Part Two Forecasting CASE M&L; Manufacturing ers. In adition o suons various com
ID: 335546 • Letter: P
Question
Part Two Forecasting CASE M&L; Manufacturing ers. In adition o suons various components for printers grouwth plans, and third,the other product ha istributes these The MSL Manufacturing makes various components for printers growth plans; and thit and copiers. In addition to supplying these items to a major manu- odic out-of-stock instances. acturer of printers and copiers, the company distributes these The manager has compié and similar items to office supply stores and computer stores as two products from order reco data on product demand for the for the previous 14 weeks. These are shown in the following table cement parts for printers and desktop copiers. In all, the company makes about 20 different items. The two markets (the najor manufacturer and the replacement market) require some what different handling. For example, replacement products must be packaged individually whereas products are shipped in bulk to Product 1 50 54 Product 2 40 38 Week 46 42 41 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 partly 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 experienced being overstocked on some items and out of others. Being understocked has occasionally created tensions with the managers of retail outlets. Another problem is that prices of raw materials have been creeping up, although the operations man- 64 47 42 43 42 49 76 79 85 92 13 96 ager thinks that this might be a temporary condition. Unusual order due to flooding of customer's warehouse 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 1. What are some of the potential benefits of a more formalized approach to forecasting? uct. Briefly explain why you chose the methods you used. (Hint in view of the manager's disdain of more technical methods.) improve production planning and inventory management. With that in mind, the manager wants to begin forecasting r two products. These products are important for several rea ey account for a disproportionately large share of 2. Prepare a weekly forecast for the next four weeks for each prod For product 2, a simple approach, possibly some sort of naive intuitive approach, would be preferable to a technical approach one e company's profits. Second, the manager believes that of these products will become increasingly important to futureExplanation / Answer
Answer 1 - The potential benefit of the formalized approach is to easily quantify the data and given information by the use of computer. When it comes to forecasting, it helps any organization to find what the future demand would be. It helps in predicting demand, reaching highly on on-time delivery of product or services, good inventor control, ease in financial planning and lastly, with higher customer satisfaction. At the same time, forecasting enables managers to plan for future. In M&L, by using this approach they can overcome the problem of overstocking or ‘out of the stock’ of some of the products.