Full Answer Section

Slide 4: Strategies for Demand Management

• Pricing: Adjusting prices to influence demand.
  • Price discounts: Stimulating demand during slow periods.
  • Premium pricing: Maximizing profit during peak periods.
• Promotion: Using marketing campaigns to create demand.
  • Advertising: Creating awareness and generating interest.
  • Special offers: Encouraging customers to buy now.
• Availability: Managing product availability to influence purchase decisions.
  • Inventory control: Optimizing stock levels to meet demand.
  • Lead time management: Adjusting production and delivery times.

Slide 5: Expanding and Contracting Capacity

• Question: How would you require extra resources to expand and contract capacity to meet varying demand for your current organization?
• Example: A manufacturing company may hire temporary workers during peak seasons and lay them off during slow seasons to adjust production capacity.
• Strategies:
  • Flexible Workforce: Leveraging temporary staff, part-time employees, and flexible scheduling.
  • Outsourcing: Partnering with external providers to handle overflow production or customer service.
  • Flexible Production Systems: Utilizing technology to adjust production lines or manufacturing processes.

Slide 6: Backlogging and Demand Fluctuations

• Question: How does backlogging smooth out certain orders to demand fluctuations?
• Backlogging: Accepting orders even when unable to fulfill them immediately.
• Benefits:
  • Ensures customer loyalty and avoids losing potential sales.
  • Provides time to catch up with production or acquire additional resources.
• Considerations:
  • Potential for customer dissatisfaction if backlogs are too long.
  • The need for clear communication and realistic delivery estimates.

Slide 7: Customer Dissatisfaction and Demand

• Question: When does customer dissatisfaction create an inability to meet all demands?
• Consequences: Customers dissatisfied with backlogs, delays, or stockouts may choose competitors.
• Mitigating Customer Dissatisfaction:
  • Provide accurate delivery estimates and transparent communication.
  • Offer compensation for delays or inconvenience (e.g., discounts, expedited shipping).
  • Develop a strong customer service strategy to address complaints and concerns.

Slide 8: Buffering Strategies

• Question: How would you buffer a system through the use of safety stocks (excess inventories), safety lead time (lead times with a cushion) or safety capacity (excess resources) at work?

Slide 9: Safety Stocks

• Definition: Holding extra inventory to avoid stockouts during unexpected demand spikes.
• Benefits:
  • Ensures product availability, even during uncertain periods.
  • Reduces risks of lost sales and customer dissatisfaction.
• Considerations:
  • Increased storage costs and potential for obsolescence.
  • The need for careful inventory management.

Slide 10: Safety Lead Time

• Definition: Building extra time into the lead time (the time between ordering and receiving a product) to accommodate delays or uncertainties.
• Benefits: Minimizes risks of delivery delays and ensures products arrive on time.
• Considerations: May result in increased costs for expedited shipping or overtime.

Slide 11: Safety Capacity

• Definition: Having extra resources available to handle unexpected surges in demand.
• Benefits: Allows for flexibility and responsiveness to demand fluctuations.
• Considerations:
  • Increased costs associated with maintaining excess resources.
  • Potential for underutilization during slow periods.

Slide 12: Conclusion

• Demand Management is Key: Effective demand management is vital for balancing supply and demand, optimizing operations, and exceeding customer expectations.
• Tailored Approach: Choose strategies that best fit your organization’s specific industry, products, and target market.