091945815_Demand_Management

docx

School

Baltimore City Community College *

*We aren’t endorsed by this school

Course

241

Subject

Business

Date

Nov 24, 2024

Type

docx

Pages

Uploaded by westworldds

1 Business Studies Student’s Name Institution Affiliation Course Instructor Date

2 Demand Forecast of Wild Dog Coffee Company Owners handling marketing and sales at Wild Dog Coffee Company subscribe to the notion that advertising expenditures impact the sale of coffee. According to Ferguson (2014), advertising is a tool for making the customer understand the business framework before deciding to buy the product. Another aspect to consider is that advertising gives customers a chance to understand a product better. According to Rossetti and Achlerkar (2011), advertising is an avenue for appealing to a target population, which positively impacts small or large businesses. Businesses have a range of advertisement platforms. For example, a venture may consider billboards, magazines, radio, television, or media. Advertising informs the customer about a new service or product and sparks curiosity. The owners of Wild Dog Coffee Company believe that advertising impacts sales. In that regard, we will review Figure 1 to understand the costs incurred on advertising and ascertain that belief. The figure outlines the cost of advertising for the first six months. By comparing data for the first month to the sixth month, it is easy to conclude that advertising positively impacts a business. Also, the company’s revenue is directly proportional to the months as they increase. The Wild Dog Coffee Company is an established brand that has cemented its prowess as a single coffee shop with espresso products. The company capitalizes on breakfast, lunch, and an evening menu. My business partner and I are planning to open a second location, a decision influenced by our current success in the coffee industry. Our main task is to tailor an in-depth analysis for demand management, scheduling, inventory, and forecasting to improve the model before opening a second location. Analyzing demand forecasts requires demand management and all that it entails. Demand management is a dynamic approach to tracking and controlling internal purchasing operations and business unit requirements. One of the main advantages of

3 demand management is that it allows businesses to remain connected to their suppliers while addressing external spending factors. Another consideration is that demand management focuses on product volumes received from providers. Also, it deviates from individual product pricing, commonly referred to as strategic spend management. This paper analyzes inventory and demand forecasts of the Wild Dog Coffee Company. Figure 1: Advertising and Espresso Bean Use Month Lbs/Beans (y) Advertising Dollars (x) 1 987 1050 2 1412 1500 3 1020 1000 4 1140 1250 5 1322 1500 6 1399 1500 According to Figure 1, it is possible to highlight the difference in costs incurred in the first and second months. The difference between the first two months is a $450 increase while that between the second and third months is a $500 decrease. However, the trend reverses again to record a $250 rise. Consider the fourth month where advertisement costs increased by 25%. The same month registered a corresponding 11.8% increase in espresso beans used. Based on the data trends above, if the company is to decrease its monthly budget allowance, its espresso beans should drop. Therefore, advertisement costs and espresso beans are directly proportional to each other. It is easy to conclude that Wild Dog Coffee Company’s advertising is increasing its sales revenue. Forecasting and Linear Graph

Your preview ends here

Eager to read complete document? Join bartleby learn and gain access to the full version

Access to all documents
Unlimited textbook solutions
24/7 expert homework help

4 The relationship between two variables shows using a linear regression model. The examined or predicted variable is the dependent variable, while that used to highlight the dependent variable is the independent variable. A review of Figures 2 and 3 highlights the distinction between two variables through advertising. According to the forecasting model, the first month shows that espresso bean usage was 1,050, while the second month shows an increase to 1,500. Also, the linear model shows in the third month bean usage dropped to 1,000. Through the model, it is easy to understand the relationship between costs in the usage of espresso beans produced by the company. Another development is that a decrease in budget leads to a corresponding drop in the number of espresso beans used. Therefore, both fluctuate at the same level. Consider a situation where the advertising budget increases by $2,000. The net effect of such an increase is more usage of espresso beans in beverage production. The seventh month recorded a value of $1,350 to a drop in espresso usage compared to the previous month due to a budget drop. The two linear graphs show a trend where an increase and a corresponding decrease in data. However, the fifth and sixth months show steady data devoid of fluctuations. It is conclusive that advertising directly impacts the usage of espresso beans. The company should consider strategic advertising for the maximum use of espresso beans. Figure 2: Advertising Dollars

