Production and purchase planning, stock management
In any FMCG business one of the core competences is ability to forecast and plan. In the game you can either manage production plan, or plan volume to be purchased. As a manufacturer your daily limit for plan is certainly the production capacity, but you can allocate it freely across products from specific category.
How good you are in planning, influences your results at the end of the round:
- if your plan is much above your customer demand, you will be left with high stock, resulting in higher storage costs, and frozen cash.
- if your plan is below the sales potential, you will limit your sales upfront, and compromise on revenues and profits
You should keep your stock at a secure level, not to allow out of stocks on one hand, but also avoid excessive (and thus expensive) stock maintenance.
In practice you can use the automated algorithm to manage the stock for you. It attempts manufacturing / purchasing so that the initial stock should cover 5-periods sales potential (based on last realized sales). Of course the attempts might not be successful, if you do not have enough production capacity or your suppliers run out of product.
For each business in the game, the common (stock) equation describes the process:
Stock at the end of round 2 = Stock at the end of round 1 + Purchased / manufactured volumes in round 2 - Volume sold in round 2