The number of beans in Lbs. needed by Wild Dog Coffee Co. for their seventh month will be forecasted by analyzing data collected for the prior six months. The data in Table 1.0 below will be used to analyze the relationship between the number of coffee beans used and the number of dollars used for advertising. The representation of these two demographics will be represented in the linear graph that follows.
Table 1.0
Advertising Dollars and amount of Beans
|
Month |
Advertising Dollars |
Amount of beans |
|
1 |
1050 |
987 |
|
2 |
1500 |
1412 |
|
3 |
1000 |
1020 |
|
4 |
1250 |
1140 |
|
5 |
1500 |
1322 |
|
6 |
1500 |
1399 |
|
7 |
1350 |
1252.8 |
Delegate your assignment to our experts and they will do the rest.
The table above shows that when the amount of advertising dollars is $1350.00, the number of coffee beans used for the seventh month will be 1253 Lbs. This figure is arrived at through statistical calculations. Graph A below will show the linear regression of the 6 months whose amount of beans needed and the amount of advertising dollars provided together with a 7th-month forecast. The graph shows an increase in the amount of beans used in the 2 nd month that corresponded to increased advertising revenue while a decrease in advertising dollars led to a decrease of beans used in the 3 rd month. An increase in revenue in the 4-6 months leads to an increase in beans usage for those months. This figure evens out during the 5 th and 6 th months, where the same amount of advertising revenue is used. The forecast shows that there will be a drop in the 7 th month, corresponding to a decrease in the advertising revenue. Hence there is a direct relationship between these two demographics. Such corresponds to Gebre's (2018) research, who found that advertising is one of the most critical communication influencing a company's performance in more than one way. Brand awareness increased by the advertising revenue, affects the company's internal workings, and increases sales revenue. The same is evident in Wild Dog Co.
Graph A: Linear Graph
Wild Dog Coffee Business Information
Table 2.0
Wild Dog Coffee Business Information
|
Questions |
Responses |
|
Amount of espresso beverages made each hour. |
30, on average |
|
Amount of coffee beans in ounces needed to make each beverage |
1.5 ounces |
|
Hours the shop is open. |
6:00 a.m.–8:00 p.m., Sunday–Saturday |
|
Number of days the business is open |
364 days per year. The coffee shop is closed on Christmas day. |
Analyzing Forecasting Techniques
The information above will answer several questions about the relationship between advertising dollars and the number of coffee beans used.
The shop makes an average of 30 expresso beverages each hour in a day. On a working day, the shop is open from 6 a.m. -8 p.m. hence it has a 14hrs working period. To calculate the number of expresso beverages the shop will make in a day, we will multiply the number of beverages made in an hour times the hours the shop is open, i.e., 30 beverages multiplied by 14 hours. Such gives a total of 420 expresso beverages each day. The same technique can be used to calculate the number of coffee beans needed each day in lbs. Each beverage requires 1.5 ounces; therefore, we will multiply 1.5 ounces by 420 expresso beverages, which are the number of beverages made each day. This totals to 630 ounces. This figure is converted to lbs. through the formula 1 ounce = 0.06 lbs. The 630 ounces, therefore, total 39.3 lbs. used each day.
A high advertising revenue correlates positively to higher usage of coffee beans. The sale in a month's degree is shown by the number of beans used since it predicts how many beverages are sold. The 5 th and 6 th months were the busiest, and it is also in those months that more advertising was done. One can, therefore, deduce that increased advertising leads to increased sales.
Inventory Management
The coffee company can adopt two different approaches to inventory management. The first is the FNSD approach. Here the inventory items are divided into four categories, which descend in order of the priority (Arora, 2016). The F category representing fast is for those that move fast and happen in the shortest amount of time. N is for those that move normally over a short period, while S is for those that move slowly for more than a year. D, which is the last category stands for those items whose demand is zero. This approach can be used by the shop to keep the inventory of coffee beans needed daily. The downside to this process is that the coffee's lifespan is two weeks, and therefore, when demand is slow or in category D, that is a direct loss for the shop.
The other inventory tool the coffee shop can use is the ABC approach. This inventory type proposes that 20% of the activity will account for an 80% impact on the business (Arora, 2016). The items in this system are categorized into A, B, and C groups. A comprises the essential requirements of the business, which account for the business's majority uses. The coffee beans, water, and electricity will make up this group. These are needed in large quantities daily. Category B will account for the money portion acquired from sales, used and spent on acquiring the beans and other ingredients. The items needed in fewer quantities but vital to the business, such as machines, tools, and cups, will make up group C items. The advantage of this categorization is that although all the business items are essential to its success, it can keep an eye on those needed frequently and in high bulk. The downside is the wrong categorization of the items may halt the business's services or affect the efficient delivery of services.
Analyzing Workforce Staffing
The workforce scheduling of a company is vital to ensure the smooth running of its business activities. Such is because staff overworking will drain them emotionally and physically, affecting the quality of services. In contrast, underutilization of the staff will increase inefficiency, thus lead to increased running costs. A schedule that does not account for all activities and the duration needed to run them may result in underutilization and, therefore, crippling business activities if the staff is inadequate compared to the number of tasks available. Wild Dog Co. may utilize two types of schedules; fixed and rotational schedule. A rotational schedule rotates employees within periods of days or hours, while a fixed schedule provides each employee with constant working hours and days each week (Krajewski et al., 2019). Tables 3.0 and 4.0 will represent these two schedules.