5 Note. This figure demonstrates the element of the relationship between the amount spent in dollars against the months of the year. Figure 3: Usage of Espresso Beans Note. This figure demonstrates the element of the relationship between the usage of espresso beans against the months of the year. Calculating the amount of espresso beverage required calls for the use of Wild Dog Coffee Business Information provided. In this case, the company makes approximately 30 espresso beverages an hour. Also, 1.5 ounces of espresso beans prepare for a single cup. Another consideration is operating hours which start at 6 am to 8 pm from Sunday to Saturday. The only

6 time when the shop remains closed is on Christmas day. Therefore, the total hours the shop opens in a day is 14 hours multiplied by 30 to give approximately 420 espresso cups. The second calculation involves multiplying 420 cups by 1.5 ounces to get 630 ounces per day. With that in place, the next task is to determine the number of espresso beans in pounds used by the company in a day. We do an ounce-to-pound conversion by dividing 630 by 16 to get 39.375 pounds. It is important to note that the amount of dollars invested in advertising directly impacts coffee beans. For Instance, company trends dictate that an increase in advertising costs has a corresponding increase in the number of coffee beans required to make a beverage. Inventory Management Wild Dog Coffee Company must efficiently manage its inventory process. The fact that the company is small with not much storage space means it has no capacity to handle large inventory. However, the company cannot run away from the increasing demand. For instance, up to 1,400 pounds of espresso beans per month are needed with only one type of bean stocked. If the company runs out of stock, the only option is to close the shop until the next supply arrives. According to Turley & Kelley (2016), any company that temporarily closes its shop due to its supply chain may lose business in the long run. The same applies to Wild Dog Coffee Company. Another important aspect of consideration is inclined to the fact that espresso beans come in 25- pound packages sold at $9 a pound. The company should be flexible enough to take advantage of the free shipping for $250 and above orders and place one worth the same amount. With that in place, the company can save $19.95, channeled into purchases. As a result, the company can capitalize on two inventory management techniques to prevent such scenarios from occurring. They are inventory cycle counting and the bulk shipment approach.

Your preview ends here

Eager to read complete document? Join bartleby learn and gain access to the full version

Access to all documents
Unlimited textbook solutions
24/7 expert homework help

7 Pros and Cons Both approaches have advantages and disadvantages regardless of how ideal they are for the company. The firm can save money through the bulk shipment method. According to Turley and Kelley (2016), this method guarantees a discount for bulk purchases rather than individual purchases. Also, bulk shipment is one of the most recommended and predominant techniques for high-demand products, which applies to the company. The bulk has several advantages, such as subsidized or no shipping costs, the potential for profiteering, and company convenience. However, common disadvantages are high storage holding costs, the highest capital risk, and challenges in laying money at a time. According to Rossetti and Achlerkar (2011), some companies consider bulk as a minimum of ten. Wild Dog Coffee Company is established with a storage capacity to handle ten or twenty shipments. Such a move is integral toward preventing unwarranted scenarios characterized by backorders. For the company to succeed, it must ensure it has coffee beans throughout as demand increases. The inventory cycle entails handling a small inventory on a selected day without complete stock-taking. It is important to note that this is a convenient arrangement because the company is small and requires large amounts of capital for a comprehensive inventory. Also, the inventory cycle is affordable and less time-consuming. For instance, the company needs a few days a month to sample select products. That way, it gets an insight into the inventory and any adjustments that should be made. Just like bulk shipment, the inventory cycle has its advantages and disadvantages. The main pros are cost and time efficiency. Such an approach doesn’t interfere with the company’s operations. However, its con is inclined to the fact that it is less accurate compared to carrying out a complete inventory. The results of the inventory process may not give an account

8 of the company’s stock. The company’s operations are not limited to these two approaches. However, a trial and error method would be ideal for testing the best approach. Overall, demand will increase with a 1.84 pounds a day standard deviation leading to a corresponding increase in sales revenue. An increase in the use of espresso beans leads to a corresponding increase in revenue. Business Scheduling Management Staffing Scenario 1 Sunday Monday Tuesday Wednesday Thursday Friday Saturday Total FT Non- Barista (8) FT Non- Barista (8) FT Non- Barista (8) FT Non- Barista (8) FT Non- Barista (8) 40 FT Barista (14) FT Barista (14) FT Barista (14) 42 PT #1 Barista (14) PT #1 Barista (4.67) 18.67 PT #2 Barista (4.67) 18.67 PT #3 Barista (14) PT #3 Barista (4.67) 18.67 PT #1 Non- Barista (7) PT #1 Non- Barista (6) PT #1 Non- Barista (6) 26 PT #2 Non- Barista (7) PT #2 Non- Barista (6) PT #2 Non- Barista (6) 26

