UNIVERSITY OF MINDANAO

PROFESSIONAL SCHOOLS
Matina, Davao City

Demand for Nestle All Purpose Cream

in Rosabaya Distributors Inc.

In Partial Fulfillment of the

Requirements in BM101 Quantitative
Models for Managerial Decisions

Submitted to:
Engr. Antonio Emberda

Prepared by:
Maria Glenda Larosa
Lilibeth Laolao
Emmanuel Panuelos

September 2019
 ABSTRACT

This paper presents the study of the demand of Nestle All Purpose
Cream. This will show how much is being utilize in the market and how to
simulate and forecast the orders of the customers using different analytical
methods to ensure out of stocks in the distributor as well as in the market. By all
accounts and with proven results, the paper will show how to stabilize the supply
of the stocks in its season.
 ACKNOWLEDGEMENT

The researchers would like to extend their heartfelt gratitude and thanks
to the people who had given their full support for the accomplishment of this
study:

Engr. Antonio Emberda, the researchers’ adviser, for imparting his

knowledge, skills, expertise and brilliant ideas in this research and for giving
them a memorable experience and great honor;

Mr. Eugene Flores and Ms. Leilani Manalac, the Nestle Field Sales
Managers, for the understanding and cooperation in sharing them the historical
sales nationally;

Mr. Rommel Yongco, the Supply Chain Manager of Rosabaya Distributor

Inc., for explaining the major transactions in the business and who provided
them with support documents that made this study relevant;

Their beloved parents, who gave them the undying support, morally and
financially. Their friends who inspired and encouraged them to pursue this study;
and,

Above all, they are very grateful to the Almighty God for the Divine love,
guidance and enlightenment that He had given in order to come up with this
piece of work.
 TABLE OF CONTENTS

TITLE PAGE i
ABSTRACT ii
ACKNOWLEDGEMENT iii
LIST OF TABLES iv
LIST OF FIGURES v

Chapter 1 INTRODUCTION
Background of the Study 1
Statement of the Problem and Objectives 3
Assumptions of the Study 3
Theoretical and Conceptual Framework 4
Significance of the Study 6
Scope and Limitations 7
Definition of Terms 8

Chapter 2 REVIEW OF RELATED LITERATURE

Literature and Study / Industry Study 9

Chapter 3 METHODOLOGY
Research Methodology 11
Research Method / Design 12
Research Instrument / Procedure 13
Statistical Treatment 14

Chapter 4 ANALYSIS AND CONCLUSION

Significant Research Results 18
Presentation, Interpretation and Analysis of Data 18
Summary of Findings and Conclusion 18
Chapter 5 RECOMMENDATIONS

REFERENCES
APPENDICES
A. Data Flow Diagrams
B. Data Dictionary
C. Technical, Economical and Operational Feasibility
D. Excel Spreadsheets Formula
E. QM Application Manual
 Chapter 1
INTRODUCTION

Background of the Study

NESTLÉ All Purpose Cream is a versatile ingredient; it can be used in

anything from desserts to pasta or even in savory dishes. Though aside from
adding creaminess to specialties or everyday cooking, all-purpose cream can
also be a time-saver, a cost-cutter, or even become your “special” ingredient
when it comes to preparing good food. Nowadays, with global completion,
consumers’ behavior is still what matters. They decide what brand to be bought
no matter how costly it is. In the likes of Nestle All Purpose Cream, it is still the
number one brand in the market within its category. However, the demand is
quite challenging when it comes to its seasonality. Most of the scenario is
leading to loss of sales due to out of stocks. The data of Rosabaya Distributors
Inc., the only Nestle distributor in Davao City shows that the great demand of
the cream during holiday season needs ample stocks during the peak season.
Thus, this study would use quantitative analysis to address some issues and
concerns to avoid out of stocks.

1
Figure 1 : Historical sales of Nestle All Purpose Cream
MONTH TOTAL SALES IN CASES
2017-Jan 3,152
2017-Feb 3,303
2017-Mar 3,933
2017-Apr 3,944
2017-May 3,128
2017-Jun 3,565
2017-Jul 6,624
2017-Aug 14,293
2017-Sep 3,339
2017-Oct 4,575
2017-Nov 4,873
2017-Dec 3,085
2018-Jan 532
2018-Feb 1,850
2018-Mar 1,770
2018-Apr 4,614
2018-May 3,130
2018-Jun 5,705
2018-Jul 4,944
2018-Aug 5,866
2018-Sep 5,642
2018-Oct 7,233
2018-Nov 3,917
2018-Dec 2,400
2019-Jan 3,818
2019-Feb 4,305
2019-Mar 4,482
2019-Apr 4,501
2019-May 5,120
2019-Jun 3,584
2019-Jul 3,514
2019-Aug 5,547

2
Statement of the Problem and Objectives

In this study, we wanted to know the following;

1. Given the historical sales form 2017 up to August of 2019, how many
cases would still be needed to fulfill the demand of NESTLÉ All Purpose
Cream until December of this year?
2. Simulate the yearly demand for a number of years (Using 10 years
simulation).

