M&L Manufacturing makes various components for printers and copiers. In addition to supplying these items to a major manufacturer, the company distributes these and similar items to office supply stores and computer stores as replacement parts for printers and desktop copiers. In all, the company makes about 20 different items. The two markets (the major manufacturer and the replacement market) require somewhat different handling. For example, replacement products must be packaged individually whereas products are shipped in bulk to the major manufacturer. The company does not use forecasts for production planning. Instead, the operations manager decides which items to produce and the batch size, based on orders and the amounts in inventory. The products that have the fewest amounts in inventory get the highest priority. Demand is uneven, and the company has experienced being overstocked on some items and out of others. Being understocked has occasionally created tensions with the managers of retail outlets. Another problem is that prices of raw materials have been creeping up, although the operations manager thinks that this might be a temporary condition. Because of competitive pressures and falling profits, the manager has decided to undertake a number of changes. One change is to introduce more formal forecasting procedures in order to improve production planning and inventory management. With that in mind, the manager wants to begin forecasting for two products. These products are important for several reasons. First, they account for a disproportionately large share of the companys profits. Second, the manager believes that one of these products will become increasingly important to future growth plans; and third, the other product has experienced periodic out- of-stock instances. The manager has compiled data on product demand for the two products from order records for the previous 14 weeks. These are shown in the following table.

Product Product Product Product

Week 1 2 Week 1 2

1 50 40 8 76 47

2 54 38 9 79 42

3 57 41 10 82 43

4 60 46 11 85 42

5 64 42 12 87 49

6 67 41 13 92 43

7 90* 41 14 96 44

* unusual order due to overstocking at customers warehouse

1. using the above data for weeks 1-14 for products 1 and 2, prepare forecasts for weeks 15 18 for each of the products by doing the following:

• Plot the data for the first 14 weeks and present separate graphs for product 1 and for product 2 (this will show the behavior of your data for weeks 1 to 14 for each product)
• Calculate forecasts for weeks 15 through 18 for product 1 and product 2. This will require you to select the best method from the forecasting techniques presented in chapter 9 that allow the observed data from weeks 1 14 to continue in weeks 15 18.
• Plot the data for weeks 118 in separate graphs for product 1 and product 2 and present the graphs. Explain why you chose the technique that you decided to use for each product. Do the forecasted weeks of 15 18 make sense visually from what you observed in the first 14 weeks? If not, you likely did not choose the correct technique.
• Hint: the formulas are very useful in the real world to calculate forecasts but managers must be able to look at the data and manually adjust the numbers if they think it makes sense to do so. If you do adjust your numbers, tell me why.