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Supply Chain Optimization At Madurai Aavin Milk Dairy Case Solution

Solution Id Length Case Author Case Publisher
1743 797 Words (5 Pages) Unnikrishnan Dinesh Kumar, P. Arun Pandian, Nachiappan SP Indian Institute of Management-Bangalore : IMB341
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Supply Chain optimization refers to the implementation of certain tools and techniques which ensures optimal operations of manufacturing and distribution channels (Brinzaa, 2012). The major factors of supply chain optimization are inventory control, supplier inventory management, demand planning, and system integration (Li, 2014). In MAMD's case the company is dealing with the problem of demand forecasting, the fulfillment of demand by getting more product from a supplier and ensuring the delivery of good quality milk to the final consumer at a lower cost. In this report, our focus will be to forecast the demand for milk in 2011 and challenges that MAMD might face in fulfilling that demand.

Following questions are answered in this case study solution

  1. Demand for Milk from April-September (2011)

  2. Estimated Daily Demand

  3. Forecasted Demand for Premium Milk

  4. Meeting the demand in an optimal manner that would maximize MAMD profit

Case Analysis for Supply Chain Optimization At Madurai Aavin Milk Dairy

1. Demand for Milk from April-September (2011)

As per Anand assumption, 10% increase in sales will be assumed as demand for the year 2011. We have applied Anand's assumption and have forecasted the demand for 2011 from the month of April to September, and the results are 9,600,030 liters in April, 10,930,345 in May, 10,755,043 in June, 11,449,825 in July, 10,632,612 in August, 9,814,553 in September. 

Next, we applied the other assumption which said that the supply was 70% of the total demand in 2010-2011. Based on that 70% we found total demand. As per the results, the demand figures were higher than what we got through applying Anand’s assumption. Combining both results, we estimated that on average, the demand would be more than 10,000,000 liters every month.

2. Estimated Daily Demand

Estimated daily demand and supply section shows a gap between the expected demand and supply. The demand is way more than supply each day. Here MAMD needs to increase the supply and optimize it by following certain measures:

  1. MAMD needs to increase the quantity of milk collected to fill the demand-supply gap. It can increase this by bringing more farmers under its supervision, or it can set its own small farms where they can keep their own cattle.

  2. It can provide incentives, for example, small loans to locals to enter in the dairy sector and start a cattle farm.

  3. It can outsource its milk collection activity by entering into a contract will independent transport company or local dairy farmer to procure milk from villagers (Mani, Joshi, & Ashok, 2017). This will increase transportation cost, but it will be a short-term issue. In long-term, it will benefit MAMD.

3. Forecasted Demand for Premium Milk

As per Anand MAMD sold mostly premium milk in the 2010-2011 period. It rarely dealt with other products as the demand for premium milk was higher. This suggests that the figure provided in this report mainly forecast the demand for premium milk, which will be more than 10,000,000 as per our estimates.

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