Assumptions of the Study

 There are possibilities of change in technology and chances of product

innovation in the long run.
 There are possibilities of increasing good quality Nestle All Purpose
Cream manufacturing unit.
 Growing no. of substitutes in the market.

3
Theoretical and Conceptual Framework

Rosabaya Dist., Inc (RDI) enhances demand forecast with QM and

Minitab Software.

The company improved the sales precision in one of their business units
in 9 percent, creating direct impact in the level of customer service, reducing
inventories and improving product demand.

QM and Minitab, the global leader in analytics solutions, was the partner
chosen by RDI, the largest food and beverage company in the world, to fulfill its
business needs, focusing in sales demand forecast calculations that directs
decisions in a number of company areas.

RDI, QM and Minitab have a global contract for the acquisition of new
analytics solutions. The idea is to improve the effectiveness of demand planning.

To measure the results, RDI defined four pillars: improvements in

customer service (in retail), inventory reduction and better demand planning,
which contributes to loss reduction.

Figure 1 shows the Conceptual Framework of the study that includes the
input, processes, and output components.

4
Figure 1: The Conceptual Framework Showing the Variables of the Study

5
Significance of the Study

The study aimed to provide comprehensive and effective demand

analysis to Rosabaya Distributors Incorporated. This will facilitate on giving
solutions to the problems encountered by the company. In the present global
market, it is not at all possible for a firm to exist without adequate knowledge on
consumer behavior. Consumer behaviour informs determines demand for a
commodity in the market. This study will benefit to the following:

1) Pricing Policy:
The importance of demand analysis in business decision is that it helps
firms design their pricing policy. Firm can choose either to lower or raise a
product’s price by observing trend of consumer demand for that product.
Producers can’t fix price for their products without first understanding the market
demand for them.

2) Investment Policy:
Demand analysis helps firm adopt appropriate investment policy. Based
on the nature of demand for a particular product in a particular market, firms can
make their investment decisions.

3) Market forecast:
Demand analysis helps business firms in their investment decisions,
based on the prevailing response of consumers towards a particular commodity,
firm can foresee the demand. This in turn helps them in investing on an
appropriate industry.

6
Scope and Limitations

Opinion Poll Approach, demand for a new product is estimated by direct

enquiry of the ultimate purchasers, either by the use of samples or a full scale.

Sales Experience Approach, a new product is offered for sale in a large

market. The estimate so obtained that can be blown up to arrive at the total
demand for the product for all channels.

Vicarious Approach, consumer reactions to a new product is surveyed

indirectly through the eyes of specialized dealers who are supposedly informed
about consumers’ needs and alternative opportunities.

Costs and Accuracy of Forecasts, there is a cost-accuracy trade off

while selecting a forecasting method. The more sophisticated methods involve
high costs of implementation and maintenance, but they provide accurate
forecasts which brings operational economy. Thus, it is expected to balance the
cost and accuracy and try to optimize the costs.

7
Definition of Terms

The following terms are conceptually and operationally defined for clear
understanding:
Demand. Conceptually, an insistent and peremptory request, made as if
by right.
Forecast. Conceptually, is a technique that uses historical data as inputs
to make informed estimates that are predictive in determining the direction of
future trends.
Simulation. Conceptually, is an approximate imitation of the operation of
a process or system.
SAP Quality Management (QM). Conceptually, is a component of SAP
ERP Central Component (ECC) that helps businesses implement and run quality
control processes. It is designed to prevent defects, enable continuous process
improvement, and establish sustained quality control programs.
Minitab. Conceptually, is originally intended as a tool for teaching
statistics, is a general-purpose statistical software package designed for easy
interactive use. Minitab is well suited for instructional applications, but is also
powerful enough to be used as a primary tool for analyzing research data.

8
 Chapter 2
Review of Related Literature and Study

Pednekar, Achut P (2015): Customer satisfaction is important for the

company to build the sales and value of the brand. The objectives and the
purpose of the study were explained to the respondents. Both primary and
secondary data were collected to realize the objectives of the study. Due to
limitation of time, only 100 respondents were selected from Mhapsa area on the
basis of convenient sampling. In order to make an in-depth study, secondary
data has been collected from journals, publications, news, internet, and
magazines.

Necessary statistical tools have been used and the collected data were
then consolidated, tabulated and analyzed. The results and discussions have
been presented under various head. The products covered under the study is
Nestle All Purpose Cream. The study concludes that the product is purchased
on the basis of quality, price, brand status, identity, services, packaging,
credibility and self-esteem. They get attracted to the many variables related to
the utility and the price value.

