M&L Manufacturing M&L Manufacturing makes various components for printers and copiers. In addition to supplying these items to a major manufacturer, the company distributes these and similar items to office supply stores and computer stores as replacement parts for printers and desktop copiers. In all, the company makes about 20 different items. The two markets (the major manufacturer and the replacement market) require somewhat different handling. For example, replacement products must be packaged individually whereas products are shipped in bulk to the major manufacturer. The company does not use forecasts for production planning. Because of competitive pressures and falling profits, the manager has 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. With that in mind, the manager wants to begin forecasting for two products. The manager has compiled data on product demand for the two products from order records for the previous 14 weeks. These are shown in the following table.
Week Product 1 Product 2
1 50 40
2 54 38
3 57 41
4 60 46
5 64 42
6 67 41
7 90* 41
8 76 47
9 79 42
10 82 43
11 85 42
12 87 49
13 92 43
14 96 44
Questions
1. What are some of the potential benefits of a more formalized approach to forecasting?
2. Prepare a weekly forecast for the next four weeks for each product. Briefly explain why you chose the methods you used. (Hint: For product 2, a simple approach, possibly some sort of naive/intuitive approach, would be preferable to a technical approach in view of the manager's disdain of more technical methods.)