Demand Management Plan

Introduction

Demand management is an integral part of any business. It involves forecasting, inventory management, and scheduling, which are used to meet customer demands in the most efficient way possible. This demand management plan will analyze the impact of advertising on product demand, forecast the need for espresso beans, create an inventory management analysis, and evaluate the scheduling management of Wild Dog Coffee Company, a locally owned coffee shop with a single location. This plan will also provide recommendations on inventory management and staffing plans for Wild Dog Coffee Company.

Assessing the Impact of Advertising on Product Demand

Wild Dog Coffee Company believes that advertising expenditures impact the sales of coffee beverages, and they wanted to confirm if this is true. Six months of data were gathered on the pounds of espresso beans used each month to assess the impact and the monthly advertising expenditures. The data was then analyzed using a simple linear regression model to determine the correlation between the two variables.

The linear regression model showed a positive correlation between the pounds of espresso beans used each month and the monthly advertising expenditures. This suggests that as the number of advertisements increases, the demand for espresso beans also increases. To forecast the number of pounds of espresso beans needed for month 7, with an advertising budget of $1,350, the linear regression model predicts that the company will need 1,347.5 pounds of espresso beans. A linear regression model is a powerful tool that can be used to forecast the demand for products. This can be especially beneficial to small businesses, as it allows them to accurately predict the demand for their products and services (Hoffmann, 2021). In order to maximize profits and minimize losses, small businesses need to know precisely how many products and services they will need to produce and sell to satisfy customer demand. Knowing this information allows businesses to plan their production and marketing strategies accordingly.

The linear regression model can also compare different products and services. By comparing the demand for different products and services, businesses can better understand which products and services are more popular with customers and which are not. This information can adjust pricing and marketing strategies (Bansal & Chaturvedi, 2021). This can be especially beneficial to small businesses, as they often need more resources to conduct extensive market research. In addition to forecasting demand, the linear regression model can also identify trends and patterns in customer demand. By analyzing the data, businesses can identify which products and services are most popular with customers and which are not (Bansal & Chaturvedi, 2021). This information can be used to develop more effective marketing strategies and to adjust product offerings to meet customer needs better.

The linear regression model can also be used to analyze the impact of external factors on customer demand. For example, businesses can use the model to analyze the impact of changes in the economy or customer tastes on demand for their products and services. By understanding how external factors affect customer demand, businesses can develop strategies to adjust their product offerings to meet customer needs better. Finally, the linear regression model can be used to identify the most effective ways to advertise products and services (Hoffmann, 2021). By analyzing the impact of different forms of advertising on customer demand, businesses can determine which methods are most effective in increasing sales. This information can then be used to adjust marketing strategies and create more effective advertising campaigns.

The linear regression model is a powerful tool for businesses of any size and is valuable for small businesses. By leveraging the power of the linear regression model, small businesses can increase their profits and minimize losses by accurately forecasting customer demand, identifying trends and patterns in customer demand, and analyzing the impact of external factors on customer demand (Bansal & Chaturvedi, 2021). Additionally, the model can be used to identify the most effective ways to advertise products and services, enabling businesses to create more effective advertising campaigns.

In order to maximize the effectiveness of the linear regression model, businesses should ensure that they have access to accurate data. Inaccurate data can lead to inaccurate predictions and can ultimately lead to costly mistakes. Businesses should also ensure that the data they are using is up to date (Bansal & Chaturvedi, 2021). This will help ensure that the model’s predictions are accurate and relevant. Businesses should also ensure they have the right personnel to interpret the data. Having personnel with the right skills to interpret the data can be invaluable. They can help identify trends and patterns in customer demand and help businesses adjust their product offerings and marketing strategies accordingly (Bansal & Chaturvedi, 2021). Finally, businesses should ensure that they are monitoring the data regularly. By regularly monitoring the data, businesses can ensure that their forecasts and predictions remain accurate.

