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Paul Jordan has just been hired as a management analyst at Digital Cell Phone, Inc. Digital Cell manufactures a broad line of phones for the consumer market. Paul's boss, John Smithers, chief operations officer, has asked Paul to stop by his office this morning. After a brief exchange of pleasantries over a cup of coffee, he says he has a special assignment for Paul: "We've always just made an educated guess about how many phones we need to make each month. Usually, we just look at how many we sold last month and plan to produce about the same number. This sometimes works fine. But most months we either have too many phones in inventory or we are out of stock. Neither situation is good. Handing Paul the table shown here, Smithers continues, "Here are our actual orders entered for the past 36 months. There are 144 phones per case. I was hoping that since you graduated recently from the University of Alaska, you might have studied some techniques that would help us plan better. It's been a while since I was in college --- I think I forgot most of the details I learned then. I'd like you to analyze these data and give me an idea of what our business will look like over the next 6 to 24 months. Do you think you can handle this?" "Of course." Paul replies, sounding more confident than he really is, "How much time do ! have?" "I need your report on the Monday before Thanksgiving - that would be November 20th, 1 plan to take it home with me and read it during the holiday. Since I'm sure you will not be around during the holiday, be sure that you explain things carefully so that I can understand your recommendation without having to ask you any more questions. Since you are new to the company va chould know that I like to co the details and camnlata innanhan fin having to ask you any more questions. Since you are new to the company, you should know that I like to see the details and complete justification for recommendations from my staff." With that, Paul was dismissed. Arriving back at his office, he began his analysis. Orders Received by Month. Month 2003 2004 2005 January 480 575 608 Februarty 436 527 597 March 482 540 612 April 448 502 603 May 458 508 628 June 489 573 605 June 489 573 605 July 498 508 627 August 430 498 578 September 444 485 585 October 496 526 581 November 487 552 632 December 525 587 656 Discussion questions: 1. Prepare a monthly forecast for Year 2005 using the 2-month moving average, Linear Regression and Correlation and Seasonal Indices using data for 2003 and 2004. Use average total demand for 2003 and 2004 for the forecast for 2005 for the seasonal technique. Then compare the forecast data of Year 2005 with the Actual data for Year 2005 on a monthly basis and a yearly basis. Use MAD, MSE and MAPE to determine which forecast will be better. Discuss/explain which technique you will recommend to use. Explain your reasons. Which is a good basis for evaluating the forecasting technique - the monthly or the yearly accuracy? Explain your answer. Darnahen the the cellule bana bucinace from Vaare 2002 2007 Alhat are the 2. Research on the the cellular phone business from Years 2003 to 2007. What are the factors affecting the demand for cellphones and explain each. What is the future trend for each of these factors and how do they affect the forecasts made earlier? Will you raise, keep or reduce your forecasts given these factors? Explain your answer. 3. Study the operations system of Digital. Supplement you understanding of Digital with your research of the industry. 1. What are the objectives of Digital with respect to its customers? Clarify, be specific and illustrate each. Discuss how the company can satisfy these objectives. 2. What (components) does the Digital company system have more likely) that can help it achieve its objectives? Cite a justification from the case. 3. What (components) does the Digital company system have (more likely) that can help it achieve its objectives? Cite a justification from the case. 4. What (components) does the environment of Digital company system including its market and competitors have (more likely) that can easily be exploited by Digital so it can increase its customer base? Cite a justification from the case. 5. What (components) does the environment of Digital company system including its market and competitors have (more likely) that can make Digital decrease or lose its customer base? Cite a justification from the case. 6. What are your conclusions from the analysis of Digital? How well is Digital doing with respect to its objectives? What is it doing right? What is it doing wrong? Why is it doing wrong? Be as specific (illustrate or cite from the case as much as possible; as possible. 7. What are your recommendations to John Smithers should be in detailed steps How will the company maintain or increase the growth on a yearly basis? How can the company assure of its' sustainability and continuous existence