Planning Demand and Supply in a Supply Chain

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第三單元 (1) : Planning Demand and Supply in a Supply Chain. Planning Demand and Supply in a Supply Chain. 郭瑞祥教授. 【 本著作除另有註明外,採取 創用 CC 「姓名標示-非商業性-相同方式分享」台灣 3.0 版 授權釋出 】. 1. Outline. Part I: Aggregate planning Part II: Managing predictable variability. 2. Manage Predictable Variability. - PowerPoint PPT Presentation

Transcript of Planning Demand and Supply in a Supply Chain

Supply Chain CoordinationPlanning Demand and Supply
in a Supply Chain

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Predicable variability is change in demand that can be forecasted.
A firm must choose two broad options:
Manage supply (manage capacity and manage inventory)
Manage demand
Often companies divide the task
Marketing manages demand maximize revenue
Operations manage supply minimize cost
Separating the supply and demand decisions makes it difficult to coordinate the supply chain
Designing product flexibility
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Managing capacity
Building inventory of high demand or predictable demand products
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- Managing Demand -
Demand can be influenced using pricing and other forms of promotions.
Impact of the promotion on demand
Product margins
Four key factors influence the timing of a trade promotion:
Market growth
The demand forecast is shown below:
Discounting a unit from $40 to $39 results in the period demand’s increasing by 10 percent because of increased consumption or substitution. Further, 20 percent of each of the two following months demand is moved forward.
Microsoft Office 2010
The demand forecast is shown below:
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Revenue over planning horizon = $643,400
Profit over planning horizon = $221,485
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Scenario 5: Aggregate Planning and Promotion at Red Tomato
Demand fluctuation has increased relative to the profile in scenario 1.
Discounting a unit from $40 to $39 results in the period demand’s increasing by 10 percent because of increased consumption or substitution. Further, 20 percent of each of the two following months demand is moved forward.
Consider the discount offering in peak month of April.
The demand forecast is shown below:
Microsoft Office 2010
Scenario 5: Aggregate Planning and Promotion at Red Tomato
Demand fluctuation has increased relative to the profile in scenario 1.
Discounting a unit from $40 to $39 results in the period demand’s increasing by 10 percent because of increased consumption or substitution. Further, 20 percent of each of the two following months demand is moved forward.
Consider the discount offering in peak month of April.
The demand forecast is shown below:
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Revenue over planning horizon = $650,140
Profit over planning horizon = $211,283
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Conclusions based on Scenarios 1, 4 & 5
A price promotion in January (scenario 4) results in a higher profit than no promotion (scenario 1). A promotion in April (scenario 5) results in a lower profit than no promotion (scenario 1).
Even though revenues are higher when promotions is offered in April, the increase in operating costs makes it a less profitable option.
Red Tomato should offer the discount in the off-peak month of January.
The above conclusions could be different if Red Tomato were in a situation in which most of the demand increase comes from market growth or stealing market share rather than forward buying (see scenarios 6 & 7)
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Scenario 6: Aggregate Planning and Promotion at Red Tomato
Discounting a unit from $40 to $39 results in the period demand’s increasing by 100 percent because of increased consumption or substitution. Further, 20 percent of each of the two following months demand is moved forward.
Consider the discount offering in off-peak month of January.
The demand forecast is shown below:
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Scenario 6: Aggregate Planning and Promotion at Red Tomato
Discounting a unit from $40 to $39 results in the period demand’s increasing by 100 percent because of increased consumption or substitution. Further, 20 percent of each of the two following months demand is moved forward.
Consider the discount offering in off-peak month of January.
The demand forecast is shown below:
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Revenue over planning horizon = $699,560
Profit over planning horizon = $242,810
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at Red Tomato
Demand fluctuation has increased relative to the profile in scenario 1.
Discounting a unit from $40 to $39 results in the period demand’s increasing by 100 percent because of increased consumption or substitution. Further, 20 percent of each of the two following months demand is moved forward.
Consider the discount offering in peak month of April.
The demand forecast is shown below:
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Revenue over planning horizon = $783,520
Profit over planning horizon = $247,320
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Pricing and aggregate planning must be done jointly.
Average inventory increases if a promotion is run during the peak period and decreases if run during off-peak period.
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Low demand period



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