Abstract
Sales and operation planning is an integrated tactical level panning system that balances demand and supply by determining optimum production amount, inventory level and capacity requirements to maximize customer service level and financial gain. It plays a major role in supply chain planning in enhancing responsiveness of all internal functions and linking them to customers and suppliers. This research aims at reviewing the subject area in the literature and develop a simulation model as an industrial engineering decision support system for an Ethiopian automotive industry. The industry's sales and operation planning process was surveyed to identify gaps and develop an enhanced simulation model that can be utilized to understand the system behavior and evaluate performance of manufacturing flexibility and inventory control policies. The simulation analysis result demonstrates that the customer service level and financial gains of the industry can be enhanced significantly through the proposed planning technique, flexibility, safety stock and emergency backup supply policies. The findings from the simulation analysis and their managerial implication are expected to improve the technical capability of Ethiopian automotive industries.
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