2-2 Small Group Discussion: Product and Service Demand Forecasting

In the retail world, there is a significant difference between steady-state and peak holiday demand. After reviewing the Demand Forecasting Graph presentation, analyze and explain the measures required to ensure customer satisfaction throughout the scenario below. In other words, where is the supply risk? As you read the scenario below, keep in mind the service-level agreement to have a certain amount of product on the shelves. Think about when to order, how much to order, and the delivery time that would ensure that the product is available to the customer at the right time and when it is in demand.

This year, management has decided to offer a significant discount during peak season on current widget inventory due to the upcoming release of the new and improved Widget 2.0 arriving next year. Assuming each square on slide 2 of the Demand Forecasting Graph presentation (titled EOQ and Demand Adjustments) is equal to an economic order quantity, how and when would you recommend preparing for the estimated surge in demand for the sale? What other elements of the supply chain should be considered when preparing for this increase in demand?

In responding to your peers’ posts, assess the type of risk they are proposing in order to meet customer demand. For instance, will they hold an excessive amount of inventory and drive up holding costs? Did they propose an approach that is too lean and would jeopardize customer satisfaction? Explain how you might alter their approach and why.

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