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:
o Which purchase orders have to be placed, and when
o When manufacturing needs to begin, to have products delivered to a customer
o 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
o Includes notes explain your timing calculation
o 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 1/1/20XX.
• Ignore any holidays
• Assume a 5-day work week
• The customer requires the product to arrive at his location on 3/31/2011