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Overview:
Min & Lin Philippines, Inc. is the newest processed meat manufacturing. M&L Phil’s., offers quality processed meat products. Its most successful brand is the Lin-Min Bacon, which captured 60% of the total bacon market share to date. The board of directors wanted improvement in the sales performance of the Lin-Min Bacon brand by ensuring availability of the major material and finished goods stock and they wanted to achieve a higher service level to customers at 95%, while maintaining optimum or minimum inventory levels. A management committee meeting was conducted to review the past sales and operations performance for the Lin-Min Bacon Brand. The groups represented were – Sales, Marketing, Production and Logistics. The Marketing Group showed the Actual Sales Performance and their Forecasts for the Lin-Min Bacon over the past 2 years. They noted that the Sales Group haven’t been giving any forecasting figures, that’s why they have develop their own forecast – based on a two-month moving average. The marketing group claimed that they have performed beyond their responsibility and that without these forecasts; the company cannot achieve its 60% market share. The Sales Group mentioned that they have been incurring many incidences of stock outs which are why they have not been able to push the product as much as they can. They said that many of the outlets have been complaining of back orders not immediately served. They suggested that sales would increase if only the production group could always ensure the maintenance of a stock cover – equivalent to at least one (1) month of the average monthly sales. They insisted that if this will not be applied, they will be forced to make their own forecast and will require production to follow, because they are the ones being blames by the customer and the company’s lost sales. The production group has mentioned that they have always been able to produce the cooked bacon according to the monthly forecast of Marketing, but has difficulty in catching up with additional orders beyond the forecasted requirement due to the unavailability of labels & plastic containers during several occasions, because the suppliers of the Logistics group needs at least one month lead time. The Logistics group mentioned that they have been meeting the materials requirements of production. However, they cannot avoid delays in serving additional requirements due to the sudden increase in demand beyond the original projections given by production and marketing. Also, they cannot order beyond the planned requirements because there are warehousing and storage limitations. In fact, their analyses indicate that there are many situations when the materials and finished goods are available, but do not move because the sales are not coming in as forecasted. In fact the group feels that they have been very supportive through their constant expediting efforts to rush the sudden production orders. They claimed that they have already contracted the annual volume of raw and packaging materials with at least 5 suppliers per item to ensure continuous availability of supply. Knowing all of these, the COO could not believe what was happening. He was worried that the situation may deteriorate. He wanted to urgently address all the concerns of each group and ensure that an effective sales and operations planning process are developed before the board meeting next month. He then asked the department heads of each group to work together and define the improvements in the planning process. He asked them to prepare their proposed business planning processes, activities, methods and other recommended actions – with supporting details & computations.

The Lin-Min Bacon actual monthly sales and forecast data from marketing – based on two month moving average method (units are in thousands of kgs per month) Lin-Min Bacon|
Period| Actual Demand| Forecast|
Mar ‘01| 43| -|
Apr| 44| 21.5|
May|...
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