Interaction between Marketing and Production functions.pdf
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The document outlines the interaction between the marketing and production departments in a management information systems MBA program at the University of Dhaka, focusing on simulations related to order management and production capacity. It compares two simulation scenarios, detailing assumptions and outcomes, such as sales representatives, marketing budgets, order rates, and revenue calculations. Additionally, it includes various diagrams and relationships among variables affecting production and sales outcomes.
Interaction between Marketing and Production functions.pdf
- 1. Interaction between Marketing and Production functions Department of Management Information Systems (MIS) MBA, 2nd Semester University of Dhaka Dhaka-1000 Samsul Alam ID: 05-002 Chanchal Molla ID: 05-014 Md. Habibur Rahman ID: 05-032 Md. Mehedi Shamim ID: 05-041 By the Group of Spirit of Unity
- 2. Curtesy To our honorable Teacher Professor Professor Department of MIS Faculty of Business Studies University of Dhaka Dhaka-1000.
- 3. Pros and Cons for Simulation- 1(Baseline) Problem Analysis Assumptions for Simulated scenario 1 • The firm has presently 20 sales representative • The marketing dept. generates the order for the products • The production dept. produces and ships the products • Each sale representative generates 10 orders per week • The production department has a fixed total capacity of 400 orders • The production utilization rate is 80% • The revenue per order is £300 • The marketing dept. budget is 15% of the sales total revenues • The weekly salary of a sales representative is £15 per week • The process of recruiting or firing a sales representative takes, on average, 8 weeks • Customers’ tolerance level of the delivery delay is to be 1-6 week
- 4. Pros and Cons for Simulation- 1(Baseline) Cont… Causal Loop Diagram (CLD)
- 5. Pros and Cons for Simulation-1(Baseline) Cont… Stock and Flow Diagram
- 6. Pros and Cons for Simulation-1(Baseline) Cont… A list of model data, and the dimensions of all variables in the model Serial Number Variables Dimensions of Variables Amount 1 Number of Sales Representative Employees 20 2 Hiring/firing Rate Employees 3 Sales Representative Gap Employees 12 4 Targeted Sales Representative Employees 32 5 Sales Representative Based on Marketing Budget Employees 6 Sales Representative Based on Utilization Employees 7 Hiring/firing Delay Weeks 8 8 Delivery Delay Weeks 1-6 9 Order Rate Units 10 Number of Orders Units 320 11 Shipment Rate Units 12 Maximum Production Units 13 Order Per SR Units 10 14 Revenue Per Order United Kingdom Pounds 300 15 Revenue Rate United Kingdom Pounds 16 Total Revenue United Kingdom Pounds 96000 17 Budget Percentage United Kingdom Pounds 0.15 18 Budget Rate United Kingdom Pounds 19 Marketing Budget United Kingdom Pounds 14400 20 Payment Rate United Kingdom Pounds 15