Payaud, Marielle A. (2014): The bottom of the pyramid (BoP) refers to

markets that serve some of the poorest individuals on the planet. Many
multinational corporations contend that they are implementing BoP marketing
strategies while selling products targeted to the very poor in developing
countries. There are significant differences across marketing strategies directed
at BoP consumers, from merely adapting an existing product to the development
of an innovative product strategy integrating explicit fair and inclusive growth at
the local community level. It is possible to distinguish mere international
marketing strategies from genuine Bop strategies, as an analysis of three case
studies shows:

9
 Nestlé operations in the Central and West African region, and DANONE
and Procter & Gamble operations in Egypt.

Studying the characteristics of the diverse marketing strategies that these

firms target to BoP consumers leads to a classification of five types of Bop
Marketing strategies. The tool presented here will help management understand
what a genuine Bop marketing strategy should be and how to improve current
marketing practices to include BoP corporate social responsibility principles.

Grigoroudis, E and Siskos, (2009): ''A Customer means the party to which
the goods are to be supplied or service rendered by the supplier”. Provide
definition for customer‟ upon two approaches: With reference to loyalty, “A
customer is the person that assesses the quality of the offered products.

10
 Chapter 3
Methodology

Forecasting Method

Using Decomposition of Timer-Series:

DETAILS TREN3 SEAS3 FITS3 RESI3

2017 January 3,152 4,296.10 1.03 4,430.05 (1,278.05)

2017 February 3,303 4,300.13 1.06 4,572.72 (1,269.72)

2017 March 3,933 4,304.16 0.91 3,897.12 35.88

2017 April 3,944 4,308.18 1.03 4,442.50 (498.50)

2017 May 3,128 4,312.21 1.06 4,585.56 (1,457.56)

2017 June 3,565 4,316.23 0.91 3,908.06 (343.06)

2017 July 6,624 4,320.26 1.03 4,454.96 2,169.04

2017 August 14,293 4,324.28 1.06 4,598.40 9,694.60

2017 September 3,339 4,328.31 0.91 3,918.99 (579.99)

2017 October 4,575 4,332.34 1.03 4,467.41 107.59

2017 November 4,873 4,336.36 1.06 4,611.24 261.76

2017 December 3,085 4,340.39 0.91 3,929.93 (844.93)

2018 January 532 4,344.41 1.03 4,479.86 (3,947.86)

2018 February 1,850 4,348.44 1.06 4,624.09 (2,774.09)

2018 March 1,770 4,352.46 0.91 3,940.86 (2,170.86)

2018 April 4,614 4,356.49 1.03 4,492.32 121.68

2018 May 3,130 4,360.52 1.06 4,636.93 (1,506.93)

2018 June 5,705 4,364.54 0.91 3,951.80 1,753.20

2018 July 4,944 4,368.57 1.03 4,504.77 439.23

2018 August 5,866 4,372.59 1.06 4,649.77 1,216.23

2018 September 5,642 4,376.62 0.91 3,962.73 1,679.27

2018 October 7,233 4,380.64 1.03 4,517.22 2,715.78

2018 November 3,917 4,384.67 1.06 4,662.62 (745.62)

2018 December 2,400 4,388.70 0.91 3,973.67 (1,573.67)

2019 January 3,818 4,392.72 1.03 4,529.68 (711.68)

2019 February 4,305 4,396.75 1.06 4,675.46 (370.46)

2019 March 4,482 4,400.77 0.91 3,984.60 497.40

2019 April 4,501 4,404.80 1.03 4,542.13 (41.13)

2019 May 5,120 4,408.83 1.06 4,688.30 431.70

2019 June 3,584 4,412.85 0.91 3,995.54 (411.54)

2019 July 3,514 4,416.88 1.03 4,554.59 (1,040.59)

2019 August 5,547 4,420.90 1.06 4,701.14 845.86

Using Weighted Moving Average :

MAD 
 forecast error

52,593
 1,697
n 31

12
 Absolute
Forecast
Year Month Qty Value of
Qty
Errors
January 3,152 0 0
February 3,303 3,152 151
March 3,933 3,303 630
April 3,944 3,933 11
May 3,128 3,944 816
2017

June 3,565 3,128 437

July 6,624 3,565 3,059
August 14,293 6,624 7,669
September 3,339 14,293 10,954
October 4,575 3,339 1,236
November 4,873 4,575 298
December 3,085 4,873 1,788
January 532 3,085 2,553
February 1,850 532 1,318
March 1,770 1,850 80
April 4,614 1,770 2,844
May 3,130 4,614 1,484
2018