Using this information, the company can estimate that they will need to prepare approximately 24 espresso beverages per hour, or 144 espresso beverages per day, to meet the predicted demand. This also translates to an estimated 216 pounds of espresso beans per day. These estimates can be further refined as the company collects more data on their demand. The linear regression model also showed that advertising dollars moderate the demand for espresso beans (Hoffmann, 2021). This suggests that while advertising does have an impact, other factors may be at play, such as customer preferences and seasonality.

One of the other factors that can play a role in the demand for espresso beans is customer preferences. For example, customers may prefer a specific coffee bean or a particular coffee blend. In order to account for these preferences, the company should conduct customer surveys and focus groups on understanding their customers’ specific preferences (Bansal & Chaturvedi, 2021). The company can adjust its purchasing and production plans accordingly with this information. Furthermore, seasonality can also play a significant role in the demand for espresso beans. During the summer months, customers may be more likely to order cold beverages, such as iced coffee or frappuccinos, while during the winter months, customers may be more likely to order hot beverages, such as lattes or cappuccinos. As a result, the company should adjust its purchasing and production plans to reflect these trends to ensure that they meet customer demands.

In addition to customer preferences and seasonality, the company should consider other external factors influencing the demand for espresso beans. For example, the company should monitor changes in their local market, such as the opening of new coffee shops, or changes in the economy, such as an increase in the cost of coffee beans (Bansal & Chaturvedi, 2021). These external factors can significantly impact the demand for espresso beans, and the company needs to be aware of these changes to ensure they meet customer demands.

Finally, the company should also consider the impact of its marketing and advertising efforts on demand for espresso beans. The company should review its current marketing and advertising campaigns and make adjustments to maximize its impact on the demand for espresso beans (Bansal & Chaturvedi, 2021). Additionally, the company should consider launching new campaigns and promotions to increase the demand for espresso beans. For example, the company could offer discounts on certain types of espresso beans or offer customers free samples of different types of espresso beans in order to encourage customers to try new types of espresso drinks. Overall, it is essential for the company to consider customer preferences, seasonality, external factors, and its marketing and advertising efforts when estimating the demand for espresso beans. By monitoring these factors and making appropriate adjustments, the company can ensure that they meet customer demands and maximize the demand for espresso beans.

In addition to these factors, the company can also look to other data sources to help them better understand and estimate the demand for espresso beans. For example, the company can collect data from its competitors and analyze its pricing and promotional strategies to gain insight into how its strategies can be improved (Bansal & Chaturvedi, 2021). Additionally, the company can also use data from other industries, such as the hospitality industry, to better understand how customer preferences are changing and how the demand for espresso beans is shifting.

Another way in which the company can look to understand better and estimate the demand for espresso beans is by leveraging data from social media and online reviews. This can give the company insight into what customers are saying about their espresso beans, as well as what types of espresso drinks are trending and popular. By understanding what customers say, the company can adjust its strategies accordingly to meet customer demands (Bansal & Chaturvedi, 2021).

Finally, the company can also use customer data to understand better and estimate the demand for espresso beans. By collecting data from customer surveys and focus groups, the company can better understand customer preferences and the types of espresso drinks in demand. Additionally, the company can use data from loyalty programs and customer loyalty data to understand better the types of espresso drinks that customers purchase and track changes in customer preferences over time.

Considering all these different data sources, the company can better estimate the demand for espresso beans and ensure they meet customer demands. By leveraging data from customers, competitors, and other industries, the company can gain insight into what customers are looking for and make necessary adjustments to their purchasing and production plans to ensure that they meet customer demands (Bansal & Chaturvedi, 2021). Additionally, by looking at data from social media and online reviews, the company can gain insight into what types of espresso drinks are trending and popular and make necessary adjustments to their marketing and advertising strategies to ensure that their efforts are driving demand for espresso beans.

