al. (2023), implementing flexible facility
strategies can improve cost effectiveness, strengthen resilience, broaden capacity,
and diversify product manufacturing. Because flexible facilities produce a myriad
of product types, industries such as the oil industry where demand is predictable
and economies of scale are a major benefit would use more specialize facilities
and rarely use flexible facility types except perhaps in instances where they need
larger volumes warehoused (Chopra, 2018).
Discuss how you would set up a collaboration mechanism for the enterprises
in a supply chain.
In a study performed by Baah et al. (2021), the researchers found that
supply chain collaboration favorably impacts supply chain operations, visibility,
responsiveness, stakeholder confidence, and profitability. To implement a supply
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chain collaboration mechanism, it is imperative that the retailer and manufacture
develop sales and operations planning (S&OP) procedures during planning that
highlights mutually beneficial incentives and establishes collaboration (Chopra,
2018). Moreover, a system that includes collaborative planning, forecasting and
replenishment should be created where leaders from every level of the supply
chain work conjunctly to develop forecasting models, use historical data analysis
to develop key performance indicators (Tadayonrad & Ndiaye, 2023), production
and logistics scheduling, inventory management plans, and data sharing
capabilities to ensure alignment throughout the entire enterprise (Chopra, 2018).
What are some product lines that use common parts across many products?
What are the advantages of doing this?
Per Chopra (2018), companies that produce various product lines such as
the specialized machines (i.e. lawn mowers), electronics, and automobiles that
have the same or similar functionality will use common parts. The advantages of
utilizing common parts across many products simplifies production operations,
diminishes stockouts, facilitates quick alignment of supply and demand and
mitigates challenges associated with excessive inventory (Chopra, 2018). The most
impactful advantage of creating product lines with common parts are the reduced
costs and increased profits.
Discuss how a company can get sales and operations to work together with the
common goal of coordinating supply and demand to maximize profitability.
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Hinging on the aforementioned response regarding the implementation of a
collaboration mechanism, establishing jointly developed processes and
crossfunctional teams within sales and operations to facilitate coordination,
communication and comprehensive demand management decision-making that
positively impacts the entire enterprise and maximizes profits (Chopra, 2018).
Moreover, by encouraging cross functional collaboration with the sales and
operations planning teams forecast accuracy is increased while demand
management risks are decreased which lends to a competitive advantage (Chopra,
2018).
How can a firm use pricing to change demand patterns? Pricing
strategies are critical contributors to demand management. Higher prices may
yield greater profits per item, but has disadvantages related to demand while
lower prices depending on the market persuades consumers to buy more (Miah et
al., 2021). Dynamic pricing strategies help to bring balance to demand during peak
and off-peak periods (Chopra, 2018 & Miah et al., 2021). Offering discounts during
off-peak seasons and slightly higher prices during high demand seasons soothes
price sensitivity which can be a demand deterrent and encourages consumers to
adjust their normal purchasing behavior leading to profit optimization (Miah et al.,
2021). Incorporating historical data analysis KPIs (Tadayonrad & Ndiaye, 2023)
with collaborative sales and operations decision making, will ensure the success of
dynamic pricing strategies to efficiently manage demand variability and control
demand patters (Chopra, 2018).
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Why would a firm want to offer pricing promotions in its peak-demand
periods?
Offering pricing promotions during peak-demand periods helps firms to
strategically increase demand which increases profits (Chopra, 2018). There are
some critical considerations to account for when offering promotions such as
production capacity, volume capacity, consumer consciousness and the potential
for value diminishment (Chopra, 2018). Another potential drawback is the ability
to meet the increased demand engendered by the promotion which will require
additional labor and warehouse space driving up costs and potentially impacting
profits (Chopra, 2018). Pricing promotions during high demand periods also caters
to price sensitive consumers (Miah et al., 2021) and because during these periods
consumers are more open to new products offering the promotion during these
periods can attract new customers and increase market share (Chopra, 2018).
Why would a firm want to offer pricing promotions during its low-demand
periods?
Pricing promotion during low-demand periods stimulates demand which
has benefits related to capacity exacerbation implications, reducing holding costs,
and lessening inventory excess (Chopra, 2018). Because off-peak periods
contribute to extremely high stock leading to inventory excess firms should
incorporate inventory dependent promotion rates to provoke off-season
purchases, balance demand and minimize inventory idling (Miah et al., 2021).
While offering price promotions during low-demand periods motivates purchasing
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decisions, cost increases in fixed and variable transportation expenses must be
factored into promotion policy implementation (Miah et al., 2021).
References
Baah, C., Acquah, I. S. K., & Ofori, D. (2021). Exploring the influence of supply chain
collaboration on supply chain visibility, stakeholder trust, environmental and financial
performances: a partial least square approach. Benchmarking an International Journal,
29(1), 172–193. https://doi.org/10.1108/bij-10-2020-0519
Chopra, S. (2018). Supply Chain Management (7th ed.). Pearson Education.
https://libertyonline.vitalsource.com/books/9780134732459
Liu, C., Ji, Y., & Li, X. (2023). Closed-Loop Supply Chain Network Design with Flexible
Capacity under Uncertain Environment. Sustainability, 15(19), 14565.
https://doi.org/10.3390/su151914565
Miah, M. S., Islam, M. M., Hasan, M., Mashud, A. H. M., Roy, D., & Sana, S. S. (2021). A discount
Technique-Based inventory management on electronics products supply chain.
Journal of Risk and Financial Management, 14(9), 398.
https://doi.org/10.3390/jrfm14090398
Tadayonrad, Y., & Ndiaye, A. B. (2023). A new key performance indicator model for demand
forecasting in inventory management considering supply chain reliability and seasonality.
Supply Chain Analytics, 3, 100026. https://doi.org/10.1016/j.sca.2023.100026
Wang, D., & Gao, W. (2023). Model and simulation of benefit distribution of collaborative
cooperation in the supply chain of general contracting projects. Buildings, 13(7), 1788.
https://doi.org/10.3390/buildings13071788
