Consider the following scenario: Agricultural chemicals corporation: Management
ID: 399136 • Letter: C
Question
Consider the following scenario:
Agricultural chemicals corporation: Management at your agricultural chemicals corporation has been dissatisfied with production planning. Production plans are created using best guesses of demand for each product, which are based on how much of each product has been ordered in the past. If a customer places an unexpected order or requests a change to an existing order after it has been placed, there is no way to adjust production plans. The company may have to tell customers it can’t fill their orders, or it may run up extra costs maintaining additional inventory to prevent stock-outs.
At the end of each month, orders are totaled and manually keyed into the company’s production planning system. Data from the past month’s production and inventory systems are manually entered into the firm’s order management system. Analysts from the sales department and from the production department analyze the data from their respective systems to determine what the sales targets and production targets should be for the next month. These estimates are usually different. The analysts then get together at a high-level planning meeting to revise the production and sales targets to take into account senior management’s goals for market share, revenues, and profits. The outcome of the meeting is a finalized production master schedule.
The entire production planning process takes 17 business days to complete. Nine of these days are required to enter and validate the data. The remaining days are spent developing and reconciling the production and sales targets and finalizing the production master schedule.
1. Identify at least 3 metrics that could be put in place to measure the impact of the existing process on operational efficiency?
Explanation / Answer
There are two types of forecasting models.
• Quantitative
• Qualitative
Quantitative forecasting methods can be defined as a method in which the predictions are made on the numerical facts for predicting the upcoming events.
Two main type of quantitative forecasting methods are as follows
• Explanatory method
• Time series method
Explanatory method
Explanatory Method can be defined as a method in which changes for the specific term is measured with the help of the statistical data and this directly helps in explain in what is causing the specific variation hence we call it explanatory model for the forecasting.
Time series method
Time series Method can be defined when the data is very useful for forecasting the things which can change over time. For example stock prices of Walmart or monthly rainfall as well as annual Google profits can be a part of the time series method for forecasting which provides an Observation for the same thing and helps in forecasting. This is done by predicting the sequence of the specific Observation for the future.
Qualitative approach forecasting done with solutions when the sufficient information is not available for the specific topic. Where the specific data is not available qualitative approaches are used.
Some main qualitative approach are as follows.
• Jury of execution opinion.
Into the specific method opinions of experts are taken and later they are combined and averaged. The specific strategy takes individual opinion or Group opinions on the basis of the requirement. All element are requested to generate new ideas which are later evaluated for their specific profitability as well as feasibility .
• Opinion of the salesperson.
This specific method is done by having the opinions of the sales managers for setting the trend in the industry. Overall Trends for the marketing can be calculated by taking the opinion of the salesperson in the industry. Forecasting methods are basically used for short term planning as the level of data gained from the sales person or not very sophisticated.
• Consumers Expectations.
Consumer Expectations method directly works on the basis of creating a server with the customers. While asking the customers for the future needs this survey is carried out and provide a Useful information where the industry is very limited. Based on the specific Service result overall forecast for the specific survey can be implemented into the organisational structure.
Implementation of a strong electronic record management program as well as implementation of other forecasting tool would definitely help the organisation to assess the successful probability of forecasting and providing information regarding all of a sudden orders. As the nature of order is on 13 availability of forecasting techniques would definitely increase the level of benefit generated by the organisation for providing it a positive approach and improving availability of opportunities for the organisation the specific operating environment.