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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 3/31/2011

      • Ignore any holidays

      • Assume a 5-day work week

      • The customer requires the product to arrive at his location on 3/31/2011

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