M& L with details calculation
Case M&L Manufacturing
Q1.What are some of the potential benefits of a more formalized approach to forecasting?
Q2.Prepare a Weekly forecast for the next four weeks for each product. Briefly explain why you chose the methods you used.
Forecasting helps to predict the future orders, in turns it ensures customers demands are constantly being fulfilled; which eventually makes the customers happy.
Forecasting helps the company to remain competitive, it reduces inventory costs.
Besides, forecasting helps to prepare for an increase or drop in sales, it saves on labour costs.
And all these factors bring higher profit to the company.
Using Linear Methods to predict the next four weeks forecast
Product 1
Given data,
Week 1= 50
Week 2= 54
Week 3= 57
Week 4= 60
Week 5= 64
Week 6= 67
Week 7= 90
Week 8= 76
Week 9 =79
Week 10= 82
Week 11 =85
Week 12 =87
Week 13= 92
Week 14= 96
Week 15
Now, we will be using the general form for a trend model; which is ;
Y = a + bt or F = a + bt
Whereas, Y= demand, t=period
[Ty=50,108,171,240,320,402,630,608,711,820,935,1044,1196,1344 t²=1, 4,9,16,25,36,49,64,81,100,121,144,169,196 (Details calculation shown on the spreadsheet) ]
=
=3.569
=
=47.45
=100
Similarly, Week 16= 103
Week 17= 107
Week 18 =110
Product 2
Week 1= 40
Week 2= 38
Week 3=41
Week 4= 46
Week 5= 42
Week 6= 41
Week 7= 41
Week 8= 47
Week 9= 42
Week10= 43
Week 11= 42
Week 12= 49
Week 13= 43
Week 14= 44
Week 15
=
=.36
=
=40.08
Week 15: Thus the trend equation is: F=a+bt
=40.08+.36*15
=45 (rounded).
Similarly,
Week 15= 45
Week16= 46
Week17= 47
Week18= 48
Now, I’ll show the forecast of product 2 using the simple/naive approach.
The reasons of using naive/intuitive approach are many. Some of them are it is very cheap, quick and easy to prepare. As a result it is widely used by all level of managers.
It does
Q1.What are some of the potential benefits of a more formalized approach to forecasting?
Q2.Prepare a Weekly forecast for the next four weeks for each product. Briefly explain why you chose the methods you used.
Forecasting helps to predict the future orders, in turns it ensures customers demands are constantly being fulfilled; which eventually makes the customers happy.
Forecasting helps the company to remain competitive, it reduces inventory costs.
Besides, forecasting helps to prepare for an increase or drop in sales, it saves on labour costs.
And all these factors bring higher profit to the company.
Using Linear Methods to predict the next four weeks forecast
Product 1
Given data,
Week 1= 50
Week 2= 54
Week 3= 57
Week 4= 60
Week 5= 64
Week 6= 67
Week 7= 90
Week 8= 76
Week 9 =79
Week 10= 82
Week 11 =85
Week 12 =87
Week 13= 92
Week 14= 96
Week 15
Now, we will be using the general form for a trend model; which is ;
Y = a + bt or F = a + bt
Whereas, Y= demand, t=period
[Ty=50,108,171,240,320,402,630,608,711,820,935,1044,1196,1344 t²=1, 4,9,16,25,36,49,64,81,100,121,144,169,196 (Details calculation shown on the spreadsheet) ]
=
=3.569
=
=47.45
=100
Similarly, Week 16= 103
Week 17= 107
Week 18 =110
Product 2
Week 1= 40
Week 2= 38
Week 3=41
Week 4= 46
Week 5= 42
Week 6= 41
Week 7= 41
Week 8= 47
Week 9= 42
Week10= 43
Week 11= 42
Week 12= 49
Week 13= 43
Week 14= 44
Week 15
=
=.36
=
=40.08
Week 15: Thus the trend equation is: F=a+bt
=40.08+.36*15
=45 (rounded).
Similarly,
Week 15= 45
Week16= 46
Week17= 47
Week18= 48
Now, I’ll show the forecast of product 2 using the simple/naive approach.
The reasons of using naive/intuitive approach are many. Some of them are it is very cheap, quick and easy to prepare. As a result it is widely used by all level of managers.
It does