Assignment Question $($Task$)$

Low Customer Service

A company produces and sells nearly $50$ SKUs of various chocolate brands following a

make$-$to$-$stock strategy. The total shelf$-$life ranges between $7-12$ months.

The demand on these chocolate products is fast growing, and the company is having a

hard time to keep up with this growth. Their customer service level over the last $6$

months has been constantly below target due to continuous stockouts. These stockouts

are the result of the fast growth in demand, and the company's limited capacity to

produce the required quantities when needed. What is affecting their capacity is the

available warehouse space that limits their ability to store larger production quantities.

Their demand plan accuracy is not good either, which is aggravating the situation. What

makes their position even harder is the short shelf life of their products, in which case

producing too much may lead to expiries and write$-$offs, and this is also a problem as

the company is trying to eliminate wastage and reduce cost.

As a result of this situation, customer orders are being shorted frequently to an extent

that cannot be tolerated anymore, and this is leading to increased customer frustration,

loss of sales opportunity, and heavy customer fines.

You have been assigned the task of looking into this challenge and suggesting solutions

that could lead to desired improvements. Write a proposal to the company's

management explaining your plan to address all the mentioned issues using tools,

methods, recommendations, etc. to tackle every aspect and improve their inventory

levels. Use your creativity, experience and understanding of the material $($forecasting

techniques, capacity planning, inventory cost, ABC classification, etc.$)$ to create a

feasible solution that could result in tangible benefits over the short and long term.