annotated-MBA-FPX5016_Tralisha_Johnson_20Assessment_202_20Attempt_201.docx

1 Demand Management Plan Tralisha Johnson January 29, 2024

2 2 Table of Contents Executive Summary ....................................................................................................................................... 3 Impact of Advertising on Product Demand ............................................................................................... 3 Interpret the Forecasting Model ................................................................................................................. 4 Inventory Management Analysis ................................................................................................................. 6 Periodic Review Systems ............................................................................................................................... 6 Continuous Review System ........................................................................................................................... 7 Scheduling Management ............................................................................................................................... 7 FlexTime Scheduling ....................................................................................................................... 8 Fixed Scheduling ............................................................................................................................. 8 Sample Fixed Schedule ................................................................................................................. 10 Recommendations ........................................................................................................................................ 10 References ..................................................................................................................................................... 11

4 4 Espresso Bean Use and Advertising Month Lbs./Beans (y) Advertising Dollars (x) 1 987 $1,050 2 1,412 $1,500 3 1,020 $1,000 4 1,140 $1,250 5 1,322 $1,500 6 1,399 $1,500 Table 2 Table 2 shows that advertising does influence sales. In month 1, Wild Dog Coffee Company spent $1,050 on advertising and used 987 lbs. of beans. In month 2, $1,500 was spent on advertising and the use of beans increased to 1,412. Then, in month 3, only $1,000 was spent on advertising and the beans used in lbs. was 1,020 (a decrease from month 2). From this chart, we can determine that advertising costs relate to the espresso beans usage. Since more beans are being used, we can assume the advertising dollars are driving sales. Interpret the Forecasting Model Wild Dog Coffee Company wants to know how many pounds of beans will be used in month 7. A simple linear regression model will be used to interpret the forecast of pounds of espresso beans needed for month 7. “Linear regression is a basic and commonly used type of predictive analysis” (What is Linear Regression? , n.d.). Linear regression is a predictive analysis. It shows the relationship between two variables. The two variables used in this analysis are the current pounds of beans being used and the current advertising costs in dollars. As seen in table 2, the more spent on advertising, the more beans used. Table 3 1 2 3 4 5 6 Lbs/Beans (y) 987 1,412 1,020 1,140 1,322 1,399 Advertising Dollars (x) $1,050 $1,500 $1,000 $1,250 $1,500 $1,500 987 1,412 1,020 1,140 1,322 1,399 $1,050 $1,500 $1,000 $1,250 $1,500 $1,500 0 200 400 600 800 1000 1200 1400 1600 Lbs/Beans (y) Advertising Dollars (x) Wild Dog Coffee Company Linear Regression Chart Axis Title Axis Title

5 5 Wild Dog Coffee Company wants a forecast of the pounds of espresso beans needed for month 7 with an advertising budget of $1,350. The equation is y = a + bx which is 188.22 + .788 * 1,350 = 1252.76 or rounded to 1253 lbs. The company wants to know how many espresso beverages to prepare, on average, each day, how many pounds of espresso beans are needed each day, and to what extent do advertising dollars predict the need for espresso beans. In table 1, it shows that Wild Dog Coffee Company is open 364 days a year from 6 am to 8 pm which is 14 hours. The company makes 30 beverages each hour on average and uses 1.5 ounces of beans per beverage. 14 * 30 = 420. Around 420 beverages a day are needed. 420 * 1.5 = 630. In a single day, Wild Dog Coffee Company uses 630 ounces of beans which is 630 / 16 = 39.375 pounds of beans a day. Most months have 30 days. 30 days using 39 pounds of beans comes to around 1,170 beans a month. Advertising is driving the demand for espresso beans such as seasonal items, competitors, and the economy. In tables 4 and 5, the R square value is 95%. This shows how much variation of the espresso bean usage is affected by the advertising dollars. 95% of the espresso beans are forecasted from the advertising dollars. The Multiple R is 98% showing a positive correlation. As one increases, the other increases. If one decreases, the other will decrease. Table 4 SUMMARY OUTPUT Regression Statistics Multiple R 0.975396474 R Square 0.951398282 Adjusted R Square 0.939247853 Standard Error 46.73128373 Observations 6 ANOVA df SS MS F Significance F Regression 1 170996.0818 170996.0818 78.301618 0.000900554 Residual 4 8735.251515 2183.812879 Total 5 179731.3333 Coefficients Standard Error t Stat P-value Lower 95% Upper 95% Lower 95.0% Upper 95.0% Intercept 188.2242424 117.4073745 1.60317223 0.184159737 -137.7508879 514.1993728 -137.7508879 514.1993728 X Variable 1 0.788545455 0.089113062 8.848820147 0.000900554 0.541127931 1.035962978 0.541127931 1.035962978

