You Are The Director Of Supply Chain Planning At Plusht ✓ Solved
You Are The Director Of Supply Chain Planning Over At Plushtoysinc Cor
You are the director of supply chain planning over at PlushToysInc Corp. and you are tasked with implementing an aggregate planning strategy. Your CEO meets with you and says it’s time to roll out the newest stuffed animals for the holiday season. The company recently completed a sales forecast totaling 7,000 units to satisfy customer demand. You have two options: Option 1 - make 6,000 stuffed animals with a marketing budget of $600,000. This makes you work under demand and with less inherent risk.
Option 2 – make 7,000 stuffed animals to meet the forecast with a marketing budget of $700,000. Look at both options and apply principles from chapter 10 to explain which methods will work best to carry out your directives and why. over 350 words, you have 12 hours to finish it, please know this is a discussion, and i have provide the file of chapter 10.
Sample Paper For Above instruction
Introduction
In the realm of supply chain management, aggregate planning plays a pivotal role in aligning production and capacity planning with fluctuating demand forecasts. As the Director of Supply Chain Planning at PlushToysInc, selecting the optimal approach to produce stuffed animals for the holiday season requires careful consideration of capacity, costs, risks, and strategic objectives. This discussion compares two options—producing 6,000 units or 7,000 units—and applies principles from Chapter 10 to determine which strategy best aligns with organizational goals and operational efficiency.
Analysis of Options Using Principles from Chapter 10
Chapter 10 emphasizes the importance of aggregate planning strategies such as chase demand, level production, and hybrid approaches, each suitable under certain demand variability and cost structures (Heizer & Render, 2020).
Option 1: Producing 6,000 Units
This approach involves producing fewer units than the forecasted demand, effectively operating under demand. The primary benefit of this strategy is the reduction in production costs and risk associated with overproduction, especially relevant when demand is uncertain or variable. According to the chase demand strategy, this method aligns production closely with actual demand, minimizing inventory holding costs and potential obsolescence (Heizer & Render, 2020). With a marketing budget of $600,000, the company effectively invests in targeted promotions to stimulate demand or manage customer expectations. However, this strategy might lead to missed sales opportunities if actual demand exceeds production, resulting in stockouts and dissatisfied customers.
Option 2: Producing 7,000 Units
This option involves matching the forecasted demand precisely, assuming demand reliability. It employs a level production strategy, maintaining a consistent production rate regardless of fluctuations, which simplifies scheduling and workforce management (Heizer & Render, 2020). The $700,000 marketing budget supports the promotion of the new stuffed animals, aiming to meet or exceed customer demand. Although it involves higher costs and risks of overproduction, it ensures maximal sales fulfillment and customer satisfaction, crucial during a competitive holiday season.
Strategic Considerations
Choosing between these options hinges on factors like demand variability, cost implications, and organizational capacity. If the demand forecast of 7,000 units is deemed reliable, then Option 2 aligns better with customer satisfaction and revenue goals. Conversely, if demand is uncertain or fluctuates, Option 1 offers a safer, less risky approach, aligning with lean inventory principles discussed in Chapter 10.
Conclusion
Applying principles from Chapter 10, the optimal choice depends on demand certainty and risk appetite. If the forecast is accurate, producing 7,000 units (Option 2) is preferable for maximizing sales and customer satisfaction, provided the company can absorb the additional costs and risks. However, if demand volatility is high, the conservative approach of producing 6,000 units (Option 1) reduces risk and aligns with lean inventory strategies. Ultimately, a hybrid approach—adjusting production based on real-time demand signals—may offer the best balance between efficiency and flexibility.
References
Heizer, J., & Render, B. (2020). Operations Management (13th ed.). Pearson.