APICS Sales & Operations Planning 5 — Questions and Answers
Question 1: Which of the following best describes a 'chase demand' production strategy in S&OP?
- Adjusting workforce and production rates to match demand fluctuations each period (Correct answer)
- Building inventory ahead of anticipated demand surges
- Maintaining a fixed production rate throughout the planning horizon
- Subcontracting all production during low-demand periods
Correct answer: Adjusting workforce and production rates to match demand fluctuations each period
A chase strategy varies production output (through hiring, layoffs, or overtime) to closely match actual demand, minimizing inventory but increasing workforce variability.
Question 2: In a multi-site manufacturing company, S&OP helps resolve which of the following challenges?
- Allocating demand across plants to optimize cost and service (Correct answer)
- Setting individual machine maintenance schedules
- Determining the color palette for product packaging
- Approving travel budgets for the sales team
Correct answer: Allocating demand across plants to optimize cost and service
S&OP provides the aggregate-level visibility needed to decide which plants or regions should fulfill demand based on capacity, cost, and service constraints.
Question 3: What is the risk of running S&OP without involving the finance function?
- The operating plan may conflict with financial targets and budget commitments (Correct answer)
- Demand forecasts will be statistically less accurate
- Supplier lead times will not be properly captured
- Customer service levels will automatically decline
Correct answer: The operating plan may conflict with financial targets and budget commitments
Without finance, the S&OP plan may be operationally feasible but financially inconsistent with the budget, creating a disconnect between operations and the P&L.
Question 4: Which tool is most commonly used to support the statistical forecasting step in an S&OP process?
- Time-series forecasting models such as exponential smoothing or ARIMA (Correct answer)
- Kanban boards for visual production control
- ABC analysis for inventory classification
- Network diagrams for project scheduling
Correct answer: Time-series forecasting models such as exponential smoothing or ARIMA
Exponential smoothing and ARIMA models use historical demand data to generate statistical baseline forecasts that serve as the starting point in the S&OP demand review.
Question 5: In the APICS framework, the S&OP plan feeds directly into which master planning process?
- Master Production Scheduling (MPS) (Correct answer)
- Order Promising (ATP)
- Distribution Requirements Planning (DRP)
- Supplier Relationship Management (SRM)
Correct answer: Master Production Scheduling (MPS)
The S&OP aggregate production plan is disaggregated into the Master Production Schedule, which drives detailed scheduling, MRP, and procurement.
Question 6: A company's S&OP process consistently shows that the sales team overestimates demand. What corrective action should be taken?
- Apply statistical bias correction and adjust the incentive structure to reward forecast accuracy (Correct answer)
- Eliminate the sales input step from the demand review
- Replace the sales team's forecast with the finance team's budget
- Increase safety stock to compensate for the overestimation
Correct answer: Apply statistical bias correction and adjust the incentive structure to reward forecast accuracy
Persistent upward bias should be corrected statistically and addressed by realigning sales incentives so reps benefit from accuracy rather than high forecasts.
Question 7: Which of the following best describes the 'management business review' or executive S&OP meeting?
- A monthly meeting where senior leaders approve the reconciled plan and make decisions on unresolved gaps (Correct answer)
- A weekly operational stand-up to review yesterday's production output
- An annual strategic planning offsite for the leadership team
- A quarterly investor relations briefing on financial results
Correct answer: A monthly meeting where senior leaders approve the reconciled plan and make decisions on unresolved gaps
The executive S&OP meeting is the decision-making forum where leadership approves the one agreed plan and resolves any remaining cross-functional conflicts escalated from the pre-S&OP meeting.
APICS Sales & Operations Planning 5
Which of the following best describes a 'chase demand' production strategy in S&OP?