CASE STUDY - Forecasting    Your line manager, Ms Lionheart, has collected and scrutinised performance data for the company. She was concerned that the inventories were high for certain products which had resulted in significant price reductions and losses for the company. At the same time, the company had run out of stock for other items early in the season resulting in unsatisfied customers and lost sales. Ms Lionheart has concluded that the problem was not with the specific products carried in the stock, but with the quantities ordered by the procurement department for two popular products; Dog Ball Launcher and Lightweight Dog Lead. Dog Ball Launcher is a product carried by the company for the past four years. Quarterly demand data for the past four years are shown in table 1. Last year the company seemed to always be out of stock for this item. The model used by the procurement department to forecast demand for this product over the last two years has been Multiplicative Seasonal model based on seasonal indices developed using data from 2018‐2019 with predicted annual demand increase of 6 units per year since 2019. Lightweight Dog Lead is a new product that the company has been selling for the past two years. When the product was introduced in 2020, it was expected to have a large increasing demand trend. The procurement team has been using Trend Projection with least‐squares method developed using data from 2020 to forecast the demand for this item. However, they now seem to have too much inventory for this product. Monthly demand data for the past two years for this item is shown in table 2. Ms Lionheart now wonders if right forecasting models were being applied to these two products. She wants you to analyse the available data and produce a short report (1,000 words ± 10%) with all relevant tables and figures, to address the highlighted issues.   In your report you need to consider the following for both sets of data: 1. Analyse and explain the data. 2. Is appropriate forecasting model being applied? Explain. 3. What forecasting model would you use? Explain why you selected your approach. 4. Generate the forecast for each period in 2020 and 2021 using the current model and the model you selected. Analyse the results. 5. Determine the forecast error for the current model and the model you selected. Explain your method and findings. 6. Provide three key recommendations for the company.   table 1 : demand for dog ball launcher 2018-2021   Quarter 2018 2019 2020 2021 Demand  Q1 10 14 20 30 Q2 29 31 26 31 Q3 26 29 28 33 Q4 15 18 30 35 Table 2 : Demand for lightweight Dog lead 2020-2021   Month 2020 Demand 2021 Demand January 36 98 Februrary 42 101 March 56 97 April 75 99 May 85 100 June 94 95 July 101 107 August 108 104 September 105 98 October 114 104 November 111 100 December 110 102

Management, Loose-Leaf Version
13th Edition
ISBN:9781305969308
Author:Richard L. Daft
Publisher:Richard L. Daft
Chapter19: Managing Quality And Performance
Section: Chapter Questions
Problem 3CFCA: Cousins Jeri Lynn De Bose, Tish Hoover, and Josephine (Joey) Parks looked forward to meeting up...
icon
Related questions
Question

 

 

Question

Write a 1000 words report on a case study.

 

You have recently started a new job as a junior operations manager at Pet Kingdom, a pet

supplies retailer. You are writing these reports to your line manager, Ms Lionheart, so the

appearance and language of your reports need to be professional.

 

CASE STUDY - Forecasting 

 

Your line manager, Ms Lionheart, has collected and scrutinised performance data for the

company. She was concerned that the inventories were high for certain products which had

resulted in significant price reductions and losses for the company. At the same time, the

company had run out of stock for other items early in the season resulting in unsatisfied

customers and lost sales. Ms Lionheart has concluded that the problem was not with the

specific products carried in the stock, but with the quantities ordered by the procurement

department for two popular products; Dog Ball Launcher and Lightweight Dog Lead.

Dog Ball Launcher is a product carried by the company for the past four years. Quarterly

demand data for the past four years are shown in table 1. Last year the company seemed to

always be out of stock for this item. The model used by the procurement department to

forecast demand for this product over the last two years has been Multiplicative Seasonal

model based on seasonal indices developed using data from 2018‐2019 with predicted

annual demand increase of 6 units per year since 2019.

Lightweight Dog Lead is a new product that the company has been selling for the past two

years. When the product was introduced in 2020, it was expected to have a large increasing

demand trend. The procurement team has been using Trend Projection with least‐squares

method developed using data from 2020 to forecast the demand for this item. However,

they now seem to have too much inventory for this product. Monthly demand data for the

past two years for this item is shown in table 2.

Ms Lionheart now wonders if right forecasting models were being applied to these two

products. She wants you to analyse the available data and produce a short report (1,000

words ± 10%) with all relevant tables and figures, to address the highlighted issues.  

In your report you need to consider the following for both sets of data:

1. Analyse and explain the data.

2. Is appropriate forecasting model being applied? Explain.

3. What forecasting model would you use? Explain why you selected your approach.

4. Generate the forecast for each period in 2020 and 2021 using the current model and

the model you selected. Analyse the results.

5. Determine the forecast error for the current model and the model you selected.

Explain your method and findings.

6. Provide three key recommendations for the company.

 

table 1 : demand for dog ball launcher 2018-2021

 

Quarter 2018 2019 2020 2021 Demand 

Q1 10 14 20 30

Q2 29 31 26 31

Q3 26 29 28 33

Q4 15 18 30 35

Table 2 : Demand for lightweight Dog lead 2020-2021

 

Month 2020 Demand 2021 Demand

January 36 98

Februrary 42 101

March 56 97

April 75 99

May 85 100

June 94 95

July 101 107

August 108 104

September 105 98

October 114 104

November 111 100

December 110 102

Expert Solution
steps

Step by step

Solved in 4 steps with 4 images

Blurred answer
Knowledge Booster
Business reports
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
  • SEE MORE QUESTIONS
Recommended textbooks for you
Management, Loose-Leaf Version
Management, Loose-Leaf Version
Management
ISBN:
9781305969308
Author:
Richard L. Daft
Publisher:
South-Western College Pub