Case assignment from Chapter 3 of Manufacturing Planning and Control for Supply Chain Management.

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Case Forecasting at Ross Products Ross Products Division of Abbott Laboratories is headquartered in Columbus, Ohio. The company produces a variety of nutritional products, including adult medical nutrition supplements and pediatric infant formulas, as well as ancillary equipment. An example of this equipment is a pump that supplies nutritional liquids to the stomach and that can also monitor the rate of flow. There are four manufacturing facilities in the United States, and Ross markets its products in the United States and overseas. Managers use a program entitled Log*Plus to perform demand management activities. The firm uses a comprehensive approach to assure that all demands on capacity are included in the forecast. Figure 3.21 illustrates the system's key features. The demand management aspects of Log*Plus produces forecasts from national inputs and monitors actual demand against these forecasts. The process of producing the forecast used for planning starts with forecasts from marketing and sales FIGURE 3 Forecasting Procedure 1 Ross Produ Division, Abbott Laboratori FIGURE 3.22 Example Forecast for Ross Products Division, Abbott Laberateries in dollars by product groups. These are broken out by region in Log*Plus to provide plant-level forecasts of national demand. These data are consolidated with the forecast for international sales and the total is converted to an item level forecast by plant. The process is not finished, however, until marketing, the product manager, and the production and inventory manager review the forecasts. Three times a year, meetings are held to review forecasts for all products in conjunction with budget meetings. These meetings can be held monthly for products that are experiencing changes, promotions, or other factors that could change demand. To provide a service to customers and directly capture information on the market, Ross manages product inventory in some of its customers' facilities using VMI. Information on the use of these products is transmitted to Ross by electronic data interchange (EDI). These data are combined with the forecasts to produce reports such as the one shown in Figure 3.22 for SKU XYZ, a medical nutrition product in 8-ounce cans. The top of the figure shows several years' actual sales with two years and three months of forecast sales. (The current month is shown with an asterisk in year 0 .) To facilitate any review of the forecasts, the data are plotted in the bottom half of the report. Here the seasonality is quite evident as is a sales peak about a year and a half ago (because of a promotion). These forecasts are a basic input to the master production scheduling module of the firm. Assignment 1. Using the historic data given in Figure 3.22 (through August of year 0 ), develop your own forecast for the next two years. Use the regression techniques described in the chapter. 2. How do your forecasts compare to those shown in the Ross report? Case Forecasting at Ross Products Ross Products Division of Abbott Laboratories is headquartered in Columbus, Ohio. The company produces a variety of nutritional products, including adult medical nutrition supplements and pediatric infant formulas, as well as ancillary equipment. An example of this equipment is a pump that supplies nutritional liquids to the stomach and that can also monitor the rate of flow. There are four manufacturing facilities in the United States, and Ross markets its products in the United States and overseas. Managers use a program entitled Log*Plus to perform demand management activities. The firm uses a comprehensive approach to assure that all demands on capacity are included in the forecast. Figure 3.21 illustrates the system's key features. The demand management aspects of Log*Plus produces forecasts from national inputs and monitors actual demand against these forecasts. The process of producing the forecast used for planning starts with forecasts from marketing and sales FIGURE 3 Forecasting Procedure 1 Ross Produ Division, Abbott Laboratori FIGURE 3.22 Example Forecast for Ross Products Division, Abbott Laberateries in dollars by product groups. These are broken out by region in Log*Plus to provide plant-level forecasts of national demand. These data are consolidated with the forecast for international sales and the total is converted to an item level forecast by plant. The process is not finished, however, until marketing, the product manager, and the production and inventory manager review the forecasts. Three times a year, meetings are held to review forecasts for all products in conjunction with budget meetings. These meetings can be held monthly for products that are experiencing changes, promotions, or other factors that could change demand. To provide a service to customers and directly capture information on the market, Ross manages product inventory in some of its customers' facilities using VMI. Information on the use of these products is transmitted to Ross by electronic data interchange (EDI). These data are combined with the forecasts to produce reports such as the one shown in Figure 3.22 for SKU XYZ, a medical nutrition product in 8-ounce cans. The top of the figure shows several years' actual sales with two years and three months of forecast sales. (The current month is shown with an asterisk in year 0 .) To facilitate any review of the forecasts, the data are plotted in the bottom half of the report. Here the seasonality is quite evident as is a sales peak about a year and a half ago (because of a promotion). These forecasts are a basic input to the master production scheduling module of the firm. Assignment 1. Using the historic data given in Figure 3.22 (through August of year 0 ), develop your own forecast for the next two years. Use the regression techniques described in the chapter. 2. How do your forecasts compare to those shown in the Ross report