9 $322 $322 $346 $392.14 $346 $346 $346 $190.01 Staffing Scenario 2 Sunday Monday Tuesday Wednesday Thursday Friday Saturday Total FT Barista (10) FT Barista (10) FT Barista (10) FT Barista (10) ) 40 FT Non- Barista (8) FT Non- Barista (8) FT Non- Barista (8) FT Non- Barista (8 40 PT #1 PT #1 PT #1 PT #1 22 Barista (4) Barista (4) Barista (7) Barista (7) 18.67 PT #3 Barista (14) PT #3 Barista (4.67) 18.67 PT #2 Barista (4) PT #2 Barista (7) PT #2 Barista (4) PT #2 Barista (7 ) 22 PT #2 Non- Barista (6) PT #2 Non- Barista (6) 26 PT #1 Non- Barista (6) PT #1 Non- Barista (6) PT #1 Non- Barista (7) PT #1 Non- Barista (7) 26 PT #2 Non- Barista (6) PT #2 Non- Barista (6) PT #2 Non- Barista (7) PT #2 Non- Barista (7) 26

Your preview ends here

Eager to read complete document? Join bartleby learn and gain access to the full version

Access to all documents
Unlimited textbook solutions
24/7 expert homework help

10 $346 $346 $346 $346 $346 $322 $404 180 Business scheduling entails development, maintenance and collaboration of work schedules for employees. As the person in charge of the schedule, it is appropriate to organize the schedule as per demand with the aim of maximizing revenue. Employees employed on a full- time basis work for at least 40 hours in a week while their part-time counterparts work for 20 hours for the same period. Also, employees who work outside their designated hours are entitled to overtime pay. At the moment, the company has two full-time employees and six part-time employees. It is important to note that the costs incurred hiring and firing an employee are $550 and $250 respectively. Wild Dog Coffee Company is open 84 hours a week. Also, company shifts are tailored based on company convenience. At least two employees are required to handle a customer’s order. The first one takes an order and the second one makes the coffee beverage.. Every staffing scenario has its advantages and disadvantages. Consider scenario 1, where every employee works for 20 or 40 hours. The number of hours depends on whether they are full-time or part-time. Also, scenario 1 is characterized by two or more off days in a week with employees happily working during peak hours. However, the disadvantages of scenario 1 are costs incurred by the company to meet overtime expenses and an overpacked and overstaffed schedule. Scenario 2 entails fewer hours and less overtime with the same work hours. Only a few employees work in a day, several days a week. This scenario has a few disadvantages. Work may be overwhelming during peak hours for two employees. It is important to note that the company has enough employees. However, the two working scenarios show that the company needs a full- time barista and two part-time baristas. If the business continues to have good customer flow, the current number of employees is okay. Overtime is good as it compensates employees working out of their hours. As a manager, my priority is to minimize overtime. However, high demand

11 translates to extra working hours. Recommendation The analysis of the inventory, and staff management aided in finding the best approach. After an examination of the company’s total values, assets, staff count, and operation hours, the bulk shipping and the second scenario for staff management carry the day. Bulk shipping is dynamic and ensures that the company doesn’t run out of raw materials. Secondly, it saves the company significant amounts of cash. The current staff is enough to meet the company’s needs. It is important to note that the selections are based on the fact that bulk shipment helps the company capitalize on profits with minimum expenditure. Another consideration is that a bulk shipment ensures that the company has a backup. Also, it aids in implementing safety and all risks the business may face with product loss. References Ferguson, A. (2014). Focused Demand Management (2nd ed.). The Committee. Rossetti, M., & Achlerkar, A. (2011). Evaluation of segmentation techniques for inventory management in large scale multi-item inventory systems. International Journal Of Logistics Systems And Management , 8 (4), 403. https://doi.org/10.1504/ijlsm.2011.039598

12 Turley, L., & Kelley, S. (2016). A Comparison of Advertising Content: Business to Business versus Consumer Services. Journal Of Advertising , 26 (4), 39-48. https://doi.org/10.1080/00913367.1997.10673534

Your preview ends here

Eager to read complete document? Join bartleby learn and gain access to the full version

Access to all documents
Unlimited textbook solutions
24/7 expert homework help

091945815_Demand_Management

Related Documents