Forecast, Forecast methods, calculations, case study
Case Study 1: Notex Manufacturing
Notex Manufacturing makes various batteries used in mobile devices. The company has a major customer so batteries are shipped in bulk to this customer. The company also distributes these batteries to retail stores as replacement parts. The batteries are packaged individually to retail stores. In all, the company makes about 15 different batteries. Currently, the company does not use any forecasting to predict the demand for the batteries. Instead, it has employed rule of thumb to decide about the volume of the production. This has caused some issues for the company including stock-out for some types of batteries or overstocking for some others. The other problem is an increase in the price of raw materials though the company believes it is a temporary condition. Due to complaints from suppliers and also customers the company has decided to introduce a systematic approach toward forecasting.
Therefore, the company has decided to forecast two most important products. The following table (see next page) shows the data on product demand for the two products from order records for the previous 19 months.
Which forecasting method/s do you suggest for the two products? Briefly explain why? Forecast for the next month for each product. (Use MAD for measuring error).
Month Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul
Product 1 33 37 38 40 42 47 43 49 51 55 62 68 69 70 65 55 50 51 49
Product 2 33 34 35 35 36 36 37 39 81* 38 40 38 39 40 39 40 41 42 41
* Unusual order due to flooding of customer's warehouse.
Case Study 2: UFE Clubs Case Study
UFE Clubs produces ball bearings. The diameter of the ball bearings is very important for the quality purposes. The following tables shows the diameters of 6 randomly selected samples. Each sample contains four observations.
Sample 1 2 3 4
1 .604 .612 .588 .600
2 .597 .601 .607 .603
3 .581 .570 .585 .592
4 .620 .605 .595 .588
5 .590 .614 .608 .604
6 .585 .583 .617 .579
a. Is the production process of the ball bearings are under control both in terms of central tendency and dispersion. Show all calculations.
b. A customer for ball bearings places an order with diameter of 0.600 +/- 0.050. What is the Process Capability Index? The Process Capability Ratio?
c. If the firm is seeking four-sigma performance, is the process capable of producing the ball bearings?
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