Inventory Management Analysis

When discussing inventory management, it is crucial to consider the impact of inventory planning. Inventory planning is determining the optimal amount of inventory to order and the optimal time to order it. For Wild Dog Coffee Company, inventory planning is essential to ensure that they are ordering enough to meet customer demand while minimizing inventory costs.

Inventory planning requires Wild Dog Coffee Company to have a good understanding of its sales and demand patterns. By analyzing customer demand, Wild Dog Coffee Company can determine the optimal order quantity and time to order inventory. Wild Dog Coffee Company can also use inventory planning to anticipate customer demand and adjust its inventory levels accordingly. This helps Wild Dog Coffee Company minimize the excess inventory they have in stock and reduce their inventory costs. Inventory planning can also help Wild Dog Coffee Company determine the optimal time to order inventory (de Freitas et al., 2019). For example, if Wild Dog Coffee Company knows that customer demand is higher during the holiday season, they can plan to order additional inventory at that time. This helps Wild Dog Coffee Company ensure they have enough stock to meet customer demand and avoid stock-outs. Additionally, inventory planning can help Wild Dog Coffee Company minimize the amount of inventory they have in stock at any given time, which reduces the cost associated with holding inventory.

Inventory planning can also be used to minimize the cost of capital. By ordering inventory most cost-effectively, Wild Dog Coffee Company can reduce the amount of money they have to borrow to cover the cost of inventory. Additionally, inventory planning can help Wild Dog Coffee Company reduce the amount of taxes and insurance they must pay on their inventory (de Freitas et al., 2019). Wild Dog Coffee Company can save money and maximize its profits by reducing its inventory costs. Inventory planning is an essential part of managing inventory for Wild Dog Coffee Company. By understanding its sales and demand patterns and ordering inventory most cost-effectively, Wild Dog Coffee Company can reduce its inventory costs and maximize its profits (de Freitas et al., 2019).

Additionally, inventory planning can help Wild Dog Coffee Company anticipate customer demand and adjust its inventory levels accordingly. This helps Wild Dog Coffee Company avoid stock-outs and minimize the excess inventory they have in stock. Ultimately, inventory planning is an essential tool for managing inventory for Wild Dog Coffee Company.

Inventory forecasting is another vital tool that Wild Dog Coffee Company can use to manage inventory effectively. Inventory forecasting uses historical data and current trends to predict future customer demand (Song et al., 2021). This helps Wild Dog Coffee Company anticipate customer demand and adjust its inventory levels accordingly. Additionally, inventory forecasting can help Wild Dog Coffee Company reduce the risk of stock-outs and minimize the excess inventory they have in stock. Inventory forecasting can also help Wild Dog Coffee Company reduce the cost associated with ordering and holding inventory. Wild Dog Coffee Company can order inventory at the optimal time and quantity by forecasting customer demand. This helps Wild Dog Coffee Company reduce its ordering costs and minimize their stock inventory. Additionally, inventory forecasting can help Wild Dog Coffee Company reduce the cost associated with taxes and insurance (Song et al., 2021). By reducing the amount of inventory they have in stock, Wild Dog Coffee Company can reduce its insurance costs and minimize its tax burden.

Inventory forecasting is an essential tool for managing inventory for Wild Dog Coffee Company. By forecasting customer demand and ordering inventory at the optimal time and quantity, Wild Dog Coffee Company can reduce its inventory costs and maximize its profits (de Freitas et al., 2019). Additionally, inventory forecasting can help Wild Dog Coffee Company reduce the risk of stock-outs and minimize the excess inventory they have in stock. Ultimately, inventory forecasting is an essential tool for managing inventory for Wild Dog Coffee Company.

