MBA FPX 5016 Assessment 2 Demand Management Plan

• MBA FPX 5016 Assessment 2

Demand Plan for Wild Dog Coffee Company

Introduction

Wild Dog Coffee Company is a small, locally owned coffee shop that offers a variety of espresso beverages, breakfast, lunch, and a limited evening menu. With plans to expand to a second location, the company aims to test new menu items while maintaining consistency in espresso beverage preparation.

In a previous phase, Wild Dog Coffee assessed and streamlined the espresso production process to reduce preparation time, enhance customer satisfaction, and ensure consistency across locations. This second phase focuses on developing a demand management plan to forecast espresso inventory needs, identify the best inventory control methods, and analyze staffing requirements. This MBA FPX 5016 Assessment 2 explores strategies to streamline inventory control and workforce scheduling for operational success.

The Impact of Advertising on Product Demand

Understanding Demand and Supply

Demand refers to a customer’s willingness to purchase a product or service at a specific price and is closely linked to supply. Companies must accurately forecast demand to balance supply with customer needs and maintain profitability.

Role of Advertising

Advertising is crucial for building brand awareness and increasing demand. For Wild Dog Coffee, targeted advertising campaigns will inform potential customers about the new location, seasonal beverages, and special offers. Social media platforms such as Facebook, Instagram, and Twitter are cost-effective tools for engaging customers and promoting the grand opening.

In addition to digital campaigns, in-store signage and partnerships with local businesses can amplify the marketing effort. For instance, offering free espresso samples at nearby stores or collaborating with a local pottery shop to showcase handmade mugs in-store can create cross-promotional opportunities. These advertising strategies will directly impact product demand and support Wild Dog Coffee’s expansion, a key aspect of the MBA FPX 5016 Assessment 2.

Forecast Model Interpretation

Forecasting Demand

Demand forecasting is essential for maintaining appropriate inventory levels and is often based on historical data. For Wild Dog Coffee, advertising expenditures play a significant role in determining monthly espresso usage. A regression analysis trend projection predicts the required inventory based on past advertising and sales data.

Using historical data, a linear regression model was developed:

y = 0.79x + 188.22 with an R² value of 0.95.

Key Findings:

• With an advertising budget of $1,350, Wild Dog Coffee will use 1,253 pounds of espresso beans in Month 7.
• This translates to preparing 446 espresso beverages daily, requiring an average of 32 per hour.
• The R² value of 0.95 indicates that 95% of the variance in demand can be attributed to advertising expenditures.

While advertising significantly impacts demand, other factors such as seasonal trends, economic conditions, and competitor activity must also be considered.

Inventory Management Analysis

Managing Inventory

Inventory management determines optimal inventory levels, replenishment frequency, and quantities. For Wild Dog Coffee, managing espresso bean inventory is critical due to potential holding costs and limited storage space. Recent supply chain challenges, such as poor harvests in Brazil, have highlighted the need for effective inventory strategies.

Continuous Review System

The continuous review system monitors inventory in real time, triggering reorders when the stock reaches a predefined level. A point-of-sale (POS) system can automate this process, enabling seamless inventory tracking between locations. While effective, this system requires a significant investment, with costs ranging from $2,000 to $3,000 and monthly fees of $100 to $250.

Periodic Review System

In contrast, the periodic review system relies on physical inventory counts conducted at set intervals. While this approach is less expensive, it is more labour-intensive and prone to errors. Given the anticipated growth, the continuous review system is recommended for Wild Dog Coffee if budget constraints allow.

Ordering Specifications

Key details for inventory management include:

• Monthly Demand: 1,400 pounds.
• Cost per Pound: $9.00.
• Packaging: 25-pound units.
• Delivery Time: 7 days.
• Shipping Costs: Free for orders over $250; $19.95 for smaller orders.
• Holding Costs: 10% per unit annually.

These factors will guide ordering decisions to ensure sufficient inventory without overextending cash flow.

Scheduling Analysis

Staffing Requirements

A staffing analysis ensures that employee schedules align with customer demand. Based on the Month 7 forecast, Wild Dog Coffee will need:

• At least two full-time staff members at the new location.
• Additional part-time workers during peak hours (6:00–9:00 am and 3:00–6:00 pm).

Break schedules must comply with labour laws while maintaining productivity. Cross-training employees for roles like cashiering, beverage preparation, and cleaning can reduce staffing needs and labour costs, aligning with the efficiency goals of MBA FPX 5016 Assessment 2.

Conclusion

The MBA FPX 5016 Assessment 2 Demand Management Plan highlights the importance of accurate forecasting, efficient inventory management, and strategic staffing for Wild Dog Coffee’s successful expansion. By implementing a continuous review inventory system and optimizing workforce scheduling, the company can meet increased demand while minimizing costs.

With these measures in place, Wild Dog Coffee is well-positioned to deliver high-quality products and exceptional service at its new location, ensuring customer satisfaction and long-term growth.

Read more MBA FPX 5016 Assessment 1 Process Improvement Plan about for complete information about this class.

References

Ahmed, A. (2019). The importance of advertising in demand generation. Marketing Journal, 32(4), 27-36.

Boyarsky, S. (n.d.). Marketing strategies for coffee shops. Retrieved from [example URL].

Carlson, B. (2022). Choosing the best inventory system for small businesses. Small Business News, 18(2), 14-19.

How Much Does a POS System Cost? (n.d.). Retrieved from [example URL].

Khan, M. (2022, August 21). Coffee shortages loom as bad weather hits Brazilian crops. The Wall Street Journal.

Krajewski, L. J., Malhotra, M. K., & Ritzman, L. P. (2019). Operations management: Processes and supply chains (12th ed.). Pearson.