Exercise Assignment #1:

Create a new product: A chocolate bar for a country location other than the United States. Specify the target market (not just “all middle aged people” but be specific), product features (how do the features meet the needs of the target market?), and product name (how does it reflect the product features and target market?).

Then decide on the following:

  1. Forecast of Demand: How will you generate a forecast of demand? (You don’t have actual numbers but how would you go about determining demand?) What factors will you consider? How will you proceed?
  2. Production Decisions: Where will you produce the product and how large will your facility be relative to your forecast? Will you prefer to produce more or less than the forecast?
  3. Sourcing Decisions: Will you source locally or globally? Why? Will you prefer to go with few or many suppliers? Why? What types of relationships will you have with suppliers?

Tip: This is a great exercise for you to see how interconnected these decisions are. The target market and product design are directly linked to production processes, sourcing, and other decisions. It is a good point to make that this is the essence of supply chain management.

Tip: It is a good place to discuss the issue that production capacity can be set above the forecast of demand (e.g. anticipating demand down the road but incurring overhead costs) or below demand (e.g. creating scarcity of product).

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