- 7. Pros and Cons for Simulation-1(Baseline) Cont… Simulated Output Table Weeks MarketingBudget Nooforders NoofSR TotalRevenue BudgetRate Hiring/ Firing Rate OrderRate Payment Rate `RevenueRate Shipment Rate Budget Percent age` Deliver y Delay Hiring/F iring Delay Max Product ion OrderPerSR RevenuePer Order SRBasedon Utilization SR Gap SRBasedon Mkt.Budget Targeted SR Initial 14,400.00 320 20 96,000.00 0.15 6 8 320 10 300 32 12 960 32 1 34,150.10 639 21.43 208,122.40 19,765.10 1.43 320 15 131,887.50 53.3 0.15 6 8 320 10 300 32 10.57 2,276.67 32 2 75,045.77 958 22.69 394,799.23 40,910.67 1.26 320 15 227,587.50 159.67 0.15 6 8 320 10 300 32 9.31 5,003.05 32 3 147,656.69 1,277.00 23.8 645,460.81 72,625.92 1.11 320 15 323,287.50 212.83 0.15 6 8 320 10 300 32 8.2 9,843.78 32 4 261,054.08 1,596.00 24.78 951,035.92 113,412.39 0.98 320 15 418,987.50 266 0.15 6 8 320 10 300 32 7.22 17,403.61 32 5 423,023.11 1,915.00 25.64 1,303,739.39 161,984.03 0.86 320 15 514,687.50 319.16 0.15 6 8 320 10 300 32 6.36 28,201.54 32 6 640,245.23 2,234.00 26.4 1,696,889.77 217,237.12 0.76 320 15 610,387.50 372.33 0.15 6 8 320 10 300 32 5.6 42,683.02 32 7 917,509.81 2,114.38 27.07 2,083,828.94 277,279.58 0.67 320 15 664,218.75 352.33 0.15 6 8 320 10 300 32 4.93 61,167.32 32 8 1,246,773.87 1,675.75 27.66 2,346,993.63 329,279.06 0.59 320 15 592,443.75 279.16 0.15 6 8 320 10 300 32 4.34 83,118.26 32 9 1,605,239.91 918.13 28.17 2,413,481.34 358,481.04 0.52 320 15 424,968.75 153.00 0.15 6 8 320 10 300 32 3.83 107,015.99 32 10 1,959,774.94 1011.12 28.63 2,220,725.06 354,550.03 0.46 320 15 161,793.75 168.50 0.15 6 8 320 10 300 32 3.37 130,651.66 32 11 2,274,595.37 1785.05 29.03 1,905,889.63 314,835.43 0.4 320 15 150000.75 1785.4 0.15 6 8 320 10 300 32 2.97 151,639.69 32
- 8. Pros and Cons for Simulation-1(Baseline) Cont… Relationship between Targeted SR and Order Rate 12:17 PM Fri, Apr 24, 2015 Relation between No. of SR and Order Rate Page 1 1.00 3.75 6.50 9.25 12.00 Weeks 1: 1: 1: 2: 2: 2: 20 25 30 319 320 321 1: No of Sales Representativ e 2: Order Rate 1 1 1 1 2 2 2 2
- 9. Pros and Cons for Simulation-1(Baseline) Cont… Relationship between Marketing Budget and Targeted SR 12:20 PM Fri, Apr 24, 2015 Relation Between Mkt. Budget and Target SR Page 1 1.00 3.75 6.50 9.25 12.00 Weeks 1: 1: 1: 2: 2: 2: 0 1500000 3000000 31 32 33 1: Marketing Budget 2: Target SR 1 1 1 1 2 2 2 2
- 10. Pros and Cons for Simulation-1(Baseline) Cont… Relationship between Delivery Delay and No of Orders 12:20 PM Fri, Apr 24, 2015 Relation Between No. of Orders and Deliv ery Delay Page 1 1.00 3.75 6.50 9.25 12.00 Weeks 1: 1: 1: 2: 2: 2: 0 1500 3000 5 6 7 1: No of orders 2: Deliv ery Delay 1 1 1 1 2 2 2 2
- 11. Pros and Cons for Simulation-1(Baseline) Cont… Relationship between Targeted SR and Revenue Rate 12:22 PM Fri, Apr 24, 2015 Relation Between No. of SR and Rev enue Rate Page 1 1.00 3.75 6.50 9.25 12.00 Weeks 1: 1: 1: 2: 2: 2: 20 25 30 0 350000 700000 1: No of Sales Representativ e 2: Rev enue Rate 1 1 1 1 2 2 2 2
- 12. Pros and Cons for Simulation-1(Baseline) Cont… Relationship between Targeted SR and Payment Rate 12:22 PM Fri, Apr 24, 2015 Relation Between No. of SR and Pay ment Rate Page 1 1.00 3.75 6.50 9.25 12.00 Weeks 1: 1: 1: 2: 2: 2: 20 25 30 14 15 16 1: No of Sales Representativ e 2: Pay ment Rate 1 1 1 1 2 2 2 2
- 13. Pros and Cons for Simulation-1(Baseline) Cont… Relationship between Delivery Delay and Revenue Rate 12:24 PM Fri, Apr 24, 2015 Relation Between Deliv ery Delay and Rev enue Rate Page 1 1.00 3.75 6.50 9.25 12.00 Weeks 1: 1: 1: 2: 2: 2: 5 6 7 0 350000 700000 1: Deliv ery Delay 2: Rev enue Rate 1 1 1 1 2 2 2 2
- 14. Pros and Cons for Simulation-2 Problem Analysis Assumptions for Simulated scenario 1 • The fraction of revenues to the marketing department is 10%. • There is no recruitment or firing of sales representatives. • The customers’ delivery delay monitoring time is 2 weeks. • The production utilisation fraction is 60%.
