Question

You’ve recently been hired as the production manager for a large consumer packaged goods company. In your first meeting with the sales manager, the manager said that production has always made more product than the sales force could move. He tells you that it would be much better if the sales force could create more demand than the company could supply. What would you tell the sales manager? Is it better to have more demand than supply?

(2-3 paragraphs please) (5-6 sentences each)

Answer 1

The demand is the requirement for particular product and supply can be defined as availablity of good and services at particular time. Demand and supply both work together. The demand and supply works indirectly. Demands comes first before the supply. Usually demand occures first and then supply in normal process. But there are also examples where innovative products have been introduced without the demand in market. If demand increases and supply remains unchanged, then it leads to higher price and if demand decreases and supply remains same then it leads to low price.

In Normal case, it is always beneficial to equal the demand and supply. As suggested by manager, if demand increases more than the company could supply, there will be a shortage. so the price of product or service will inrease as more products will be in demand than it's supply. It is important to match supply with demand. If we are not able to maintain the stock as per demand then it will affect on sales and eventually profit of the company. If supply is more than the demand, then company can face losses due to wastage and decrease in prices. So it is important to match the demand and supply. In this case, if sales manager is advising to generate more demand then they should maintain that supply level too to meet that demand. On the other hand In this company having more supply than demand will also lead to the losses.

So as a production manager, in present situation I will advise that having more supply we can create the equal demand to meet those supplies to avoid wastage of products and loss in prices. Also the sales force can increase the demand in future but the production team will also have to increase the supply equally to meet that demand.