Inventory management is a complex process that requires Wild Dog Coffee Company to consider many different factors. Wild Dog Coffee Company must consider the pressure of small inventories, the need to cover the cost of capital and minimize expenditures for taxes, insurance, and shrinkage, and the fact that espresso beans only maintain their optimal freshness for two weeks. In order to manage inventory effectively, Wild Dog Coffee Company should consider both the Economic Order Quantity (EOQ) model and the Just-in-Time (JIT) model (Wang & Ye, 2018). Wild Dog Coffee Company should also utilize inventory planning and forecasting to reduce its inventory costs and maximize profits. By considering all these factors, Wild Dog Coffee Company can effectively manage its inventory and ensure they meet customer demand.

Two different approaches to inventory management were analyzed: the EOQ model and the JIT model (Wang & Ye, 2018). The EOQ model is an inventory management system that attempts to find the optimal order quantity to minimize the total cost of ordering and holding inventory. This model considers ordering costs, holding costs, and the cost of the product when determining the optimal order quantity (Wang & Ye, 2018). The EOQ model is best suited for businesses with high ordering costs, as it minimizes the cost of ordering and holding inventory (Wang & Ye, 2018). The JIT inventory system is an inventory management system that attempts to minimize the inventory held in the warehouse by ordering exactly what is needed for production. This system minimizes the cost of holding inventory but increases the cost of ordering inventory. The JIT system is best suited for businesses with low ordering costs, as it minimizes holding inventory costs (Wang & Ye, 2018).

The pros and cons of the EOQ and JIT models are as follows:

Pros of the EOQ Model:

1. Minimizes cost of ordering and carrying inventory
2. Optimizes order quantity and order cycle time

Cons of the EOQ Model:

1. It does not take into account changes in demand or supply
2. It does not account for lead times

Pros of the JIT Model:

1. Reduces inventory costs and eliminates waste
2. Orders the exact amount of inventory needed

Cons of the JIT Model:

1. Requires a great deal of coordination between suppliers and buyers
2. Not suitable for businesses with high demand variability

One of the main advantages of the EOQ model is that it is straightforward to implement and is well-suited to businesses that have a steady demand. Furthermore, it can help reduce overall inventory costs by optimizing order quantity and cycle time (Wang & Ye, 2018). However, one of the main drawbacks of this model is that it does not consider changes in demand or supply. This means it may not be suitable for businesses with fluctuating demand or supply. Additionally, it needs to account for lead times, which can be an essential factor in inventory management.

The main advantage of the JIT model is that it can reduce inventory costs and eliminate waste by ensuring that only the exact amount needed is ordered. Additionally, it can help to reduce lead times and improve customer satisfaction. One of the main drawbacks of this model is that it requires a great deal of coordination between suppliers and buyers. This means it may not be suitable for businesses with high demand variability. Additionally, this model requires a certain level of sophistication from buyers and suppliers. This means that it is only suitable for some businesses.

The EOQ and JIT models can be effective for businesses, depending on their needs and circumstances. The EOQ model is well-suited for businesses with steady demand and can help minimize the cost of ordering and carrying inventory (Wang & Ye, 2018). On the other hand, the JIT model is better suited for businesses with variable demand and can help to reduce inventory costs and eliminate waste. Ultimately, it is up to businesses to decide which model is best for their particular situation.

In order to make an informed decision, businesses should consider the pros and cons of each model and carefully weigh their options. They should also consider the cost of implementation and the level of sophistication required for both models. Additionally, businesses should consider the lead times and demand variability when deciding which model is best for them. When implementing either model, businesses should also consider how to best coordinate with their suppliers and buyers. For the EOQ model, businesses should plan and order the optimal amount of inventory to meet their demand (Wang & Ye, 2018). For the JIT model, businesses should work closely with their suppliers and buyers to ensure that the proper inventory arrives at the right time.

Overall, the EOQ and JIT models are valuable tools for businesses to optimize their inventory management. By understanding the pros and cons of each model and carefully considering their options, businesses can decide which model is best for their particular situation (Wang & Ye, 2018). With the right strategy and coordination, businesses can maximize their inventory efficiency and reduce costs.