- 15. Pros and Cons for Simulation-2 Cont… Causal Loop Diagram (CLD)
- 16. Pros and Cons for Simulation-2 Cont… Stock and Flow Diagram
- 17. Pros and Cons for Simulation-2 Cont… A list of model data, and the dimensions of all variables in the model Serial Number Variables Dimensions of Variables Amount 1 Number of orders Units 240 2 Marketing budget United kingdom pound s 7200 3 Total revenue United kingdom pound 72000 4 Order rate Units 10 5 Revenue rate United kingdom pound 72000 6 Budget rate United kingdom pound 7200 7 Shipment rate Units 8 Payment rate United kingdom pound 15 10 Order per sales representative Units 10 11 Target Sales representative Employees 24 12 SR based on utilization Employees 24 13 Sales representative based on marketing budget Employees 480 14 Maximum production Units 240 15 Budget percentage United Kingdom Pounds .10 16 Revenue per order United Kingdom Pounds 300 17 Delivery delay weeks 2
- 18. Pros and Cons for Simulation-2 Cont… Simulated Output Table Weeks Marketing Budget Noof orders TotalRevenue BudgetRate OrderRate Paym ent Rate `Revenue Rate Shipment Rate Budget Percentage ` Delivery Delay Max Produ ction Order Per SR Reven ue Per Order SR Based on Utiliz ation SRBased onMkt. Budget TargetedSR Initial 7,200.00 320 72,000.00 0.1 2 240 10 300 24 480 24 1 18,105.17 559 183,967.33 10,920.17 240 15 122,887.50 279.5 0.1 2 240 10 300 24 1,207.01 24 2 42,438.37 798 354,206.63 24,348.20 240 15 194,587.50 399 0.1 2 240 10 300 24 2,829.22 24 3 85,189.50 628.38 537,359.25 42,766.13 240 15 225,918.75 314 0.1 2 240 10 300 24 5,679.30 24 4 143,258.44 219.75 627,419.06 58,083.94 240 15 148,143.75 109.5 0.1 2 240 10 300 24 9,550.56 24 5 205,174.12 305 587,988.38 61,930.68 240 15 22,500.00 152.5 0.1 2 240 10 300 24 13,678.27 24 6 261,789.52 325 531,357.98 56,630.40 240 15 18000 162.5 0.1 2 240 10 300 24 17,452.63 24 7 313,053.85 395 491,708.34 51,279.33 240 15 11,629.69 197.5 0.1 2 240 10 300 24 20,870.26 24 8 362,669.01 405 518,578.18 49,630.16 240 15 76,500.00 202.5 0.1 2 240 10 300 24 24,177.93 24 9 417,524.97 606.23 611,173.62 54,870.96 240 15 147,466.41 303 0.1 2 240 10 300 24 27,835.00 24 10 483,192.19 591.23 731,299.22 65,682.22 240 15 185,807.81 295.5 0.1 2 240 10 300 24 32,212.81 24 11 559,815.82 339.68 808,992.13 76,638.63 240 15 154,331.54 169.5 0.1 2 240 10 300 24 37,321.05 24
- 19. Pros and Cons for Simulation-2 Cont… Simulated Output Graphs List of the plotted variables in the graph: Marketing Budget Revenue Rate Number of Sales Representative Order Rate Targeted Sales Representative Number of Orders Delivery Delay Payment Rate
