Forecasting

500–750 words plus a chart/time line (1 document

The forecasting department, traditionally reporting to the sale manager, has historically seen a forecast accuracy of about 60%, and this in turn causes problems for the following departments:

• Purchasing: What should we buy and how much?
• Production: What should we really build?
• Inventory management: We keep building the wrong thing.

The sales manager asked you to write her a memo, specifically addressing the following:

• How could you suggest that your new system would achieve any better levels of forecast accuracy?
• Why is forecast accuracy itself not as important under traditional methods?
• Create a chart or timeline that includes all of the following:
  • Which purchase orders have to be placed, and when
  • When manufacturing needs to begin, to have products delivered to a customer
  • Approximate dates for all of the following:
    • When the product must be shipped to meet the customer's due date
    • When the application of the cover and packaging must take place to meet the customer's due date
    • When the manufacturing of the widget must begin and end
    • When the raw material for the widget must be ordered
    • When the plastic cover must be ordered
    • When the cardboard box must be ordered
  • Includes notes explain your timing calculation
  • Assumes all of the following conditions:
    • The factory has two departments: manufacturing and packaging
    • Product X consists of 3 components
      • a widget manufactured in the factory with a total manufacturing lead time of 1 week
      • a plastic cover purchased from vendor A with a procurement lead time of 3 weeks
      • a cardboard shipping box purchased from vendor B with a procurement lead time of 4 weeks
    • The widget itself is made from steel (whose lead time from vendor C is 4 weeks).
    • It takes 1 day for the cover to be applied to the product and for the product to be inserted in the box in the packaging department.
    • The shipping time to this customer is in 3 weeks, and you do not want it to be late or early.
    • Assume you received the customer order on 1/1/20XX.
    • Ignore any holidays
    • Assume a 5-day work week
    • The customer requires the product to arrive at his location on 3/31/2011