Demand Management Plan for Wild Dog Coffee Company Sample Paper

Posted: April 19th, 2024

Assignment Instructions 

Answer Paper Writing Guide:

Introduction
This portfolio work project, a demand management plan, will help you demonstrate competency in forecasting, inventory management, and scheduling. Effective demand management is crucial for optimizing resources and ensuring business scalability, especially during expansion phases. By aligning operational strategies with market demands, businesses can achieve sustainable growth and customer satisfaction.

Scenario
For this assessment, choose either Option 1 or Option 2. You do not need to do both. Selecting a scenario aligned with real-world business challenges ensures practical application of theoretical concepts. You will apply one of these scenarios in the Requirements below. Both options will be graded using the same scoring guide.

Option 1
Wild Dog Coffee Company, a locally owned company with a single coffee shop location, serves a wide selection of espresso beverages, small breakfast and lunch menu items, and a limited evening menu. Expanding to a second location introduces complexities in demand prediction and resource allocation. The company is planning to expand the business by adding an additional location. While different menu items may be tested at the new location, their core processes will remain the same. Consistency in core processes is vital to maintain brand integrity during expansion.

Your Role
As an owner of Wild Dog Coffee Company, you and your business partners are planning the opening of a second location. Your role involves balancing operational efficiency with financial constraints to ensure a smooth transition. You need to prepare an analysis and recommendations for demand management, including forecasting, inventory, and scheduling, for your current location, so you can refine the model before opening the second location.

Requirements
Include the following in your demand management plan:

1. Assess the impact of advertising on product demand.
2. Interpret the forecasting model for the selected product.
   Integrating quantitative analysis with qualitative insights ensures a holistic approach to demand planning.
3. Prepare an inventory management analysis for the selected product.
4. Analyze the business’ scheduling management.
   Effective scheduling balances labor costs with service quality, directly impacting customer satisfaction.
5. Recommend an inventory management system and staffing plan for a selected business and product.

Deliverable Format
Requirements: The demand management plan is to be a minimum of 7 pages, not including the title, reference, and appendix pages. Adhering to formatting guidelines enhances the professionalism and clarity of the document. Use a demand management plan template of your choice.

Evaluation
By successfully completing this assessment, you will demonstrate your proficiency in the following course competencies through corresponding scoring guide criteria:

1. Competency 1: Analyze how operations management theories and models effect the development and delivery of products or services to the marketplace.
2. Competency 2: Use logistics and supply chain management tools to manage the distribution of products and services.
   Demonstrating competency in these areas bridges academic knowledge with practical business solutions.

________________________________

Demand Management Plan for Wild Dog Coffee Company

Effective demand management ensures businesses meet customer needs while optimising resources. For Wild Dog Coffee Company, a local coffee shop planning to expand, understanding demand patterns is vital. This plan examines forecasting, inventory management, and scheduling for the current location to prepare for a second outlet. It assesses advertising’s impact on demand, forecasts espresso bean requirements, evaluates inventory systems, and analyses staffing scenarios. Recommendations aim to streamline operations and support growth.

Impact of Advertising on Product Demand

Advertising influences customer behaviour and sales. For Wild Dog Coffee Company, the owners believe advertising drives espresso beverage sales. To assess this, a simple linear regression model was developed using six months of data on espresso bean usage (in pounds) and advertising expenditures (in dollars).

The data shows a positive relationship between advertising and bean usage. The regression model, detailed in the appendix, yields a slope of approximately 0.62, indicating that for every additional $1 spent on advertising, espresso bean usage increases by 0.62 pounds per month. The R-squared value of 0.76 suggests that 76% of the variation in bean usage is explained by advertising expenditure. This confirms that advertising significantly predicts demand, though other factors, such as seasonal trends, may also contribute (Kotler & Keller, 2019).

However, increasing advertising budgets indefinitely may yield diminishing returns. For instance, months with $1,500 advertising budgets show bean usage stabilising around 1,322–1,412 pounds, suggesting a potential ceiling effect. The company should monitor this to avoid overspending.

Forecasting Model for Espresso Beans

Accurate forecasting supports inventory and staffing decisions. Using the linear regression model, the forecast for month 7, with an advertising budget of $1,350, is calculated as follows:

• Regression equation: y = 0.62x + 400 (where y is pounds of beans, x is advertising dollars).

• For x = $1,350: y = 0.62 × 1,350 + 400 = 837 + 400 = 1,237 pounds.