- 20. Pros and Cons for Simulation-2 Cont… Relationship between Targeted SR and Order Rate 12:55 PM Fri, Apr 24, 2015 Relationship between Target SR and Order Rate Page 1 1.00 3.75 6.50 9.25 12.00 Weeks 1: 1: 1: 2: 2: 2: 23 24 25 239 240 241 1: Target SR 2: Order Rate 1 1 1 1 2 2 2 2
- 21. Pros and Cons for Simulation-2 Cont… Relationship between Marketing Budget and Targeted SR 12:56 PM Fri, Apr 24, 2015 Relationship between Mkt. Budget and Target SR Page 1 1.00 3.75 6.50 9.25 12.00 Weeks 1: 1: 1: 2: 2: 2: 0 300000 600000 23 24 25 1: Marketing Budget 2: Target SR 1 1 1 1 2 2 2 2
- 22. Pros and Cons for Simulation-2 Cont… Relationship between Marketing Budget and Targeted SR 12:56 PM Fri, Apr 24, 2015 Relationship between Mkt. Budget and Target SR Page 1 1.00 3.75 6.50 9.25 12.00 Weeks 1: 1: 1: 2: 2: 2: 0 300000 600000 23 24 25 1: Marketing Budget 2: Target SR 1 1 1 1 2 2 2 2
- 23. Pros and Cons for Simulation-2 Cont… Relationship between Delivery Delay and No of Orders 12:58 PM Fri, Apr 24, 2015 Relationship between Deliv ery Delay and No. of Orders Page 1 1.00 3.75 6.50 9.25 12.00 Weeks 1: 1: 1: 2: 2: 2: 1 2 3 0 400 800 1: Deliv ery Delay 2: No of orders 1 1 1 1 2 2 2 2
- 24. Pros and Cons for Simulation-2 Cont… Relationship between Targeted SR and Revenue Rate 12:59 PM Fri, Apr 24, 2015 Relationship between Target SR and Rev enue Rate Page 1 1.00 3.75 6.50 9.25 12.00 Weeks 1: 1: 1: 2: 2: 2: 23 24 25 0 150000 300000 1: Target SR 2: Rev enue Rate 1 1 1 1 2 2 2 2
- 25. Pros and Cons for Simulation-2 Cont… Relationship between Targeted SR and Payment Rate 12:59 PM Fri, Apr 24, 2015 Relationship between Target SR and Pay ment Rate Page 1 1.00 3.75 6.50 9.25 12.00 Weeks 1: 1: 1: 2: 2: 2: 23 24 25 14 15 16 1: Target SR 2: Pay ment Rate 1 1 1 1 2 2 2 2
- 26. Pros and Cons for Simulation-2 Cont… Relationship between Delivery Delay and Revenue Rate 1:00 PM Fri, Apr 24, 2015 Relationship between Deliv ery i Delay and Rev enue Rate Page 1 1.00 3.75 6.50 9.25 12.00 Weeks 1: 1: 1: 2: 2: 2: 1 2 3 0 150000 300000 1: Deliv ery Delay 2: Rev enue Rate 1 1 1 1 2 2 2 2
- 27. Pros and Cons for Simulation-3 Problem Analysis • Assumptions for Simulated scenario 1 • The fraction of revenues to the marketing department is 20%. • There is no recruitment or firing of sales representatives. • The customers’ delivery delay monitoring time is 8 weeks. • The production utilisation fraction is 100%.
