FORMATIVE ASSESSMENT 1 [100 Marks] Read the case study on Walt Disney and then answer the four questions based on the case study. Forecasting provides a Competitive advantage for Disney When it comes to the worlds most respected global brands, Walt Disney Parks & Resorts is a visible leader. Although the monarch of this magic kingdom is no man but a mouseMickey Mouseits CEO Robert Iger who daily manages the entertainment giant. Mickey and Minnie Mouse provide the public image of Disney to the world. Forecasts drive the work schedules of 72,000 cast members working at Walt Disney World Resort near Orlando. Disneys global portfolio includes Shanghai Disney (2016), Hong Kong Disneyland (2005), Disneyland Paris (1992), and Tokyo Disneyland (1983). But it is Walt Disney World Resort in Florida and Disneyland Resort in California that drive profits in this $55 billion corporation, which is ranked in the top 100 in both the Fortune 500 and Financial Times Global 500. Revenues at Disney are all about peoplehow many visit the parks and how they spend money while there. When Iger receives a daily report from his four theme parks and two water parks near Orlando, the report contains only two numbers: the forecast of yesterdays attendance at the parks (Magic Kingdom, Epcot, Disneys Animal Kingdom, Disneys Hollywood Studios, Typhoon Lagoon, and Blizzard Beach) and the actual attendance. An error close to zero is expected. Iger takes his forecasts very seriously. The forecasting team at Walt Disney World Resort doesnt just do a daily prediction, however, and Iger is not its only customer. The team also provides daily, weekly, monthly, annual, and 5-year forecasts to the labour management, maintenance, operations, finance, and park scheduling departments. With 20% of Walt Disney World Resorts customers coming from outside the United States, its economic model includes such variables as gross domestic product (GDP), cross-exchange rates, and arrivals into the U.S. Disney also uses 35 analysts and 70 field people to survey 1 million people each year. The surveys, administered to guests at the parks and its 20 hotels, to employees, and to travel industry professionals, examine future travel plans and experiences at the parks. This helps forecast not only attendance but also behaviour at each ride (e.g., how long people will wait, how many times they will ride). Inputs to the monthly forecasting model include airline specials, speeches by the chair of the Federal Reserve, and Wall Street trends. Disney even monitors 3,000 school districts inside and outside the U.S. for holiday/vacation schedules. With this approach, Disneys 5-year attendance forecast yields just a 5% error on average. Its annual forecasts have a 0% to 3% error. Attendance forecasts for the parks drive a whole slew of management decisions. For example, capacity on any day can be increased by opening at 8 a.m. instead of the usual 9 a.m., by opening more shows or rides, by adding more food/beverage carts (9 million hamburgers and 50 million Cokes are sold per year!), and by bringing in more employees (called cast members). Cast members are scheduled in 15-minute intervals throughout the parks for flexibility. Demand can be managed by limiting the number of guests admitted to the parks, with the FastPass+ reservation system, and by shifting crowds from rides to more street parades. At Disney, forecasting is a key driver in the companys success and competitive advantage. Source: Heizer, J., & Render, B. (2020). Operations Management Sustainability and Supply Chain Management (11th ed.). New York: Pearson Education.

Question 1 (25 Marks)

GOODforecasts are of critical importance in all aspects of a business: The forecast is the only estimate of demand until actual demand becomes known. Forecasts of demand, therefore, drive decisions in many areas. With reference to the case study discuss how Walt Disney can use forecasting service demand forecasts as a strategic tool. Your answer should focus on the following areas:

1. Supply Chain Management

2. Human Resource Management

3. Capacity planning