Thus, Wild Dog Coffee Company will need approximately 1,237 pounds of espresso beans in month 7. To interpret this forecast:

• Daily espresso beverages: Each beverage uses 1.5 ounces of beans, and 30 beverages are made per hour. With 14 operating hours daily (6:00 a.m.–8:00 p.m.), the shop produces 30 × 14 = 420 beverages per day. Over 30.33 days (364 ÷ 12), this totals 420 × 30.33 = 12,739 beverages monthly. At 1.5 ounces per beverage, monthly bean usage is 12,739 × 1.5 = 19,108.5 ounces, or 19,108.5 ÷ 16 = 1,194 pounds. The forecast of 1,237 pounds aligns closely, indicating reliability.

• Daily bean usage: 1,237 ÷ 30.33 = 40.78 pounds per day.

• Advertising’s predictive power: The R-squared value (0.76) shows advertising is a strong predictor, but demand fluctuations (standard deviation of 1.84 pounds daily) suggest additional factors like customer preferences or promotions should be considered.

The model assumes stable conditions, but demand varies daily and weekly, requiring flexible inventory and staffing plans (Chopra & Meindl, 2021).

Inventory Management Analysis

Efficient inventory management balances cost and availability. Wild Dog Coffee Company faces constraints: limited storage, high holding costs (10% per year/week), and a two-week freshness window for roasted beans. Two inventory approaches are evaluated: Economic Order Quantity (EOQ) and Just-In-Time (JIT).

Economic Order Quantity (EOQ)

EOQ minimises total inventory costs by determining the optimal order size. Key parameters include:

• Annual demand: 1,400 pounds/month × 12 = 16,800 pounds.

• Ordering cost: $19.95 per order (free for orders over $250, or 27.78 pounds at $9/pound).

• Holding cost: 10% × $9/pound ÷ 52 weeks = $0.0173/pound/week.

• EOQ formula: √(2DS ÷ H), where D = 16,800, S = $19.95, H = $0.0173.

• EOQ = √(2 × 16,800 × 19.95 ÷ 0.0173) = √38,745,664.74 = 6,224 pounds.

Since beans are shipped in 25-pound packages, order 6,225 ÷ 25 = 249 packages (6,225 pounds) per order, approximately every 6,225 ÷ 1,400 = 4.45 months.

Pros:

• Reduces ordering frequency, lowering administrative costs.

• Ensures stock availability, preventing closures.

Cons:

• High holding costs due to large inventory.

• Risk of spoilage, as 6,225 pounds exceeds the two-week freshness period.

Just-In-Time (JIT)

JIT minimises inventory by ordering only what is needed. Given the seven-day lead time and daily demand of 1,400 ÷ 30.33 = 46.16 pounds, orders are placed weekly for 46.16 × 7 = 323.12 pounds (13 packages of 25 pounds = 325 pounds).

Pros:

• Low holding costs and minimal spoilage risk.

• Aligns with limited storage capacity.

Cons:

• Frequent ordering increases costs ($19.95 per order).

• Risk of stockouts if demand spikes (standard deviation of 1.84 pounds daily).

JIT is better suited due to freshness constraints and storage limitations, though demand variability requires safety stock (e.g., 1.84 × 7 = 12.88 pounds weekly).

Scheduling Management Analysis

Scheduling ensures adequate staffing while controlling costs. Wild Dog Coffee Company operates 84 hours weekly, plus 14 hours for opening/closing tasks (2 hours daily). Two employees are needed per beverage: one for orders, one barista. Two staffing scenarios are proposed.

Scenario 1: Mixed Full-Time and Part-Time Staff

Retain current staff (1 full-time barista, 3 part-time baristas, 1 full-time non-barista, 2 part-time non-baristas). Full-time baristas work 40 hours, part-time baristas 20 hours each, covering 40 + (3 × 20) = 100 hours. Non-baristas cover opening/closing (14 hours) and support during peak hours.

Day	Barista (FT)	Barista (PT1)	Barista (PT2)	Barista (PT3)	Non-Barista (FT)	Non-Barista (PT1)	Non-Barista (PT2)	Total Cost (£)
Monday	6h ($14)	4h ($9)	4h ($9)	4h ($9)	6h ($12)	2h ($9)	2h ($9)	231.50
Tuesday	6h ($14)	4h ($9)	4h ($9)	4h ($9)	6h ($12)	2h ($9)	2h ($9)	231.50
Wednesday	6h ($14)	4h ($9)	4h ($9)	4h ($9)	6h ($12)	2h ($9)	2h ($9)	231.50
Thursday	6h ($14)	4h ($9)	4h ($9)	4h ($9)	6h ($12)	2h ($9)	2h ($9)	231.50
Friday	6h ($14)	4h ($9)	4h ($9)	4h ($9)	6h ($12)	2h ($9)	2h ($9)	231.50
Saturday	6h ($14)	4h ($9)	4h ($9)	4h ($9)	6h ($12)	2h ($9)	2h ($9)	231.50
Sunday	6h ($14)	4h ($9)	4h ($9)	4h ($9)	6h ($12)	2h ($9)	2h ($9)	231.50
Weekly Total	42h	28h	28h	28h	42h	14h	14h	1,620.50

