Questions: 1. What are some of the potential benefits of a more formalized approach to forecasting? 2. Prepare a weekly forecast for the next four weeks for each product. Briefly explain why you chose the methods you used. (Hint for product 2, a simple approach, possibly some sort of naive/intuitive approach, would be preferable to a technical approach in view of the manager's disdain of more technical methods).

Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
icon
Related questions
Question

Questions:

1. What are some of the potential benefits of a more formalized approach to forecasting?

2. Prepare a weekly forecast for the next four weeks for each product. Briefly explain why you chose the methods you used. (Hint for product 2, a simple approach, possibly some sort of naive/intuitive approach, would be preferable to a technical approach in view of the manager's disdain of more technical methods).

CASE
M&L MANUFACTURING
M&L Manufacturing makes various components for printers and
copiers. In addition to supplying these items to a major manufac-
turer, the company distributes these and similar items to office
supply stores and computer stores as replacement parts for print-
ers and desktop copiers. In all, the company makes about 20 dif-
ferent items. The two markets (the major manufacturer and the
replacement market) require somewhat different handling. For
example, replacement products must be packaged individually
whereas products are shipped in bulk to the major manufacturer.
The company does not use forecasts for production planning.
Instead, the operations manager decides which items to produce
and the batch size, based on orders and the amounts in inventory.
The products that have the fewest amounts in inventory get the
highest priority. Demand is uneven, and the company has experi-
Casel d being overstocked on some items and out of others. Being
understocked has occasionally created tensions with the manag-
Week
Product 1
Product 2
50
40
2
54
38
57
41
4
60
46
64
42
67
41
7.
90
41
76
47
79
42
10
82
43
11
85
42
12
87
49
ers of retail outlets. Another problem is that prices of raw mate-
rials have been creeping up, although the operations manager
thinks that this might be a temporary condition.
Because of competitive pressures and falling profits, the man-
ager has decided to undertake a number of changes. One change
is to introduce more formal forecasting procedures in order to Questions
improve production planning and inventory management.
With that in mind, the manager wants to begin forecasting for two
products. These products are important for several reasons. First,
they account for a disproportionately large share of the company's
profits. Second, the manager believes that one of these products will
13
92
43
14
96
44
"Unusual order due to flooding of customer's warehouse.
1. What are some of the potential benefits of a more formalized
approach to forecasting?
become increasingly important to future growth plans; and third, the
other product has experienced periodic out-of-stock instances.
The manager has compiled data on product demand for the
two products from order records for the previous 14 weeks. These
are shown in the following table.
2. Prepare a weekly forecast for the next four weeks for each
product. Briefly explain why you chose the methods you used.
(Hint: For product 2, a simple approach, possibly some sort of
naivelintuitive approach, would be preferable to a technical
approach in view of the manager's disdain of more technical
methods.)
Transcribed Image Text:CASE M&L MANUFACTURING M&L Manufacturing makes various components for printers and copiers. In addition to supplying these items to a major manufac- turer, the company distributes these and similar items to office supply stores and computer stores as replacement parts for print- ers and desktop copiers. In all, the company makes about 20 dif- ferent items. The two markets (the major manufacturer and the replacement market) require somewhat different handling. For example, replacement products must be packaged individually whereas products are shipped in bulk to the major manufacturer. The company does not use forecasts for production planning. Instead, the operations manager decides which items to produce and the batch size, based on orders and the amounts in inventory. The products that have the fewest amounts in inventory get the highest priority. Demand is uneven, and the company has experi- Casel d being overstocked on some items and out of others. Being understocked has occasionally created tensions with the manag- Week Product 1 Product 2 50 40 2 54 38 57 41 4 60 46 64 42 67 41 7. 90 41 76 47 79 42 10 82 43 11 85 42 12 87 49 ers of retail outlets. Another problem is that prices of raw mate- rials have been creeping up, although the operations manager thinks that this might be a temporary condition. Because of competitive pressures and falling profits, the man- ager has decided to undertake a number of changes. One change is to introduce more formal forecasting procedures in order to Questions improve production planning and inventory management. With that in mind, the manager wants to begin forecasting for two products. These products are important for several reasons. First, they account for a disproportionately large share of the company's profits. Second, the manager believes that one of these products will 13 92 43 14 96 44 "Unusual order due to flooding of customer's warehouse. 1. What are some of the potential benefits of a more formalized approach to forecasting? become increasingly important to future growth plans; and third, the other product has experienced periodic out-of-stock instances. The manager has compiled data on product demand for the two products from order records for the previous 14 weeks. These are shown in the following table. 2. Prepare a weekly forecast for the next four weeks for each product. Briefly explain why you chose the methods you used. (Hint: For product 2, a simple approach, possibly some sort of naivelintuitive approach, would be preferable to a technical approach in view of the manager's disdain of more technical methods.)
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps

Blurred answer
Knowledge Booster
Introduction to Forecasting
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, operations-management and related others by exploring similar questions and additional content below.
Similar questions
Recommended textbooks for you
Practical Management Science
Practical Management Science
Operations Management
ISBN:
9781337406659
Author:
WINSTON, Wayne L.
Publisher:
Cengage,
Operations Management
Operations Management
Operations Management
ISBN:
9781259667473
Author:
William J Stevenson
Publisher:
McGraw-Hill Education
Operations and Supply Chain Management (Mcgraw-hi…
Operations and Supply Chain Management (Mcgraw-hi…
Operations Management
ISBN:
9781259666100
Author:
F. Robert Jacobs, Richard B Chase
Publisher:
McGraw-Hill Education
Business in Action
Business in Action
Operations Management
ISBN:
9780135198100
Author:
BOVEE
Publisher:
PEARSON CO
Purchasing and Supply Chain Management
Purchasing and Supply Chain Management
Operations Management
ISBN:
9781285869681
Author:
Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson
Publisher:
Cengage Learning
Production and Operations Analysis, Seventh Editi…
Production and Operations Analysis, Seventh Editi…
Operations Management
ISBN:
9781478623069
Author:
Steven Nahmias, Tava Lennon Olsen
Publisher:
Waveland Press, Inc.