Case Study

J. Deans has just been appointed consultant to Mountaineer Corp. Mountaineer Corp is a retail organisation specialising in Palm Assistants which is an electronic product used extensively by business people as a digital organiser. Mountaineer Corp is concerned about inefficiencies in its supply chain. Competitors of Mountaineer Corp have launched an effective marketing campaign guaranteeing customers fast response once orders have been placed. Due to rapidly changing technology and updates to electronic gadgets, customers were attracted to the idea of getting the latest equipment before any chance of the item becoming outdated. Mountaineer Corp has suffered in the past from overstocking and having to heavily discount items once they were not quickly disposed of and were therefore reluctant to have excessive inventory. This policy led to a decline in responsiveness.

As consultant J. Deans has been tasked with exploring some options relating to forecasting and network design.

The following data was provided for a 6-month period:

Months Sales units

January 6000

February 5200

March 5800

April 7500

May 8000

June 8200

Required:

i. Use a Three-month weighted average to forecast sales for April to June. Weights to be assigned are 5,3 and 2 with the highest weight to be assigned to the most recent month.

ii. Compute the MAD for the forecast above. What would you conclude if the MAD for an alternate forecasting method was 1500?

iii. Describe THREE (3) factors that Mountaineer Corp may need to consider if they attempt to improve efficiency through an enhanced supply chain network.