- 28. Pros and Cons for Simulation-3 Cont… Causal Loop Diagram (CLD)
- 29. Pros and Cons for Simulation-3 Cont… Stock and Flow Diagram
- 30. Pros and Cons for Simulation-3 Cont… A list of model data, and the dimensions of all variables in the model Serial Number Variables Dimensions of Variables Amount 1 Number of orders Units 400 2 Marketing budget United kingdom pound s 24000 3 Total revenue United kingdom pound 120000 4 Order rate Units 10 5 Revenue rate United kingdom pound 120000 6 Budget rate United kingdom pound 24000 7 Shipment rate Units 8 Payment rate United kingdom pound 15 10 Order per sales representative Units 10 11 Target Sales representative Employees 40 12 SR based on utilization Employees 40 13 Sales representative based on marketing budget Employees 8000 14 Maximum production Units 400 15 Budget percentage United Kingdom Pounds .20 16 Revenue per order United Kingdom Pounds 300 17 Delivery delay weeks 8
- 31. Pros and Cons for Simulation-3 Cont… Simulated Output Table Weeks Marketing Budget Noof orders TotalRevenue BudgetRate OrderRate Paym ent Rate `Revenue Rate Shipment Rate Budget Percentage ` Delivery Delay Max Produ ction Order Per SR Reven ue Per Order SR Based on Utiliz ation SRBased onMkt. Budget TargetedSR Initial 24,000.00 400 120,000.00 0.2 8 400 10 300 40 1,600.00 40 1 54,684.80 719 230,187.70 30,699.80 400 15 140,887.50 89.88 0.2 8 400 10 300 40 3,645.65 40 2 114,490.71 1,118.00 430,954.29 59,820.92 400 15 260,587.50 139.75 0.2 8 400 10 300 40 7,632.71 40 3 220,219.57 1,517.00 705,497.93 105,743.85 400 15 380,287.50 189.63 0.2 8 400 10 300 40 14,681.30 40 4 385,556.54 1,916.00 1,040,133.46 165,351.98 400 15 499,987.50 239.5 0.2 8 400 10 300 40 25,703.77 40 5 621,648.31 2,315.00 1,423,714.19 236,106.76 400 15 619,687.50 289.38 0.2 8 400 10 300 40 41,443.22 40 6 937,573.89 2,714.00 1,847,161.11 315,940.58 400 15 739,387.50 339.25 0.2 8 400 10 300 40 62,504.93 40 7 1,340,728.22 3,113.00 2,303,079.28 403,169.33 400 15 859,087.50 389.25 0.2 8 400 10 300 40 89,381.88 40 8 1,837,134.52 3,512.00 2,785,445.48 496,421.29 400 15 978,787.50 439 0.2 8 400 10 300 40 122,475.63 40 9 2,430,423.90 3,442.38 3,247,259.85 593,304.39 400 15 1,055,118.75 430.25 0.2 8 400 10 300 40 162,028.26 40 10 3,106,384.43 2,973.75 3,560,628.07 675,975.52 400 15 989,343.75 371.63 0.2 8 400 10 300 40 207,092.30 40 11 3,828,798.26 2,106.13 3,642,067.99 722,428.84 400 15 803,868.75 263.25 0.2 8 400 10 300 40 255,253.22 40
- 32. Pros and Cons for Simulation-3 Cont… Relationship between Marketing Budget and Revenue Rate 1:07 PM Fri, Apr 24, 2015 Relationship between Mkt. Budget and Rev enue Rate Page 1 1.00 3.75 6.50 9.25 12.00 Weeks 1: 1: 1: 2: 2: 2: 0 2000000 4000000 50000 600000 1150000 1: Marketing Budget 2: Rev enue Rate 1 1 1 1 2 2 2 2
- 33. Pros and Cons for Simulation-3 Cont… Simulated Output Graphs List of the plotted variables in the graph: • Marketing Budget • Revenue Rate • Number of Sales Representative • Order Rate • Targeted Sales Representative • Number of Orders • Delivery Delay • Payment Rate