7 7  Easily manage records using either a physical or computer-based spreadsheet  Counts can be scheduled at any time including outside of normal business hours  Simplified delivery schedule and can start using without major preparation Cons  Increased risk of human error  Is challenging if limited inventory as physical inventory counts are more labor-intensive  Difficult to maintain control of inventory or identify losses using this system  Insufficient monitoring  The larger the company becomes, the less accurate and useful the system will become Continuous Review System According to (Inventory Management 101, n.d.), continuous review systems order the same quantity of items in each order. The order frequency varies in continuous systems because the inventory is monitored, and orders are placed when items reach a particular level. Pros  Fully Automated  Real-Time and continuous updates  Instantaneous  Rapid and accurate  Triggers new orders based on capacity and demand Cons  High costs  Recorded inventory may not reflect actual inventory  More complex  More time-consuming  Possible malfunction  Harder to track small items After reviewing the two systems, Wild Dog Coffee Company should start out using the periodic system as espresso beans are the only type of bean being stocked. 25 lbs. per package is easily countable by hand. It will not cost much out of pocket and is easily implemented. Since there will only be two locations for now, this system will work fine and as the company grows and expands, generating more profit, it can switch to the continuous inventory system. Scheduling Management According to (Bonifacio, 2023), a work schedule is a plan that outlines when and how work tasks should be completed. Creating a successful work schedule ensures structure and clarity, boost productivity,

8 8 ensures time management, and determines labor costs. There are several different types of work schedules for full-time and part-time employees. It is important for management and staff to understand the scheduling needs of both the company and the individuals. To ensure Wild Dog Coffee Company operates and runs smoothly, an analysis of two different staffing scenarios will be made. The two chosen for analysis are FlexTime and Fixed Scheduling. FlexTime Scheduling Some companies have a standard block of time employees work such as 9 am to 5 pm. Some companies benefit from a more flexible work arrangement where the employees can pick their own hours or days within a set period of given limits (Asia, 2018). Advantages  A more flexible work schedule allowing employees the ability to pursue other things such as college classes or hobbies  Workers can maintain a better work-life balance having more control over life events, which can reduce stress meaning the worker will be more dependable  Better productivity  Fewer inconveniences such as avoiding rush hours or heavy traffic Disadvantages  Workers on this schedule will not have the same interpersonal relationship with other employees as they come and go at different hours which could cause low morale  It will be more challenging to oversee the performance of the flextime workers  Distractions  Fewer benefits Fixed Scheduling Normally requires employees to work 35 to 40 hours per week. According to (Fixed Schedule vs Flexible Schedule Jobs: The Pros and Cons of Each, 2019), the most common fixed schedules include working five days of eight hours each. It could include blocks such as Monday to Friday from 8 am to 4 pm or Tuesday to Saturday 3 pm to 11 pm. It normally consists of an employee working the same number of days and hours each week. Advantages  Workers on this schedule can coordinate better with other employees and upper management because they will see them more often  Scheduling is easier since it stays the same  Workers on this shift are more manageable  Team meetings are easier to schedule when workers are on fixed schedules  Able to save on overtime hours with a fixed schedule and cut on operation costs

