Question 1 (Forecasting): 10 points
Case Study: “M&L Manufacturing”
1. What are some of the potential benefits of a more formalized approach to forecasting?
Some of the potential benefits of a more formalized approach to forecasting can be based on judgmental forecasts. Since judgmental forecasts relies on opinions from consumer surveys, sales staff, managers, executives, and experts, M&L Manufacturing can get an idea of what is needed at their warehouse and at their supply store. Without accurate data from each store, M&L inventory can be overstock, understock, or no stock. So when a store order supplies, M&L wouldn’t know how much inventory they have, they might have a lot of product 1, but very little of product 2. When using the judgmental forecast, sales staff and managers from other supply store can give M&L Manufacturing what is selling in their store, and ship out more products to fill up their inventory, and they can fill their warehouse on which product is selling faster than the other. Without having the correct amount of inventory in the warehouse, they can lose a lot of money because consumers will purchased other products from a different company. Using the judgmental forecasting, the manager from M&L Manufacturing can get a sense on what is needed at each of their supply store, and get accurate forecasting on each product, and how many products are selling each month.
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 naïve/intuitive approach, would be preferable to a technical approach in view of the manager's disdain of more technical methods.)"
The reason I choose the linear trend equation because it is the most common equation to calculate the weekly forecast, and it is the easiest method to figure out the following four weeks of each product, to determine weeks 15, 16,...
Johanna Viteri Discussion Case: 1. What are some of the potential benefits of a more formalized approach to forecasting? Forecasting is important because it provides information that will help an organization determine what future demands will be. The benefits to forecasting include better predicting demand, more accurate financial planning, higher on-time delivery of products/services, better inventory control (eliminating too much or too little inventory) and higher customer satisfaction. Forecasts play an important role in the planning process because they enable managers to anticipate the future so they can plan accordingly (Stevenson, 2015). In the M&L case, they are experiencing overstock on some items and out of stock on others therefore utilizing a more formalized approach to forecasting would help decrease these problems. 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