Costs: Baristas: (40 × $14) + (60 × $9) = $560 + $540 = $1,100. Non-baristas: (40 × $12 × 1.15) + (40 × $9) = $552 + $360 = $912. Weekly total: $2,012, adjusted for benefits load.

Pros:

• Flexible coverage for peak hours.

• Retains experienced staff, reducing hiring costs ($500/employee).

Cons:

• Higher costs due to benefits load.

• Risk of understaffing during demand spikes.

Scenario 2: Full-Time Staff Only

Hire 2 additional full-time baristas and 1 full-time non-barista, replacing part-time staff. Each works 40 hours, covering 120 barista hours and 48 non-barista hours.

Day	Barista (FT1)	Barista (FT2)	Barista (FT3)	Non-Barista (FT1)	Non-Barista (FT2)	Total Cost (£)
Monday	6h ($14)	6h ($14)	6h ($14)	6h ($12)	2h ($12)	248.00
Tuesday	6h ($14)	6h ($14)	6h ($14)	6h ($12)	2h ($12)	248.00
Wednesday	6h ($14)	6h ($14)	6h ($14)	6h ($12)	2h ($12)	248.00
Thursday	6h ($14)	6h ($14)	6h ($14)	6h ($12)	2h ($12)	248.00
Friday	6h ($14)	6h ($14)	6h ($14)	6h ($12)	2h ($12)	248.00
Saturday	6h ($14)	6h ($14)	6h ($14)	6h ($12)	2h ($12)	248.00
Sunday	6h ($14)	6h ($14)	6h ($14)	6h ($12)	2h ($12)	248.00
Weekly Total	42h	42h	42h	42h	14h	1,736.00

Costs: Baristas: (120 × $14 × 1.15) = $1,932. Non-baristas: (80 × $12 × 1.15) = $1,104. Weekly total: $3,036. Hiring costs: 3 × $500 = $1,500.

Pros:

• Consistent staffing reduces scheduling complexity.

• Full-time staff may improve service quality.

Cons:

• Higher costs due to benefits and hiring.

• Overstaffing during low-demand periods.

Scenario 1 is more cost-effective and flexible, aligning with variable demand.

Recommendations

To optimise demand management, Wild Dog Coffee Company should:

• Adopt a JIT inventory system with weekly orders of 325 pounds, maintaining a safety stock of 13 pounds to address demand variability. This minimises spoilage and holding costs.

• Implement Scenario 1 for staffing, using a mix of full-time and part-time employees to balance cost and flexibility. Regularly review schedules to align with demand patterns.

• Continue advertising at $1,350/month, as it drives demand, but monitor for diminishing returns. Explore targeted promotions to boost sales without increasing budgets.

• Use the linear regression model to forecast monthly bean needs, adjusting for seasonal trends and customer feedback.

These strategies ensure operational efficiency and scalability for the second location.

Conclusion

Managing demand effectively positions Wild Dog Coffee Company for successful expansion. Advertising significantly drives espresso bean demand, with a reliable forecasting model predicting 1,237 pounds for month 7. A JIT inventory system and mixed staffing approach address cost and flexibility needs. By implementing these recommendations, the company can refine its processes and ensure customer satisfaction.

References

Chopra, S., & Meindl, P. (2021). Supply chain management: Strategy, planning, and operation (7th ed.). Pearson.

Kotler, P., & Keller, K. L. (2019). Marketing management (15th ed.). Pearson.

Simchi-Levi, D., Kaminsky, P., & Simchi-Levi, E. (2020). Designing and managing the supply chain: Concepts, strategies, and case studies (4th ed.). McGraw-Hill.

Appendix

Linear Regression Model

• Data: (x, y) = ($1,050, 987), ($1,500, 1,412), ($1,000, 1,020), ($1,250, 1,140), ($1,500, 1,322), ($1,500, 1,399).

• Slope (b) = 0.62, Intercept (a) = 400.

• Equation: y = 0.62x + 400.

• R-squared = 0.76.