10 10 Sample Fixed Schedule for Staff Recommendations Wild Dog Coffee Company should start out using the periodic system since espresso beans are the only type of bean being stocked. This system will not cost much out of pocket and is easily implemented. 25 lbs. per package is easily countable by hand. Since there will only be two locations for now, this system will work fine and as the company grows generating more profit, it can switch to the continuous inventory system. Wild Dog Coffee Company should use a Fixed schedule since the coffee company only needs a small number of staff. It is recommended that they hire an extra full-time non-barista, since the pay rate is $12 instead of $14 for a full-time barista, to cut down on any overtime and ensure that there is at least one barista and one non barista on shift throughout the day. There is a one-time hiring fee for the new non barista of $500 which will be ok since overtime has been cut back. Mon 16 Tue 17 Wed 18 Thu 19 Fri 20 Sat 21 Sun 22 Employee 1 - Full Time Barista 5a - 1p 5a - 1p 5a - 1p 5a - 1p 5a - 1p 40 / 40 hrs | $560 Employee 2 - Part Time Barista - 1 2p - 8p 6a - 2p 2p - 8p 20 / 20 hrs | $280 Employee 3 - Part Time Barista - 2 2p - 8p 2p - 8p 2p - 8p 18 / 20 hrs | $252 Employee 4 - Part Time Barista - 3 5a - 1p 2p - 8p 2p - 8p 20 / 20 hrs | $280 Employee 5 - Full Time Non Barista 6a - 2p 6a - 2p 6a - 2p 6a - 2p 6a - 2p 40 / 40 hrs | $480 Employee 5 - Full Time Non Barista 6a - 2p 1p - 9p 5a - 1p 1p - 9p 1p - 9p 40 / 40 hrs | $480 Employee 7 - Part Time Non Barista - 2 1p - 9p 1p - 9p 16 / 20 hrs | $144 Employee 8 - Part Time Non Barista - 3 1p - 9p 1p - 9p 16 / 20 hrs | $144 194 / 200 hrs 22.00 30.00 30.00 30.00 22.00 30.00 30.00 $2,476.00 $292.00 $388.00 $364.00 $364.00 $292.00 $388.00 $388.00 Fixed Schedule

11 11 References Ahmed, A. (2019, March 27). Advertising's Effects on Demand . Retrieved from Small Business: https://smallbusiness.chron.com/advertisings-effects-demand-11673.html Asia, W. i. (2018, March 1). Flexi-Tim vs. Fixed Time . Retrieved from KMC Solutions: https://kmc.solutions/blogs/flexi-time-vs-fixed- time/#:~:text=The%20flexi%2Dtime%20gives%20the,after%20the%20standard%20offic e%20hours. Bonifacio, R. (2023, November 20). Work Schedule: Definition and Importance for Employees . Retrieved from Shiftbase: https://www.shiftbase.com/glossary/work-schedule Fixed Schedule vs Flexible Schedule Jobs: The Pros and Cons of Each . (2019, Julyk 16). Retrieved from Resumeble: https://www.resumeble.com/career-advice/fixed-vs-flexible- schedule-the-pros-and-cons-of-each Inventory Management 101 . (n.d.). Retrieved from Wasp: https://www.waspbarcode.com/buzz/inventory-management- 101#:~:text=Continuous%20review%20systems%20generally%20order,items%20reach %20a%20particular%20level. Management, O. (2024, January 8). How do you implement a periodic review system for inventory replenishment? Retrieved from Linkedin: https://www.linkedin.com/advice/1/how-do-you-implement-periodic-review- system#:~:text=A%20periodic%20review%20system%20is,stockouts%2C%20and%20si mplify%20ordering%20decisions. Tarver, E. (2023, September 13). 17 Essential Inventory Management Techniques . Retrieved from Forbes : https://www.forbes.com/advisor/business/inventory-management- techniques/ Team, I. E. (2023, June 6). Why is customer satisfaction important? 7 common benefits . Retrieved from Indeed: https://uk.indeed.com/career-advice/career-development/why- customer-satisfaction-important What is Linear Regression? . (n.d.). Retrieved from Statistics Solutions: https://www.statisticssolutions.com/free-resources/directory-of-statistical-analyses/what- is-linear-regression/