- 34. Pros and Cons for Simulation-3 Cont… Relationship between Targeted SR and Order Rate 1:08 PM Fri, Apr 24, 2015 Relationship between Target SR and Order Rate Page 1 1.00 3.75 6.50 9.25 12.00 Weeks 1: 1: 1: 2: 2: 2: 39 40 41 399 400 401 1: Target SR 2: Order Rate 1 1 1 1 2 2 2 2
- 35. Pros and Cons for Simulation-3 Cont… Relationship between Marketing Budget and Targeted SR 1:09 PM Fri, Apr 24, 2015 Relationship between Mkt. Budget and Target SR Page 1 1.00 3.75 6.50 9.25 12.00 Weeks 1: 1: 1: 2: 2: 2: 0 2000000 4000000 39 40 41 1: Marketing Budget 2: Target SR 1 1 1 1 2 2 2 2
- 36. Pros and Cons for Simulation-3 Cont… Relationship between Delivery Delay and No of Orders 1:10 PM Fri, Apr 24, 2015 Relationship between Deliv ery Delay and No of Orders Page 1 1.00 3.75 6.50 9.25 12.00 Weeks 1: 1: 1: 2: 2: 2: 7 8 9 0 2000 4000 1: Deliv ery Delay 2: No of orders 1 1 1 1 2 2 2 2
- 37. Pros and Cons for Simulation-3 Cont… Relationship between Targeted SR and Revenue Rate 1:11 PM Fri, Apr 24, 2015 Relationship between Target SR and Rev enue Rate Page 1 1.00 3.75 6.50 9.25 12.00 Weeks 1: 1: 1: 2: 2: 2: 39 40 41 50000 600000 1150000 1: Target SR 2: Rev enue Rate 1 1 1 1 2 2 2 2
- 38. Pros and Cons for Simulation-3 Cont… Relationship between Targeted SR and Payment Rate 1:12 PM Fri, Apr 24, 2015 Relationship between Target SR and Pay ment Rate Page 1 1.00 3.75 6.50 9.25 12.00 Weeks 1: 1: 1: 2: 2: 2: 39 40 41 14 15 16 1: Target SR 2: Pay ment Rate 1 1 1 1 2 2 2 2
- 39. Pros and Cons for Simulation-3 Cont… Relationship between Delivery Delay and Revenue Rate 1:13 PM Fri, Apr 24, 2015 Relationship between Deliv ery Delay and Rev enue Rate Page 1 1.00 3.75 6.50 9.25 12.00 Weeks 1: 1: 1: 2: 2: 2: 7 8 9 50000 600000 1150000 1: Deliv ery Delay 2: Rev enue Rate 1 1 1 1 2 2 2 2
- 40. Findings • The increased marketing budget is the cause of increased amount of revenues • The increased revenues are the cause of the increased order rate and sales representatives • The hiring rate is 2 SR per week and there is no firing (For Baseline Simulation) • Shipment rate is the function of no of orders and delivery delay • Minimizing the delivery delay increases the shipment Rate and no. of orders • Exceeding the maximum capacity brings diseconomies of scale in the organization • Customer order is affected by the multiple variables e.g. Customer interest, reputation, delivery delay, no. of sales representatives • Maximum capacity determines the targeted no. of sales representatives • In case of 100% and 60% utilization, no hiring decision is wrong since the organization has only 20 SR
- 41. Recommendations • Organization should not recruit employee ignoring the maximum capacity because it will require extra machineries and employees • Organization should maintain the proper range of delivery delay to retain the customers and increase the reputation • Organization should maintain a proper capacity cushion (Reserved Capacity) for the variability of demand • Organization should minimize the hiring/firing delay to minimize the overall cost • To increase the utilization rate above 50%, it must hire new employees • Organization should maintain hiring decision in case of 100% and 60% utilization rate to meet the extra demand
- 42. Discussion Session Feel free to ask Question ????????????
- 43. Gratitude