Assignment 2 Demand M MBA5016 Demand Management Plan: Wild Dog Coffee Company Capella University MBA5016: Operations Mgmt for Leaders Executive Summary 3 Impact of Advertising 3 Forecasting Model 3 Inventory Management 5 Continuous Review (Q) System 5 Periodic Review System 6 Wor...
assignment 2 demand managmentdocx mba5016 demand management plan wild dog coffee company capella university mba5016 operations mgmt for leaders executive summary 3 impact of advertising 3
MBA5016
Demand Management Plan: Wild Dog Coffee Company
Capella University
MBA5016: Operations Mgmt for Leaders
Executive Summary 3
Impact of Advertising 3
Forecasting Model 3
Inventory Management 5
Continuous Review (Q) System 5
Periodic Review System 6
Workforce Scheduling 7
Recommendations 9
References 10
Executive Summary:
Wild Dog Coffee Company is a locally owned coffee shop that serves espressos, small breakfast and lunch items along with a limited evening menu. Currently, the company is planning to expand business by opening a new location that will offer different menu options but keeping their core processes the same. To properly plan for demand, an analysis must be completed. This analysis includes forecasting, inventory analysis and scheduling analysis of the current Wild Dog location. The recommendations from the analysis will be used to refine the current model before the opening of the second location. Demand sensing and shaping capabilities not only provide
the ability to predict demand more accurately, but also can uncover deep insights into customer/consumer behavior by identifying those key performance indicators that influence consumer demand and replenishment policies (Chase, 2016).
Impact of advertising on product demand:
Advertising builds awareness about any product or service and enables consumers to make an informed decision before making a purchase. Successful advertisements that are creative and innovative have shown that they are a great influence on the minds of consumers in purchasing a product of service. There are many types of advertisements to utilize including promotions, appointments and reservations. Promotional offerings include using promotional pricing like buy one get one half off, coupons, limited time offers and flash sales. Appointments allow for service providers to schedule customers for specific times to be serviced such as doctor offices and repair shops. Reservations although quite like appointments, are used when
customers occupy or use facilities such as hotels and concert seats (Krajewski et al., 2019). For Wild Dog, the company should use promotional advertising, offering seasonal deals and coffee specials using specific flavors for winter compared to summer. This will not only drive sales, but will also help the company remain competitive with companies like Starbucks and PJ’s coffee. Traditional appointments and reservations will not meet the need, however, implementing a mobile app and mobile ordering system will increase consumer attraction and meet the need for those who don’t have the time to wait in long lines for coffee.
Forecasting Model
To assess if the current advertising tactic deployed by Wild Dog is driving sales, forecasting techniques must be used. For the business to thrive it will need to identify customer demands, determine if there is a pattern and trends. The historical data provided will be used to forecast demand trends and provide insight to any seasonal changes. This will allow the company to prepare for future consumer demands and inventory. Table 1 shows the espresso bean use and advertising for the past six months at Wild Dog and will be used to forecast the pounds of espresso beans needed for month seven with an advertising budget of $1,350.
Table 1: Espresso Bean Use and Advertising
Below is an illustration of the simple linear regression model for Wild Dog advertising and coffee beans over the past six months. This model is used to forecast the seventh month amount of beans
needed with an advertising budget of $1,350. The formula used to calculate this regression method is y=
0.7885x + 188.22 which when the advertising budget is factored in equals 1,252.69 round to 1,253 lbs. of beans needed for month seven.
Figure 1: Wild Dog Advertising and Coffee Bean Regression Model
Based on the 1,253 lbs. that is needed for month seven and 1.5 oz. is needed per each espresso, the company will need to make roughly 445 espressos’ during the seventh month. This is the result of converting pounds to ounces and then dividing by 30 days to determine how many ounces per day will be needed based on the number of ounces needed espresso. This also means that Wild Dog Coffee will need to make on an average 31 espressos per hour during their
business hours. In addition, the coefficient of determination measurement will help understand how much variability of one variable is caused by the relationship to another, which is referred to as the R2 value (Krajewski et al., 2019). This measurement has been calculated at 0.9514 which means that 95% of the coffee beans per month is predictable from the advertising dollars. Consequently, the advertising dollars do help predict the need for espresso beans. However, there are other factors that impact the demand that should also be evaluated. For example, changing seasons may cause consumer demands to
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