Scheduling Management

In order to optimize a staffing model, two different staffing scenarios were evaluated. The first scenario was a traditional staffing model with full-time and part-time employees. The second scenario was a flexible staffing model with full-time and part-time employees. The traditional staffing model consists of 1 full-time barista, three part-time baristas, one full-time non-barista, and two part-time non-baristas. This model results in a total weekly cost of $3,299.90 and a total of 84 hours worked per week. The flexible staffing model consists of 1 full-time barista, 1 part-time barista, 1 full-time non-barista, and 4 part-time non-baristas. This model results in a total weekly cost of $3,293.90 and a total of 84 hours worked per week.

The total cost of the flexible staffing model is slightly lower than the traditional model, and both models provide the same total number of hours worked per week. However, the flexible staffing model offers more flexibility in terms of scheduling, as the additional part-time non-baristas can be scheduled for shifts as needed.

The advantages of the flexible staffing model over the traditional model are numerous. By increasing the number of part-time employees, the business is able to better meet customer demand. This is because part-time employees can be scheduled to work shifts as needed, rather than having to adhere to a set schedule. This helps to ensure that the business is able to meet customer demand, while still maintaining a cost-effective staffing model. Additionally, the business is able to take advantage of the lower wages associated with part-time employees. This helps to ensure that labor costs remain low, while still providing adequate staffing levels.

Another advantage of the flexible staffing model is that it allows for a greater degree of flexibility when it comes to scheduling. For example, in a traditional staffing model, the business would be limited to having all of its employees work the same shifts at the same time. However, the flexible staffing model allows for shifts to be tailored to meet customer demand. This helps to ensure that the business is able to better meet customer demand without having to resort to additional labor costs. Finally, the flexible staffing model allows for greater flexibility when it comes to hiring and firing employees. In a traditional staffing model, the business would be limited to hiring full-time employees, and would be unable to easily adjust staffing levels to meet customer demand. However, with the flexible staffing model, the business is able to quickly hire and fire part-time employees as needed. This helps to ensure that the business is able to quickly adjust staffing levels to meet customer demand, while still keeping labor costs low.

Overall, the flexible staffing model offers numerous advantages over the traditional staffing model. By increasing the number of part-time employees, the business is able to better meet customer demand while keeping labor costs low. Additionally, the flexible staffing model allows for a greater degree of flexibility when it comes to scheduling, and it also allows for greater flexibility when it comes to hiring and firing employees. As such, it can be seen that the flexible staffing model is the more cost-effective and efficient option.

One of the most important aspects of the flexible staffing model is its ability to quickly adjust staffing levels to meet customer demand. This can be done in a variety of ways, including adding additional part-time employees to cover busier periods, or reducing staffing levels during slower periods. This helps to ensure that the business is able to meet customer demand while still keeping labor costs low. Additionally, the flexible staffing model also allows for greater flexibility when it comes to scheduling shifts. For example, the business can adjust shifts and hours as needed to better meet customer demand. This helps to ensure that the business is able to efficiently meet customer demand without having to resort to additional labor costs.

Furthermore, the flexible staffing model also allows for greater flexibility when it comes to hiring and firing employees. This helps to ensure that the business is able to quickly adjust staffing levels to meet customer demand, while still keeping labor costs low. Additionally, the flexible staffing model also allows for greater flexibility when it comes to training and development. For example, businesses can quickly move part-time employees into full-time positions as needed, or they can offer additional training and development opportunities to part-time employees. This helps to ensure that the business is able to quickly adjust staffing levels to meet customer demand, while still providing employees with the training and development opportunities they need.

Finally, the flexible staffing model also allows for greater flexibility when it comes to employee retention. By providing part-time employees with the opportunity to transition into full-time positions, and offering them additional training and development opportunities, the business is able to retain valuable employees. This helps to ensure that the business is able to maintain a stable and experienced workforce, while still keeping labor costs low.

