Capacity and Forecasting at Green Valley Bakers Research Paper - 1

Capacity and Forecasting at Green Valley Bakers - Research Paper Example This paper illustrates that the concepts of capacity utilization and forecasting techniques are very important for any business venture. Indeed, an entrepreneur or businessman will only venture to invest his capital in a business if he knows and understands that it will give him a good return on the capital invested. 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. The researcher will consider all these as he evolves a strategy for capacity utilization and demand and sales forecasting at Green Valley Bakers. 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 saw 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 p roduction. 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 whether Full Employment or Partial Unemployment is better for the economy.