Prod Man

Background

M & L Manufacturing makes various components for printers and copiers. They are supplying items to major manufacturer for printers and copiers, and they distributes these and similar items to office supply stores and computer stores as replacement parts for printers and desktop copiers. The company makes 20 different items. The major manufacturer and replacement market are the two markets that require somewhat different handling. Because of competitive pressures and falling profits, the managers decided to undertake a number of changes. One change is to introduce more formal forecasting procedures in order to improve production planning and inventory management. The manager wants to begin forecasting for two products. These products are important because fist, they account for a disproportionately large share of the company’s profit. Second, the manager believes that one of these products will become increasingly important to future growth plans. And lastly, the other product has experienced periodic out-of-stock instances.

Problems

• The company does not use forecasts for production planning (operations manager decides based 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 (created tensions with the managers of retail outlets).

• Prices of raw materials have been creeping up, although the operations manager thinks that this might be a contemporary condition.

Questions

1. What are some of the potential benefits of a more formalized approach to forecasting?

2. Prepare a weekly forecast for the next hour weeks for each product. Briefly explain why you chose the methods you used.