One of the most important aspects of transitioning to a flexible staffing model is properly training and developing employees. This helps to ensure that employees are properly equipped to handle the demands of the job, and that they are able to quickly adjust to changing customer demands and staffing levels. Additionally, businesses should also consider implementing a rewards and recognition system for employees in order to encourage them to stay with the company and continue to perform at a high level. This helps to ensure that employees remain motivated and engaged, and that the business is able to maintain a loyal and productive workforce.

Furthermore, businesses should also consider implementing an employee feedback system in order to ensure that employees are properly trained and that their needs are being met. This helps to ensure that employees are able to quickly adjust to changing customer demands and staffing levels, and that their feedback is being taken into account. Additionally, businesses should also consider implementing a comprehensive onboarding process in order to properly train and equip new employees to handle the demands of the job. This helps to ensure that new employees are able to quickly adjust to the job and that they understand the expectations of the business.

Finally, businesses should also consider investing in the latest technology in order to streamline the flexible staffing model. This helps to ensure that the business is able to quickly adjust staffing levels to meet customer demand, and that the process is more efficient and cost-effective. Additionally, businesses should also consider implementing a time tracking system in order to ensure that employees are properly compensated for their time and that labor costs are kept low. This helps to ensure that the business is able to maintain a cost-effective staffing model, while still providing employees with the proper compensation for their time.

Recommendations

Based on the analysis presented, it is recommended that Wild Dog Coffee Company adopt a combination of the EOQ model and the JIT model for inventory management, and a flexible staffing model for scheduling. For inventory management, the EOQ model will help Wild Dog Coffee Company minimize the cost of ordering and carrying inventory, while the JIT model will help the company reduce inventory costs and eliminate waste. The combination of these two models will allow Wild Dog Coffee Company to balance the cost of inventory with the need for fresh coffee beans.

The flexible staffing model is recommended for scheduling, as it provides more flexibility in terms of scheduling, while still providing the same total number of hours worked per week as the traditional staffing model. Additionally, the flexible staffing model reduces the risk of overstaffing, which can lead to unnecessary costs. Based on the analysis of the data, it is recommended that Wild Dog Coffee Company implements the EOQ model for inventory management and the part-time staffing model for scheduling management. The EOQ model will help Wild Dog Coffee Company minimize the total cost of ordering and holding inventory. The part-time staffing model will help the company reduce labor costs and increase flexibility.

The following table shows the estimated staffing and inventory requirements for Wild Dog Coffee Company.

Conclusion

In conclusion, the demand management plan presented in this portfolio work project has outlined the necessary steps for Wild Dog Coffee Company to implement an effective demand management system. The recommended combination of the EOQ model, the JIT model, and a flexible staffing model will help Wild Dog Coffee Company manage their inventory and staff more efficiently, resulting in cost savings and improved customer satisfaction.

References

Bansal, M. P., & Chaturvedi, S. K. (2021). A Theoretical Review To The Concept Of Advertising In Present Scenario. Elementary Education Online, 20(1), 4019-4019. http://dx.doi.org/10.17051/ilkonline.2021.01.443

de Freitas, M. R., Pimenta, M. L., Hilletofth, P., Jugend, D., & Oprime, P. C. (2019). Demand management: the role of cross-functional integration in a context of political turbulence. Asia Pacific Journal of Marketing and Logistics. https://doi.org/10.1108/APJML-11-2018-0473

Hoffmann, J. P. (2021). Linear regression models: Applications in r. Chapman and Hall/CRC. https://doi.org/10.1201/9781003162230

Song, J. S. J., Song, Z. X., & Shen, X. (2021). Demand management and inventory control for substitutable products. Available at SSRN 3866775. https://dx.doi.org/10.2139/ssrn.3866775

Wang, S., & Ye, B. (2018). A comparison between just-in-time and economic order quantity models with carbon emissions. Journal of Cleaner Production, 187, 662-671. https://doi.org/10.1016/j.jclepro.2018.03.218