Table 3.0
40hr Work Week/12hrs/day
This schedule has advantages and disadvantages, where staff works 12 hours a day and 40 hours per week. At least two employees are required to work all day long, that is the entire 12 hours the shop is open. Because of the long hours, part-time employees are getting six overtime hours, costly to the company. There is an advantage in that no employee was fired. There are only two full-time employees, and a majority of the staff is part-time, and they are paid less than full-time employees and do not receive benefits. Such keeps the overall staff cost low. The part-time employees are required mostly on very busy days.
The shop requires 3-4 employees per day with the requirement of at least one of the working employees being a barista. There are at least 3 employees at work each day from the above table. The staffing schedule above tries to utilize an adequate amount of staff per day while balancing the employees' weekly hours by sales volume. The company will evaluate the days when they are not very busy and adapt to the schedule appropriately. Such affords the employees off days where they can rest, and the company gets relief from paying their costs on those days.
Table 4.0
40hr week/8hrs Per Day
The schedule above where employees work for 40 hours a week, with only 80 hours per day, also has advantages and disadvantages. It was easier to schedule because a full-time employee does not need to work the whole day; they can work from morning then have the evening off or the other way round. Another advantage was that no overtime hours were paid out. However, this scheduling forced a part-time barista to be promoted to full time, costing the company 500 dollars. In comparison, a part-time non-barista was fired, thereby costing the company 250 dollars. The schedule above considers the need for 3-4 employees per day and the requirement that at least one be a barista. There are at least three working employees daily, and they work for a maximum of 8 hours. The schedule above spreads the working hours evenly and tries to make them constant to make them feel certain.
Starting by following a fixed schedule will suit this company better. Such is because the company is not that big and can make necessary changes after familiarizing itself with the market. A rotating schedule can be adopted afterward, and the staff adjusts to it accordingly. Irregular scheduling has been found to increase stress and work-family related conflicts among employees (Golden, 2015). This may affect the performance of employees negatively especially the part-time employees of Wild Dog Co. who work in irregular periods
Recommendations
The company should seek the advice of its employees on the adjustments needed for staff scheduling. This is because they are in a unique spot in that they work on the business's daily operations and, therefore, can give useful insights into the changes needed. The chase strategies can be used as an inventory tool for staffing, which involves hiring and firing employees by forecasting it (Krajewski et al., 2019). This will help the company avoid high overhead costs because it will have the optimal number of employees for each situation. It also ensures that there are no adjustment costs for workforce demand or overtime hours paid to existing employees.
The company risks not having enough employees when demand rises due to the firing of employees. Adjusting forecasts to meet demands also incurs extra costs on the business. The periodic hiring and firing of employees may create a non-stable working environment where the employees fear being the next ones to be fired. Such will affect the business's sustainability and productivity due to the increased changes in the working staff as creating a strong business culture will be difficult. A concrete and stable staffing system can lead to efficiency in the running of business activities. This is because the staffing schedule will be adapted and changed according to needs as recommended by employees and will not touch on their job security. The employees may also be required to monitor the supply inventory carefully. They can be placed with the responsibility of initiating supply demands when inventory goes low. They should come up with a system where the decrease in the stock of coffee beans is communicated early on so that orders can be made accordingly. This is because it takes seven days for the orders to arrive, and therefore the orders should be structured so that the coffee shop does not experience a shortage before the next delivery. This continuous monitoring and responsibility for making orders ensure there is a continuous supply of fresh coffee beans. The company avoids overstocking of the beans which deteriorate after two weeks. The amount to be ordered is also cleverly considered to avoid unnecessary shipping costs due to ordering low amounts of coffee beans.
References
Arora, S. (2016). Top 5 Approaches to inventory management (With Calculations). Retrieved 2018, from http://www.yourarticlelibrary.com/accounting/inventory-management/top-5-approaches-to-inventory-management-with-calculations/72241
Gebre, T. W. (2018). Effect of advertising on the sales revenue in Ambassador Garment and Trade PLC [Paper presentation]. 7th International Conference on cotton, textile and apparel value chain in Africa, Ethiopia.. https://eitex.bdu.edu.et/ICTA-2020/sites/eitex.bdu.edu.et.ICTA-2020/files/publication%20file/PROCEEDING%20%20CTA-18.pdf#page=83
Golden, L. (2015, April 9). Irregular work scheduling and its consequences (paper no 394). Economic policy Institute. https://www.epi.org/publication/irregular-work-scheduling-and-its-consequences/#:~:text=Irregular%2Fon%2Dcall%20work%20is,family%20conflict%20and%20work%20stress
Krajewski, L. J., Malhotra, M. K., & Pitzman, L. P. (2019). Operations management: Processes and supply chains (12th ed.). New York, NY: Pearson.
