DEMAND FORECASTING CASE STUDY

You have been hired as a demand planning intern for the Maui Jim Inc. They want you to develop a forecast for their Longboard style of sunglasses. The goal is to determine how many pair they will produce to meet retailer demand in February 2021. During your first meeting, you were handed some data to work with and the product team talked about the companys upcoming promotional blitz to support Spring Break 21 in major vacation destinations.

Month	Forecast	Demand
August 2020	5,800	5,400
September 2020	5,000	3,800
October 2020	4,500	3,300
November 2020	3,000	3,300
December 2020	4,500	3,900
January 2021	4,400	4,300

Other useful information about the company: Internal production capacity = 3,500 units per month under normal conditions. Historical forecasting error = +/- 300 units per month

Forecasting Concept Questions

1, Simple forecasting methods like the three-month moving average work best with what type of demand?

2. Given that forecasts are never perfect, what can a company do to understand their level of performance and improve?

Calculate the demand forecast for February 2021 using the methods listed below. Work with the data provided in the table on the previous page.

3. Three-Month Simple Moving Average

4. Three-Month Weighted Moving Average: Weight factors t 1 = .5 t 2 = .3 t 3 = .2

5. Exponential Smoothing: Alpha smoothing constant = .6

6. Which method do you recommend that the company use when forecasting February 2021 demand? Explain why you selected this method.

Evaluate the companys capacity to build the amount of product that you have forecasted.

7. Does your organization have enough capacity to serve demand in February 2021?

8. If you your forecast does not match capacity, what can be done in the short run to either deal with excess capacity or a shortage of capacity?

Evaluate the companys forecast accuracy over the last four months.

9. Evaluate the companys forecast accuracy over the last four months.

10. How well is the company doing in terms of forecast accuracy?