Wild Dog’s Demand Management Plan

Wild Dog Coffee Company has been operating in one location, serving its customers with coffee and other limited dishes. Recently, the owners have planned to expand the business and open new outlets. As one of the owners, I prepared a demand management document. This document will prepare the company on how it should forecast the demand and plan accordingly. It contains several sections; the impact of investing in advertisements on demand for coffee, an analysis of the available inventory management options, available workforce planning strategies, and a recommendation of the options that meet the company’s needs.

Impact of Advertising on Product Demand

Advertising is a crucial part of any business. When a company advertises a product, it makes the consumers familiar with it. Consumers tend to consume products they are familiar with. Advertisements also share the benefits the products offer and what makes the products better than those of competitors. In most cases, investing more money in advertising ensures that advertisements reach out to more people. However, that is not the case with the rise of digital marketing and social media campaigns. Digital marketing reaches out to more people than conventional marketing forms at a relatively lower price.

In the case of Wild Dog Coffee Company, spending more money on advertising the product has translated to an increase in demand. In every instance, the company has increased the number of dollars they spend on advertising coffee, and the demand for coffee has increased significantly. Similarly, the decrease in the dollars spent on advertising decreases the quantity of coffee demanded. This trend is indicated on the linear regression graph below.

Linear Regression Graph

Using the linear regression model data, if the company invests $1350 on advertisement in the seventh month, consumers will probably demand 1250 pounds of coffee. Therefore, the company should expect an average demand of 41.2 pounds of coffee daily. The forecast data for the 7^th month is indicated in the linear regression table below;

Linear regression table

Inventory Management Analysis

Inventory management is determining the appropriate quantity of stock a firm should have at a given time. The inventory directly affects customer satisfaction and the company’s capital appropriation (Fink, 2011). If a company stocks quantity lower than their demand, it risks having a shortage which agitates the customers and chases them away. On the other hand, having an inventory that is way higher than the demand, the company risks having its capital stuck, making it unable to pay other expenses. If the company deals with highly perishable goods, it also risks having the stock go bad if the demand is lower than the product’s shelf life. As a result, most companies, regardless of their size, use a strategy to manage their inventory. The strategy can be simple or complex, depending on the nature of the business.

Continuous Review Inventory Management

Continuous review inventory management is a form of management that involves a constant quantity order placement after a certain quantity is sold (Pontius, 2022). For every product sold, coffee, in this case, the item has to be keyed in the system. Once the quantity sold gets to a certain predetermined amount, the system automatically requests for the stock to be replaced. As a result, the quantity of the stock a company orders at a given time is always constant unless the company resets the system to have it requested after a certain interval. This inventory management system has several benefits and downsides.

For wild Dog Coffee Company to use this inventory management system, it must ensure it sets the order threshold at a quantity economically viable to transport. If the quantity is small, the cost of transportation will likely affect the company’s profitability. On the other hand, if the demanded quantity and the minimum threshold quantity do not cross, the company will likely experience shortages since the system will not issue an alert to request more stock.

Pros of the Continuous Review Inventory Management System

1. Since the system is automated, the update is real-time data. Therefore, there is no time lag.
2. This inventory management system makes keeping accounting records of the company’s transactions easy.
3. It makes work easier for companies that sell fast-moving goods like Wild Dog Coffee Company. If the system was manual, the company would need more time and human resources to use the strategy.

Cons of the Continuous Review Management System

1. The system highly relies on accuracy. If an omission occurs, the company risks having a stock shortage.
2. This automatic inventory management system is expensive to acquire.
3. This inventory management system requires highly skilled employees who can scan items quickly and without omissions.

Periodic Review Inventory System

This type of inventory management system uses time as a base factor in placing orders (Pontius, 2022). A company orders the stock after a given period. For instance, the company places an order of the stock after every week regardless of whether the stock has exhausted or not. This inventory management system is easy to execute compared to the continuous review management system. It is also cheap to execute, which makes it favorable for small businesses.

Pros of the Periodic Review Inventory Management System

1. This system is cheap and easy for a company to execute.
2. It allows enough time for the stock to be delivered.
3. It can be executed on both small and large businesses.

Cons of the Periodic Review Inventory Management System

1. This system is prone to human error since the stock take is done manually by the employees.
2. Since the stock take is done manually, this system is also time-consuming.
3. The errors are likely to spill over to the financial records.

Workforce Scheduling Management Analysis

In the hospitality industry, demands tend to be seasonal across the year. The flow of customers also varies during the day. Since Wild Dog Coffee Company focuses primarily on coffee products, the demand is likely to be high in the morning hours. People also tend to consume more coffee in cold seasons compared to hot seasons. Therefore, the variance in demand times and seasonal changes across the year calls for a proper workforce scheduling management analysis.

Failure to manage the workforce scheduling can easily lead to overworking the employees, which leads to poor quality services. On the other hand, the company might end up paying idle employees if they end up being on duty when the demand is low. The company also needs to create a schedule early enough to ensure employees have enough time to prepare and request adjustments if need be. Wild Dog Coffee Company can use either a rotating workforce schedule or a fixed workforce schedule.

