Capacity & Forecasting of Green Valley Bakers Research Paper

Capacity & Forecasting of Green Valley Bakers - Research Paper Example It takes a lot of time, effort and skills to plan out the start of operations, from where the inventory will come, how and when sales will be made and at what margins, so that some profit is left over to compensate the businessman and other stakeholders of the business, if there are any, after the costs and expenses of the bakery have been paid out. Forecasting must also take into account the current and future environment as regards legal, technological, social and other phenomena such as changes in Government policy regarding taxation on bakeries, prices of inventory items, changing tastes of consumers and improvements in baking technology. We will consider all these as we evolve a strategy for capacity utilization and demand and sales forecasting at Green Valley Bakers. Discussion Capacity utilization has been one of the main concerns of entrepreneurs and industrialists right from the very beginning of organized business enterprise. In fact the start of the Industrial Revolution s aw much of the population of villages move to the cities, lured by the prospects of gainful employment and higher and more consistent wages, thereby leading to a better lifestyle and social progress. Imagine their predicament when they were forced to move into often cramped and squalid living quarters, eating meager rations and toiling long hours in factories and mills that sought only to gain the most advantage from this situation. It was only after the refusal of workers in Chicago to continue to work under these appalling conditions that the world has moved towards respecting the rights of the workers. Even the economists of old regarded Labor as but a factor of production. As regards capacity, J.B Say remarked that Supply would create its own demand. And the production concept in marketing so popular in the 1950s enunciated that if one built a better mousetrap (meaning product), people would flock to your door to buy it. Even today there is a debate among economists as to whethe r Full Employment or Partial Unemployment is better for the economy. The Marxists would say that nothing has really changed, in this class-ridden society; it is just the capitalist or rich class or bourgeoisie taking advantage of the proletariat or worker class, as it always has. Capacity utilization and forecasting trends are as important for a bakery as an airline or engine manufacturer (Croft, 2010). In the world of accounting, costing techniques have been applied to industrial production to determine the cost per unit of production. Indeed, there have been instituted wage rates per unit of output produced by the worker. In other words, the total cost of a product has been broken up into components of direct materials, direct labor and factory overheads (meaning other costs that cannot be directly apportioned to a product). Thus an amalgam of these costs divided by the number of units products over a specific period of time give a standard cost per unit for a particular batch of bread. This is much like the batch manufacturing processes at pharmaceutical industries and Green Valley Bakers could also adopt this method of identifying production of different batches of bread. It would be invaluable in also judging whether the best-if-used-by-date for a particular unit had passed or not. As explained in earlier assignments, the maximum shelf life of breads at normal room temperature tended to