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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:
- Which purchase orders have to be placed, and when
- When manufacturing needs to begin, to have products delivered to a customer
- 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
- Includes notes explain your timing calculation
- 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