Rotating Workforce Schedule

This schedule involves rotating staff in a predetermined schedule. For instance, some employees come to work on certain days and certain hours, whereas the rest come for the remaining shift (Shahriari et al., 2014). This schedule works efficiently in industries that have a high workload. This type of schedule ensures employees are well rested. Well-rested employees tend to perform better than burned-out employees. This workforce schedule has several benefits and downsides.

Pros of a rotating workforce schedule

1. This work schedule offers employees a learning opportunity. Since the tasks and the work environment is not constant, employees get exposed to new condition often. As a result, they become diverse. Diverse employees are an asset to a company since they can work under any conditions.
2. Rotating the workforce schedule gives employees enough time to rest. When the workload is high, employees are able to catch some days to rest and rejuvenate. Fresh employees are a necessity in the service industry since they are able to serve customers efficiently.

Cons

1. This schedule makes it hard for employees to plan their lives outside work. Since employees are not able to confidently predict when they will be free due to rotations being adjusted, they find it hard to plan social events.
2. If employees are paid on an hourly basis, there might be a fluctuation in their income. The rotation schedules are likely to change over time which makes employees unable to make a consistent income.
3. This schedule might lead to inconsistent services. If some employees are faster than others, the services might be inconsistent over time as employees get rotated.

Fixed Workforce Schedule

In a fixed work schedule, management assigns employees a fixed amount of hours and days which they will work. Most organizations use this workforce planning strategy since it is easy to plan and execute (Shahriari et al., 2014). This planning strategy also has its upsides and downsides.

Pros of a fixed workforce schedule

1. A fixed workforce schedule is easy to plan and execute compared to a rotating workforce schedule. The ease of planning saves the company time and resources.
2. Most employees prefer the fixed workforce schedule since it makes it easier for them to plan their lives outside work. They are able to identify when they will be free and when they will be busy hence planning accordingly.
3. This strategy creates consistency in service delivery. When the same employees give service at a given time, they are likely to be consistent and in sync with each other.
4. This schedule is cheap for the company to execute since the employees will work with fixed hours and minimal overpay.

Cons of a fixed workforce schedule

1. This strategy offers no room for employees to learn more and become diverse. The schedule exposes the employees to the same working hours and working environment most of the time.
2. There is no teamwork among the employees. Unlike the rotating workforce schedule, the fixed workforce schedule forces the employees to work with the same people over and over. If the employees were exposed to different employees of the company often, there would be collaborative teamwork across the company.
3. Employees are likely to get burned out when the demand is high. This work schedule does not offer the flexibility to work fewer hours when the workload is high. Consequently, the quality of service delivery might drop once the demand increases.

Recommendations

Our primary objective at Wild Dog Coffee Company is to offer high-quality services. However, we have a budget constraint that we have to work with. This budget constraint tasks us with the responsibility of working with options that offer the best outcome with the least amount of investment. After analyzing the available options, I conclude this demand management plan by offering the recommendations below.

After assessing the two possible inventory management approaches, I found the continuous review inventory to offer us the solution to our inventory management issues compared to the periodic review. The continuous inventory review ensures we have a fresh stock of coffee beans always to avoid shrinkage. However, continuous review inventory management might be expensive to install. On the other hand, the periodic system is cheap to install but expensive to run since it requires a lot of human resources to conduct a stock take. Therefore, in the long run, the continuous review ends up being cheaper and faster than the periodic review. As a result, the continuous review system offers the company cheap, fast and efficient inventory management.

When it comes to workforce planning, the company has to ensure it maintains high service delivery while watching its costs on labor and the welfare of the employees. The foxed workforce planning is the appropriate workforce planning strategy for Wild Dog Company. It offers the appropriate balance for the company’s needs and those of the employees. The employees prefer fixed workforce planning since it offers them the chance to plan their lives outside work. On the other hand, it also ensures the company does not spend a lot on human resources. Hiring an extra barista is cheaper than paying the existing ones over time. Overtime payments are expensive for the company and are not a guarantee of quality services since the employees might be exhausted when working overtime.

References

Fink, R. (2011, July 6). Ten ways to improve inventory management. The Wall Street Journal. Retrieved August 28, 2022, from https://www.wsj.com/articles/BL-CFOB-520

Pontius, N. (2022, February 16). 4 types of inventory control systems: Perpetual Vs. Periodic Inventory Control and the inventory management systems that support them. Camcode. Retrieved August 28, 2022, from https://www.camcode.com/blog/inventory-control-systems-types/#:~:text=Within%20those%20systems%2C%20two%20main,Periodic%20Inventory%20System

Shahriari, M., Shamali, M., & Yazdannik, A. (2014, July). The relationship between fixed and rotating shifts with job burnout in nurses working in Critical Care Areas. Iranian journal of nursing and midwifery research. Retrieved August 28, 2022, from https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4145489/#:~:text=A%20rotating%20shift%20consists%20of,shifts%20alone%20during%20a%20month.