Demand Forecasting Exercise For Summer Widgetssafety Stockworking St ✓ Solved

Demand Forecasting Exercise 
 for Summer Widgets Safety Stock Working Stock Average Demand Seasonal Demand EOQ and Demand Adjustments EOQ • Boxes are the economic order quantity for the item from suppliers • This ensures the most cost-efficient order for both price and delivery time • Blue line is steady-state seasonal demand • Red line indicates that a sale is planned just prior to peak season • Yellow line is the fallout from poor publicity about the health hazards of the product, which are later debunked MKT 230: Module Two: Creating Print Advertisements Assignment For this assignment, you will be creating print advertisements to promote any fashion retailer of your choice. These print advertisements should be your own creation and not copied from any existing advertisements.

You are required to create two print advertisements for the same retailer. However, the advertisements must be unique (you cannot use the same images, headline, or sub-headline for both advertisements). The following information should be included in each ad: • The brand/product name, slogan, headline, and body copy • Images of the products and supporting images • Images can be done on the computer, by hand, or a combination of the two • Something that will catch the attention of your target audience! This image provided below includes all the required components of a print advertisement. However, feel free to be creative with your layout.

Headline Sub-headline (optional) Body Copy: includes product selling points, slogan, and additional information that would help to sell the product. Represents an illustration Creating Print Advertisements Rubric Critical Elements Exemplary (100%) Proficient (85%) Needs Improvement (55%) Not Evident (0%) Value Main Elements Includes all of the main elements and requirements Includes most of the main elements and requirements Includes some of the main elements and requirements Does not include any of the main elements and requirements 25 Integration and Application All of the course concepts are correctly applied Most of the course concepts are correctly applied Some of the course concepts are correctly applied Does not correctly apply any of the course concepts 25 Creative Thinking Synthesizes ideas or expertise in original ways demonstrating a high degree of innovation, divergent thinking, and risk taking Synthesizes ideas or expertise in original ways demonstrating a moderate degree of innovation, divergent thinking, and risk taking Synthesizes ideas or expertise in original ways demonstrating a minimal degree of innovation, divergent thinking, and risk taking Does not synthesize ideas or expertise in original ways and does not demonstrate innovation, divergent thinking, and risk taking 25 Integrative Learning Makes simple connections among ideas and experiences to effectively synthesize and transfer learning to new, complex situations Makes simple connections among ideas and experiences to synthesize and transfer learning to new, complex situations Makes simple connections among ideas and experiences to synthesize learning Is not able to make simple connections among ideas and experiences to synthesize learning 15 Writing (Mechanics/Citations) No errors related to organization, grammar and style, and citations Minor errors related to organization, grammar and style, and citations Some errors related to organization, grammar and style, and citations Major errors related to organization, grammar and style, and citations 10 Total Comments: 100%

Paper for above instructions

Demand Forecasting Exercise for Summer Widgets Safety Stock Working

Introduction

Effective demand forecasting is crucial for businesses to manage inventory, meet customer expectations, and reduce costs. This report focuses on demand forecasting for a hypothetical product line, Summer Widgets, during peak season. It will address safety stock, working stock, average demand, seasonal demand, economic order quantity (EOQ), and suggested demand adjustments, considering market dynamics such as promotional sales and public relations impacts.

Understanding Demand Forecasting

Demand forecasting involves predicting future customer demand for a product or service. Accurate forecasting aids businesses in making informed decisions regarding production, inventory, and marketing strategies (Mentzer et al., 2007). For Summer Widgets, a detailed analysis of past sales data, seasonal trends, and external factors is essential.

Demand Components

1. Average Demand: Average demand can be calculated using historical data from previous years. We utilize the average of the last five summer seasons' sales data. For example, if the sales for the past five summers were 200, 250, 300, 400, and 450 units, the average demand would be calculated as follows:
\[
\text{Average Demand} = \frac{(200 + 250 + 300 + 400 + 450)}{5} = 320 \text{ units}
\]
2. Seasonal Demand: It is essential to incorporate seasonal variations into the forecast. For Summer Widgets, sales tend to peak during the summer months, particularly in June and July, due to seasonal demand. Analyzing seasonal indices helps understand fluctuations. For instance, if sales typically increase by 50% during the peak months compared to the average, the seasonal demand could be adjusted accordingly.
3. Safety Stock and Working Stock: Safety stock acts as a buffer in inventory management to prevent stockouts during unexpected surges in demand or supply chain disruptions (Chopra & Meindl, 2016). The safety stock can be calculated using the known standard deviation of demand and the desired service level. If the standard deviation of demand is 30 units and the desired service level is 95%, the safety stock could be calculated through the following formula:
\[
\text{Safety Stock} = Z \times \sigma
\]
where Z is the Z-score corresponding to the service level, and σ is the standard deviation of demand.
Working stock, on the other hand, refers to the inventory that is currently held to meet average expected demand.

Economic Order Quantity (EOQ)

The EOQ model is a critical tool for inventory management, enabling businesses to identify the optimal order quantity to minimize total holding and ordering costs (Harris, 1913). The EOQ formula is:
\[
EOQ = \sqrt{\frac{2DS}{H}}
\]
Where:
- D is the annual demand,
- S is the ordering cost per order, and
- H is the holding cost per unit.
Utilizing the earlier average demand of 320 units, we estimate D, S, and H to compute EOQ effectively.

Demand Adjustments

Demand can fluctuate due to various factors like promotions and negative publicity. In this case:
- Promotional Sales: Considering that a sale is planned prior to peak season, we can expect a spike in demand. Adjustments should reflect an increase in forecasted demand by a certain percentage based on historical responses to similar promotions (Guenzi et al., 2010).
- Impact of Publicity: Negative publicity, even if later debunked, can cause a short-term drop in demand. The fallout should be estimated based on past incidents, leading to necessary adjustments in stock availability.

Implementing the Forecast

1. Data Analysis: Collect historical sales data, identify trends, and analyze external factors affecting demand.
2. Adjust Inventory Levels: Utilize calculated safety stock and EOQ figures to adjust order levels before the season starts.
3. Monitor and Revise: Continuously track sales and market conditions throughout the summer to make real-time forecasts and inventory adjustments.

Example Scenario

Assuming Summer Widgets anticipates an average demand of 320 units per month, with a peak during July of 480 units (considering seasonal demand adjustments), the safety stock can buffer against variability. Based on promotional trends, we might see a target demand of 550 units for July, requiring enhanced inventory to prevent stockouts during peak sales events.

Conclusion

Demand forecasting for Summer Widgets necessitates a multifaceted approach incorporating historical sales data, seasonal trends, average demand calculations, adjustments for promotional activities, and consideration of negative publicity. Establishing accurate EOQ and safety stock levels ensures optimal inventory flow, reduces costs, and enhances customer satisfaction.

References

Chopra, S., & Meindl, P. (2016). Supply Chain Management: Strategy, Planning, and Operation (6th ed.). Pearson.
Guenzi, P., Pardo, C., & Pavia, T. (2010). The impact of marketing on the relationship between supply chain integration and performance. Journal of Supply Chain Management, 46(1), 120-141.
Harris, F. (1913). How Many Parts to Make at Once. Factory, The Magazine of Management, 10(2), 135-136.
Mentzer, J.T., Moon, M.A., & Williams, J. (2007). Demand Management. Supply Chain Management Review, 11(6), 33-43.
To ensure all forecasting elements are considered effectively in promoting the Summer Widgets, ongoing assessment of external market dynamics will guide inventory and marketing strategies.