Shoemax Case
1.) ShoeMax is a shoe company that mainly specializes in manufacturing athletic shoes. The company was created in 1984 and is headquartered in Houston, Texas. The demand of the shoes the company produces has always been steady with some periods with high sales and others not that high, but they also use forecasting techniques in order to prepared for demand. The company knows that is essential to understand the market demand to know how much product they need to produce. The company does not want to produce more product than there is demand for because of the costs of having extra inventory in storage and production cost. Considering all of this the company mostly uses the Simple moving average technique to forecast the demand of a certain type of shoe. This forecasting technique is helpful to make demand predictions because is fairly simple to use. In this technique the closing price for a number of periods is added and then divided by the total number of periods. For example, lets say the company had closing prices for a 6 month period for one of their most popular shoes of $1400,$1500,$1605,$1678,$1700, and $1266 we would take the sum which is $7,883 and divide it by 6 which is $1,313. With this result the company can see the average sales for the six month period ($1,313) and therefore they would have an idea of how much demand they will have for the next six month period.
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2.) The Mean Absolute Deviation is a method that determines the accuracy of a forecast.
The Mean Absolute Deviation takes the average of forecasted values and actual values. This is an important method because it calculates the accuracy of a
forecast.
3.) The difference between an independent and dependent variable is that an independent variable can be changed or controlled. The dependent variable depends of the Independent variable it can be said that any changes made to the independent variable will result in the dependent variable. For example, an independent variable can be a price of a product if the price is high then the demand will probably be low because customers will look for more affordable options. If we lower the price demand will increase because customers will be more attracted for the lower price. The independent vvariable in this case would be the price and the dependent is demand.
4.) Yield management influences the aggregate plan by manipulating the price or production of a product in a business. For example, a clothing company sells their winter clothes with higher prices during the winter season because there is more demand, but as winter passes the price of the clothes left after winter is lowered because is not in season any more. With the yield management manipulated the price of the clothes according to demand and time.
5.) Aggregate planning in the service industry focuses on time, plan, and the demand for the service. In the manufacturing industry productivity and cost are the main focus. For example, a company that cleans oil spills may focus on cleaning in the fasted time possible. A company that manufactures pencils may focused in producing the largest amounts of pencils by maximizing productivity and the use of raw materials.
6.) On advantage is that companies can hire people according to their needs by periods. The disadvantages can be that there are costs associated to hiring, training, rehiring, and layoff of employees.
2.) The Mean Absolute Deviation is a method that determines the accuracy of a forecast.
The Mean Absolute Deviation takes the average of forecasted values and actual values. This is an important method because it calculates the accuracy of a
forecast.
3.) The difference between an independent and dependent variable is that an independent variable can be changed or controlled. The dependent variable depends of the Independent variable it can be said that any changes made to the independent variable will result in the dependent variable. For example, an independent variable can be a price of a product if the price is high then the demand will probably be low because customers will look for more affordable options. If we lower the price demand will increase because customers will be more attracted for the lower price. The independent vvariable in this case would be the price and the dependent is demand.
4.) Yield management influences the aggregate plan by manipulating the price or production of a product in a business. For example, a clothing company sells their winter clothes with higher prices during the winter season because there is more demand, but as winter passes the price of the clothes left after winter is lowered because is not in season any more. With the yield management manipulated the price of the clothes according to demand and time.
5.) Aggregate planning in the service industry focuses on time, plan, and the demand for the service. In the manufacturing industry productivity and cost are the main focus. For example, a company that cleans oil spills may focus on cleaning in the fasted time possible. A company that manufactures pencils may focused in producing the largest amounts of pencils by maximizing productivity and the use of raw materials.
6.) On advantage is that companies can hire people according to their needs by periods. The disadvantages can be that there are costs associated to hiring, training, rehiring, and layoff of employees.