June 5,705 3,130 2,575

July 4,944 5,705 761
August 5,866 4,944 922
September 5,642 5,866 224
October 7,233 5,642 1,591
November 3,917 7,233 3,316
December 2,400 3,917 1,517
January 3,818 2,400 1,418
February 4,305 3,818 487
March 4,482 4,305 177
April 4,501 4,482 19
2019

May 5,120 4,501 619

June 3,584 5,120 1,536
July 3,514 3,584 70
August 5,547 3,514 2,033
September 5,547 0
Total 52,593
MAD 1,697

MAD 
 forecast error 
92,399
 1,319
n 35

13
 Absolute
Forecast
Year Month Qty Value of TREN2 SEAS2
Qty
Errors
January 3,152 4,310.53 0.87
February 3,303 3,152 151 4,313.76 1.03
March 3,933 3,303 630 4,317.00 0.98
April 3,944 3,933 11 4,320.23 1.11
May 3,128 3,944 816 4,323.46 0.87
2017

June 3,565 3,128 437 4,326.69 1.03

July 6,624 3,565 3,059 4,329.92 0.98
August 14,293 6,624 7,669 4,333.15 1.11
September 3,339 14,293 10,954 4,336.39 0.87
October 4,575 3,339 1,236 4,339.62 1.03
November 4,873 4,575 298 4,342.85 0.98
December 3,085 4,873 1,788 4,346.08 1.11
January 532 3,085 2,553 4,349.31 0.87
February 1,850 532 1,318 4,352.54 1.03
March 1,770 1,850 80 4,355.78 0.98
April 4,614 1,770 2,844 4,359.01 1.11
May 3,130 4,614 1,484 4,362.24 0.87
2018

June 5,705 3,130 2,575 4,365.47 1.03

July 4,944 5,705 761 4,368.70 0.98
August 5,866 4,944 922 4,371.93 1.11
September 5,642 5,866 224 4,375.17 0.87
October 7,233 5,642 1,591 4,378.40 1.03
November 3,917 7,233 3,316 4,381.63 0.98
 December 2,400 3,917 1,517 4,384.86 1.11
January 3,818 2,400 5,459 4,388.09 0.87
February 4,305 3,818 1,875 4,391.32 1.03
March 4,482 4,305 681 4,394.56 0.98
April 4,501 4,482 73 4,397.79 1.11
May 5,120 4,501 2,383 4,401.02 0.87
2019

June 3,584 5,120 5,913 4,404.25 1.03

July 3,514 3,584 269 4,407.48 0.98
August 5,547 3,514 7,827 4,410.71 1.11
September 4,491 5,547 4,069 4,413.95 0.87
October 5,904 4,491 5,442 4,417.18 1.03
November 4,395 5,904 5,809 4,420.41 0.98
December 2,743 4,395 6,364 4,423.64 1.11
2,743 0
TOTAL 92,399
MAD 1,319

15
Simulation Method

16
 Expected 5

yearly demand   Probabilit y Demand 

i 0

 (0.37)(1) + (0.30)(2) + (0.33)(3)

 1.967

Note that the average demand from this simulation (2.4) is different from the expected daily demand. If this simulation were
repeated hundreds or thousands of times it is much more likely the average simulated demand would be nearly the same as
the expected demand
Using QM Software

17
 Chapter 4
ANALYSIS AND CONCLUSION

NEXT STEP

Even with the positive results, we can still see other challenges in a near
future, like the demand forecast by distribution center. Another challenge is to
understand statistically which variables are affecting demand.

RESULTS AND FINDINGS

 Taste is the most important factors considered by the respondents while

choosing All Purpose Cream.
 Nestle as a good brand recall compared to its customer.
 Majority of the respondents like the taste of All purpose cream due to its
stabilized formula and the demand went up.
 So the company should maintain its previous supply and additional 2.4%
or 1,319 cases at peak season to meet the consumers demand.

CONCLUSION

The research shows that the consumers buying behavior is the biggest
factor in the demand and supply of any product. The brand name of NESTLE
APC has gained a very high position in the market in the last 25 years. Though
the consumers are willing to buy the product which have taste but also includes
ingredients which are good for the health of the consumer. The demand of Nestle
APC went up at peak season compared to the market share of Q1 – Q3. Nestle
APC are making every effort to sustain the demand of the consumers and soon
will regain its position with regards to the supply.

18
References

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Inference towards SelectFast Moving Consumer Goods: A
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Bottom of the Pyramid: Examples From Nestlé, Danone, and
Procter & Gamble; Global Business & Organizational
Excellence. Jan2014, Vol. 33 Issue 2, p51-63. 13p.

3. Philip Kotler, Kevin Keller (2009) 13th Edition, Marketing

management; Pearson Publication.

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