Improving Forecasting Accuracy in the Manufacturing Business Cycle

The purpose of the present study is to examine how the Sales and Operation Plan (S&OP) process can be improved in the manufacturing industry by using a cost model to evaluate changes in the manufacturing forecast in addition to reviewing past financial performance. The additional use of a cost model transitions form using a standard traditional S&OP process to dynamic modeling and scenario analysis that may lead to different decisions being made. The manufacturing company S&OP processes in scope of this project is suspected to not be using a cost model when making financial decisions but rather the traditional S&OP process. They do not have a rolling budget in place, but rather a static budget also known as an Annual Operating Plan.