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What Is the Purpose of S&OP and What Takes Place

question 49

Essay

What is the purpose of S&OP and what takes place at the strategic, tactical, and detailed planning and control levels?


Definitions:

Contribution Margin

The amount of revenue remaining after variable costs have been deducted, which contributes to covering fixed costs and generating profit.

Opportunity Cost

The expense associated with missing out on the second-best option when a choice is made.

Contribution Margin

The difference between sales revenue and variable costs, indicating how much revenue is available to cover fixed costs and generate profit.

Variable Cost

Costs that change in proportion to the level of activity or volume of production, such as materials and labor.

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