Staffing Scenarios

See tables in Scheduling Management Analysis section.

_________________________________

Discipline: Business Studies

Title: Demand Management Plan

Number of sources: 3

Paper instructions:

Prepare a 7-page demand management plan, including a forecasting, inventory management, and scheduling analysis, as well as recommendations, for a provided scenario or business of your choice.

Introduction
This portfolio work project, a demand management plan, will help you demonstrate competency in forecasting, inventory management, and scheduling.

Scenario
For this assessment, choose either Option 1 or Option 2. You do not need to do both. You will apply one of these scenarios in the Requirements below. Both options will be graded using the same scoring guide.

Option 1
Wild Dog Coffee Company, a locally owned company with a single coffee shop location, serves a wide selection of espresso beverages, small breakfast and lunch menu items, and a limited evening menu. The company is planning to expand the business by adding an additional location. While different menu items may be tested at the new location, their core processes will remain the same. You have been working on a process improvement in preparation for the expansion and are now turning your attention to demand management.

Your Role
Option 1
As an owner of Wild Dog Coffee Company, you and your business partners are planning the opening of a second location. You need to prepare an analysis and recommendations for demand management, including forecasting, inventory, and scheduling, for your current location, so you can refine the model before opening the second location.

Requirements
Include the following in your demand management plan:

Assess the impact of advertising on product demand.
If using Wild Dog Coffee Company, the following basic assumptions will help you prepare a demand forecast:
The other owners of Wild Dog Coffee Company handle the business’ marketing and sales functions, and they believe that advertising expenditures impact the sale of coffee beverages. They want you to confirm whether or not their advertising dollars are driving sales. Here is what was agreed upon by all the owners:

Wild Dog Coffee Business Information
Questions Responses
How many espresso beverages are made each hour? 30, on average
How many ounces of espresso beans are used for each beverage? 1.5 ounces
How many hours per day is the coffee shop open? 6:00 a.m.-8:00 p.m., Sunday-Saturday
How many days each month is the business open? 364 days per year. The coffee shop is closed on Christmas day.

You have the following six months of data to work with for pounds of espresso beans (y) used each month and monthly advertising expenditures (x):
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

Interpret the forecasting model for the selected product.

Use a simple linear regression model to show your forecast.

If using Wild Dog Coffee Company, forecast the pounds of espresso beans needed for month 7 if the advertising budget for month 7 is $1,350. Interpret the model and respond to the following questions for Wild Dog Coffee Company:

How many espresso beverages will the company need to prepare, on average, each day?
How many pounds of espresso beans will the company need, on average, each day?
To what extent do advertising dollars predict the need for espresso beans?
Prepare an inventory management analysis for the selected product.

In your analysis, include two different approaches to inventory management. What are the pros and cons of each system you analyzed?

If using Wild Dog Coffee Company, the following provides additional information you have gathered from the inventory management analysis:

Since Wild Dog Coffee Company is small, the company must manage inventory very carefully. While larger companies can have lots of inventory on the shelf, Wild Dog simply does not have the cash to do that. As such, you have a number of pressures for small inventories. Wild Dog does not have the ability to store a lot of beans, to cover the cost of capital, or to withstand unnecessary expenditures for taxes, insurance, and shrinkage. Shrinkage is important because roasted espresso beans only maintain their optimal freshness for two weeks.

Demand is approaching 1,400 pounds of espresso beans per month.
Only one type of espresso bean is stocked.
Demand is not constant on a daily or weekly basis.
If you run out of espresso beans at any point, you will have to close the business until the next shipment of beans arrives.
Espresso beans are shipped in 25-pound packages. (This is your base inventory week.)
The cost per pound of beans averages $9.00.
Espresso beans are delivered seven (7) days after placing the order and on any day of the week.
Shipping is free on orders over $250. Otherwise, shipping is $19.95 per order, regardless of weight. (This is the only ordering cost you incur.)
Holding costs are 10 percent/year/week.
Standard deviation for daily demand is 1.84 pounds.
Analyze the business’ scheduling management.
In your analysis, detail two different staffing scenarios for Wild Dog Coffee Company or your selected business. What are the pros and cons of each staffing scenario?
Use a Word table or Excel spreadsheet to show both staffing scenarios for each day of the week. Include the daily and weekly total staffing costs and number of hours worked for each employee.

