Good Humor Ice Cream Inventory Shortage Essay

528 WordsApr 12, 20143 Pages
The article discussed Good Humor ice cream inventory shortage during the summer of 2012. Good Humor ice cream's owner Unilever failed to forecast market demand for the Toasted Almond bar and gave a chance to Good Humor's rival - Blue Bunny to prosper in the ice cream market in the summer 2012. The long hot spring in 2012 saw increasing sales in ice cream products. Yet Good Humor did not account the sudden sales jump into their production strategy and closed down a major factory in Hagerstown, MD. The combination of two mistakes resulted in the inventory shortage in ice cream bars. The problem starts from forecasting. Good Humor's products are seasonal. The company might have used naive forecasting method to predict the demand for 2012 based on sales in 2011. However, the seasonal pattern is not stable. "It is typical in the macroeconomics literature to neglect seasonal fluctuations by using seasonally adjusted data both in testing theories and in analyzing policy issues" (Canova & Ghysels, 1994). Closing down a major factory impeded Good Humor's ability to solve seasonal fluctuation. The company had to transfer the production request to another factory that might not possess enough workers or facility to handle the emergency. "The inventory increases when the production rate exceeds the demand rate, and decreases when the demand rate exceeds the production rate" (Yan & Kulkarni, 2008). To handle this situation, it requires a Good Humor factories to quickly adjust and increase the production rate to meet the demand. Good Humor produced and distributed same product through different channels. The same ice cream bar that was sold in grocery store was produced in a production line different from the one that produces ice cream bar sold in trucks. The complexities arise for production scheduling, material ordering, production rate, and personnel management.

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