Recently in Discovering Maths we looked at the maths within supply chains and logistics. The area which I found most interesting in this was demand planning. Demand planning is a multi-step supply chain management process used to create a prediction of sales for a particular period of time (TechTarget, 2017). Used effectively demand planning can help business to improve the accuracy of their predictions, show when sales of a product are at its highest and lowest and therefore enhance the profitability of products (TechTarget, 2017).
In the workshop we had a go at creating our own demand planning sheet for a business that we had made up. At the start of the first quarter, which for any business runs from April to June, we had a budge of £5,000. The goods we had to buy from were Christmas selection boxes, champagne (bottle), soft drink (2l bottle), beer (x4cans), whole frozen turkeys, ice cream wafers (box of 10), bunch of bananas, celebration luxury hampers, crisps (x12multi pack), sherbet dib dabs, bread (loaf), milk (1l), tins of beans (x4), luxury biscuit selection, premium durian. The aim of our demand planning was to do exactly what TechTarget (2017) said, we were to work out which products we believed would be at their peak in terms of sales during this quarter in order to generate the most sales.
We continued our demand planning into quarter 2 (July – September), quarter 3 (October – December) and finally quarter 4 (January – March). Each quarter we made a profit which we were able to carry over into the next to spend on more stock and again try to generate more profits.
As you can see from the photos, every quarter we focused on what the season was like at this time, for example during the summer we bought ice cream cones and soft drinks, in winter we bought section boxes and luxury hampers. This however was our downfall as we didn’t consider the products that stayed reasonably high in terms of sales all year round, the biggest of these being baked beans. Due to not considering these kinds of products we ended up coming away with the lowest profit compared with the rest of the class, however we were still positive in that our demand planning did make us a profit.
The sales of the baked beans got me thinking about other products that sell well throughout the whole year, so I decided to look into this. It was very difficult to fine exactly which products make to most profit for businesses as there are lots of other aspects to consider such as shipping cost and supplier costs (Simpson, 2014). However, I did read that in the last year the supermarket chain Tescos’s profits have rose considerably compared with what they have predicted (Cox, 2017). In the Independent’s article a spokesperson for Tesco said that one of the main reasons for the rise in their profits was because of their exclusive fresh food brand (Cox, 2017). This surprised me as supermarkets cannot carry over any fresh food stock into the following quarter due to their shelf life and so many of these items need to be written off. For the supermarkets this means that they still have to pay the shipping and supplier cost even though it is likely the will not sell any all of the fresh items and therefore make no profit to take forward. However, with the fresh food products being a large contributing factor in the considerable rise in Tesco’s products it seems to me like the customers here love their fresh foods.
This is an activity I would be liketo use with a class in the upper school of primary. This is something which I think they would find enjoyable and would help them develop their knowledge in areas of mathematics such as money and percentages.
References:
Cox, J. (2017) Tesco Reports £1.28bn Annual Profit and First Full Year of Growth Since 2010. Available at: http://www.independent.co.uk/news/business/news/tesco-reuslts-earnings-128bn-annual-profit-first-full-year-growth-since-2010-booker-a7679401.html (Accessed on: 24th November 2017)
Simpson, E. (2014) The Hidden World of Supplying a Supermarket. Available at: http://www.bbc.co.uk/news/business-29629742 (Accessed on: 24th November)
TeachTarget (2017) Demand Planning. Available at: http://searcherp.techtarget.com/definition/demand-planning (Accessed on 27th November 2017)