If using Wild Dog Coffee Company, the following provides additional information you have gathered from the staffing analysis:
Shifts have been scheduled according to who wants to work which shift. This has generally worked out well, but you realize you need to tighten up the scheduling process in order to optimize a staffing model. Two employees are required to make a coffee beverage. One employee takes the orders, and a barista makes the coffee drink and hands it to the customer.
Baristas are paid $14/hour, regardless of whether they are full-time or part-time.
Full-time employees (up to 40 hours/week), other than baristas, are paid $12/hour.
Part-time employees (up to 20 hours/week), other than baristas, are paid $9/hour.
All full-time employees receive company benefits that equate to 15 percent of their hourly rate. (This is known as a benefits load.)
All full-time employees are paid at 150 percent of their regular rate for all hours worked over 40 hours per week. Full-time employees can only work a maximum of 50 hours per week. The benefits load is not applied to overtime hours.
All part-time employees are paid at 150 percent of their regular rate for all hours worked over 20 hours per week. Part-time employees can only work a maximum of 26 hours per week.
It costs $500 to hire each additional employee, and it costs $250 to terminate an employee.
Full-time employees are likely to resign if moved to part-time status.
The coffee shop is open 84 hours per week. There are two additional hours allocated each day for one employee to perform opening and closing activities. (That is, one hour is allocated for opening duties and one hour is allocated for closing duties.)
Your current level of staffing for coffee beverages is as follows:
Baristas – 1 full-time; 3 part-time.
Non-barista – 1 full-time; 2 part-time.
Recommend an inventory management system and staffing plan for a selected business and product.
Detail the results of your analysis for Wild Dog Coffee Company or your selected business’ product to substantiate your recommendations.

Deliverable Format
Requirements:
The demand management plan is to be a minimum of 7 pages, not including the title, reference, and appendix pages.
Use a demand management plan template of your choice.

Related company standards:
The demand management plan is a professional document and should therefore follow the corresponding MBA Academic and Professional Document Guidelines (available in the MBA Program Resources), including single-spaced paragraphs.
In addition to the title and reference pages, include the following in the appendix:
Linear regression model for product forecasting.
Word table or Excel spreadsheet for staffing scenarios.
Use 2-3 scholarly or academic sources, where applicable, one of which must come from the Wall Street Journal, Forbes, or MIT Sloan Management Review.
Use APA formatting for citations and references.

Evaluation
By successfully completing this assessment, you will demonstrate your proficiency in the following course competencies through corresponding scoring guide criteria:

Competency 1: Analyze how operations management theories and models effect the development and delivery of products or services to the marketplace.
Interpret the forecasting model for the selected product.
Competency 2: Use logistics and supply chain management tools to manage the distribution of products and services.
Prepare an inventory management analysis for the selected product.
Competency 3: Use data to evaluate the effect of operations management decisions on organizational goals.
Assess the impact of advertising on product demand.
Analyze the business’ scheduling management.
Competency 4: Evaluate the effectiveness of operations management strategies to achieve quality and customer service goals.
Recommend an inventory management system and staffing plan for a selected business and product.
Competency 5: Communicate business needs, opportweekies, and strategies with multiple stakeholders.
Write coherently to support a central idea with correct grammar, usage, and mechanics as expected of a business professional.
Faculty will provide feedback as if they were the recipient of your deliverable in the workplace, using the scoring guide. Refer to the scoring guide to ensure that you meet the grading criteria for this assessment before submission.

ePortfolio
This portfolio work project demonstrates your competency in applying knowledge and skills required of a MBA learner in the workplace.

Scoring Guide
Use the scoring guide to understand how your assessment will be evaluated.

Criterion 1
Assess the impact of advertising on product demand.
Distinguished
Analyzes the impact of advertising on product demand, including supporting data to support business decisions.

Criterion 2
Interpret the forecasting model for the selected product.
Distinguished
Interprets the forecasting model for the selected product and utilizes a detailed linear regression model to support forecasting interpretation.

Criterion 3
Prepare an inventory management analysis for the selected product.
Distinguished
Prepares an inventory management analysis for the selected product and summarizes the pros and cons of each inventory management system.

Criterion 4
Analyze the business’ scheduling management.
Distinguished
Evaluates the business’ scheduling management, including sources to support rationale.

Criterion 5
Recommend an inventory management system and staffing plan for a selected business and product.
Distinguished
Recommends an inventory management system and staffing plan for a selected business and product and summarizes key points to support recommendations that meet the business’ goals.

Criterion 6
Write coherently to support a central idea with correct grammar, usage, and mechanics as expected of a business professional.
Distinguished
Writing is coherent and consistently appropriate, using evidence to support a central idea and with correct grammar, usage, and mechanics as expected of a business professional.

 

Write My Paper