Ice House Toys

Portfolio Seminar 3: Ice House Toys

Question 1

Ice house toys is a toy company that consists of five shops and one mail order business. This sells over 300 different toys and games. They send out three main catalogues to their regular customers. The catalogues are Winter, Spring and Christmas.

The Christmas catalogue brings them the most business. They send out 160,000 catalogues during the 1st week of October. In 1999 a total of 22600 of products averaging £42 an order.

Each of Winter and Spring catalogues were sent out at a total of 45000 regular customers. They totaled at 6900 orders from both averaging at £23 an order.

The policy of these company is to provide the products within 3 days of ordering. We can clearly see a huge difference between the Christmas season and the remaining catalogues.

October = 2900 orders

November = 13400 orders

December = 6300 orders

As displayed it's clear that during the month of November, the orders have peaked. Therefore the staff will have to either be forced to work on weekends or be paid overtime to cover all the orders in time. In 2000 they have created they have made a major change in their system by creating a website to order online. This is forecasted to skyrocket their sales. Therefore they will have a very high difficulty in maintaining their policy of delivering products within 3 days of order.

As the demand is pretty stable throughout the whole year besides October, November and December, I would recommend using a mixture of the demand management, yield management and chase demand plans altogether. The reason for this bizarre suggestion is because the chase demand plan could be used because the high peak months between October to December. This could be further classified into November which had a very high number of orders in 1999.

As the Christmas catalogues are sent out in October, the company could try giving discounts or promotional items for buying at non- peak months, for example they could provide 2 for 1 sales for items if they buy them only in October or etc., so that they will be able to even out the demand or shift it towards other months rather than November. This is defined as the demand management plan.

Furthermore they say they have ordered stock of worth £1.1 million, that is 21 000 orders at an average of £45 per order plus extra stock in case of error. They are using the yield management plan to an extent. The excess or unsold goods from the Christmas catalogue are being sold off from the winter catalogue.

Question 2

The main problem is that this consists of only five shops, the mail order runs from a 18th century ice house (1981). Alternative modern warehouse space