Question 131 - CPIM-Part-2 discussion

Option overplanning is a technique used in an assemble-to-order (ATO) environment to address uncertainty in the product mix.An ATO environment is a production strategy where products are assembled from components or subassemblies after receiving customer orders1.Option overplanning is the practice of planning and stocking more components or subassemblies than the expected demand, based on historical data or forecasts2. The purpose of option overplanning is to increase the flexibility and responsiveness of the production system, by allowing the manufacturer to meet a variety of customer orders with different options or features. Option overplanning can help reduce the risk of stockouts, improve customer service, and capture new market opportunities.

Option overplanning is not used to verify appropriate inventory levels, schedule detailed production, or compensate for forecast bias. Verifying appropriate inventory levels is a function of inventory management, which involves monitoring and controlling the quantity and quality of materials and products in stock. Scheduling detailed production is a function of detailed scheduling, which involves allocating resources and setting priorities for specific tasks or orders in the production process. Compensating for forecast bias is a function of demand management, which involves adjusting the forecasts based on the difference between the actual and predicted demand.