Craig Manufacturing

Description

The general manager of Craig Manufacturing Cambridge Branch felt that there was room to improve top-line growth through better utilization of plant capacity. The company was losing out on sales due to the highly seasonal nature of demand; the plant was fully loaded four months of the year, but it had unused capacity during the remaining months. The general manager had just attended a lecture where a more flexible approach to pricing had been suggested as a way to better manage supply chain and capacity issues. An idea began to emerge: Could Craig Manufacturing use pricing to better match demand to plant capacity? If so, would this practice boost profitability, or would it merely reduce revenues?

Learning Objective

This case deals with supply chain and price optimization, variable pricing and dynamic pricing, demand modeling, price variability through discounts, and capacity planning. Students will learn: ·The typical features of a business that lends itself to the application of revenue management pricing. ·The importance of the demand model and recognition that not all demand models follow the same form. ·How to implement a pricing model.What business issues occur when implementing revenue management pricing.

Keywords

Capacity planning optimization Pricing Revenue Management Seasonal Demand