Planning for Demand Uncertainties during Promotional Cycles of Modern Retail

- by Devdatta Jain & Meenakshi Chhajer *

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For a particular store, Discounts, CSL and Freshness Levels which shall be offered may be modeled based on above weightages, which would be decided based on previous experiences of Nestle.

For a store X, if

Then CSL =
(0.7*0.05+ 0.25*0.3+0.7*0.1+0.05*0.15+1.0*0.15+1.0*0.07+1.0*.08+1.0*0.05+ 1.0*0.05)*100% = 97.94%

Similarly, Freshness Level and Discount Levels can be calculated. This methodology can be used to define the minimum levels to be offered to the store, however, it will depend on the negotiations with the store. Hence, benefits can be shared based on the effort on collaboration with other trade partner.

Conclusion

Modern Trade, in developing countries, is growing at a much faster rate as compared to most of other sectors. This growth is throwing many challenges in operational terms and monetary terms. A successful entrepreneur / businessman is one who converts the challenges into opportunities. Using the models explained above, an organization shall be able to convert these challenges in the market into opportunities, and utilize these opportunities for its benefit. Further, due to the combined effort and synergies between trading partners, there shall be a quantifying model to share various benefits. The model suggested above shall be able to quantify the share between the partners for sharing benefits, and the synergies can be taken to new heights with joint efforts to supply products at Right Time, at Right Price, with Right Quality at Right Place.

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* Contributed by: -
Devdatta Jain & Meenakshi Chhajer,
National Institute of Industrial Engineering (NITIE), Mumbai.

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