Forecasting Dilemma at Dstore
Prerequisite Conceptual Understanding
- • Jay Heizer, et al., “Chapter 3: Forecasting”, Operations Management, 9th Edition, Pearson Education, 2008
Synopsis
This caselet can be used to facilitate understanding of the concept of Forecasting in Operations Management. Bangalore-based Dstore (P) Ltd. (Dstore) is a growing pen drive manufacturer. The company’s founder John Paul (John) faces a typical inventory problem i.e., overstock or shortage of few items because of inaccurate forecasting of demand. Since the inception, John had used the previous month’s sales as the base to forecast for the next month and planned production accordingly. Nevertheles, Dstore was continuously facing the problem of overstock or shortage. To avoid this problem, John wanted accurate forecasting and he gave this assignment to the new joinee, Ram Charan (Ram). Ram wanted to do the forecasting as accurately as John expected it to be. Can Ram find a solution to the problem at Dstore? Will he be able to identify the apt method of forecasting suitable for Dstore?
Expected Learning Outcomes
- • Methods of forecasting and time horizons
- • Suitable forecasting method for Dstore
- •· Forecast accuracy
Assignment Questions
- I. What are the available forecasting methods? Which method would be most suitable for Ram?
- II. Based on your analysis prepare a report, based on the same criteria, to be presented to John Paul.
- III. ....................
Teaching Plan
The Teaching Note follows the specific Teaching Plan [Annexure (TN)-I]............
Exhibits
Exhibit (TN)-I: Forecasting Using 3-month Moving Average
Exhibit (TN)-II: Forecasting Using 3-month Weighted Moving Average
Exhibit (TN)-III: Exponent Smoothing Forecast (2014)
Exhibit (TN)-IV: Measures of Error for 3-month Moving Average
Exhibit (TN)-V: Measures of Error for 3-month Weighted Moving Average
Exhibit (TN)-VI: Trend Analysis
Exhibit (TN)-VII: Trend Analysis on Year basis
Exhibit (TN)-VIII: Computation of Seasonal Indices
Exhibit (TN)-IX: Computation of Seasonal Forecast