The effects of pricing and forecasting decisions to a marketing–manufacturing system implementing the pull manufacturing method, with stochastic consumer demand

• Main Author: Cabiles, Christine Anne Viray
• Format: text
• Language: English
• Published: Animo Repository 2011
• Subjects: Lean manufacturing; Marketing; Pricing; Operations Research, Systems Engineering and Industrial Engineering
• Online Access: https://animorepository.dlsu.edu.ph/etd_masteral/6867
• Institution: De La Salle University

One of the conflicts organizations internally experience is the contradictory goals between its marketing and manufacturing functions. Marketing aims to make as much demand as possible, assuming that the company has infinite supply of finished goods. The latter, on the other hand, aims to produce just as much as it can, while being constrained by the manufacturing setup being implemented on the production floor. In addition, the direction of most companies is to shift their manufacturing systems into the pull system type, because of the move to leaner production. A mathematical model was introduced to demonstrate these conflicting goals, given the fact that the manufacturing function is further constrained when production is triggered upon a production requirement value set by the marketing function. A further challenge of stochastic customer demand will also be included in the model, such that an expected consumption value is obtained, and actual purchase varies depending on the price of the product and on their stocking quantity. The relationships between the WIP inventories on the production floor and the price decision of the marketing function were investigated, and how pricing and demand forecasting decisions affect manufacturing performance.