Project Description

Plastique Ltd$.,$ established in $1970,$ is a manufacturer of plastic products. Starting from a small, family$-$run business with a small core team, it has grown into a well$-$known household name. The company$$s financial statements showed revenue of $200$ million for its three business units. Plastique Ltd$.$ produces $120$ product groups, with $600$ end products. It offers $3$ brands in eight market segments. It acts as a raw input provider for a multitude of industries ranging from retail and healthcare to automotive parts. Because of the scale of the operations, the company has set up three in$-$house plants,with the total annual production capacity amounting to $150$ million kgs per annum. The plants operate for $25$ days per month or $300$ days per annum. The table below provides the distribution of plant capacities and the number of types of products each plant produces.

Furthermore, each plant has $12$ operations associated with the production $-$process. These can be considered as the $12$ work centers. Each plant has a set of $12$ operations that relate to the specific products being produced at the plant. For example, if P$1$ produces mugs, then only P$1$ can produce mugs. In case P$1$ not operational, the production of mugs halts. Mr x$,$ the CEO of Plastique Ltd$.,$ has asked the operations manager to provide a forecast of the demand for the upcoming fiscal year for the products produced by P$2.$ The forecast is detailed in the file attached to the link provided below.

Forecast Data

The first tab of the sheet of the file contains details of the company$$s performance and the accuracy of the forecast for the last $3$ months of the financial year $2019-2020.$ The second part of the table details the plant$$s plan for production, along with the capacity and the demand forecast data generated by the demand planner. The second tab of the sheet of the file provides details on the sales for the previous fiscal year and maps it to the demand forecast.

Questions to be addressed for the solution:

$1.$Based on the sales data in the second tab of the sheet $($Sales data$)$ for the period Apr$-19$ to Mar$-20,$

you are required to generate the forecast for the next $12$ months period $($Apr$-20$ to Mar$-21)$ using

suitable techniques and compute the corresponding forecast error metrics.

$2.$Based on the above, which technique is more reliable and why? How effective are your forecasted

figures compared with those of the demand planning team as shown in the first sheet $($Production

Data$)?$

$3.$Is the aggregate production capacity in P$2$ sufficient to meet the expected future demand? Would

there be a need for contract manufacturing $($outsourcing$)$ in the future?

$4.$Calculate the aggregate monthly Closing Inventory $($CI$)$ and Production Plan $($PP$)$ based

on the following inputs? What is the impact on CI and PP if the Safety Stock $($SS$)$ level is altered,

i$.$e$.,$ increased by $3\%?$

$$Safety Stock $($SS$)=30\%$ of the Monthly Demand Forecast $($DF$)$

$$Production Plan $($PP$)=$ Demand Forecast $($DF$)+$ Safety Stock $($SS$)-$ Opening Inventory $($OI$)$

$$Closing Inventory $($CI$)=$ Opening Inventory $($OI$)+$ Production Plan $($PP$)-$ Demand Forecast $($DF$)$

$$Consider 'Opening Inventory $($OI$)\text{'}=3\mathrm{.}1$ Million Kgs $($At the end of Mar$-20)$

$$Closing Inventory $($CI$)$ at the end of month $($M$)=$ Opening Inventory at the start of month $($M$+1)$

$$Calculation Period $=$ Apr$-20$ to Sep$-20(6$ Months$)$

plant P$1$ P$2$ P$3$ Total

Number of types of products $200225175600$

Production Capacity $455550150$

Sales Data

Period Apr$-19$ May$-19$ Jun$-19$ Jul$-19$ Aug$-19$ Sep$-19$ Oct$-19$ Nov$-19$ Dec$-19$ Jan$-20$ Feb$-20$ Mar$-20$

Actual Sales $4\mathrm{.}654\mathrm{.}424\mathrm{.}454\mathrm{.}214\mathrm{.}44\mathrm{.}674\mathrm{.}484\mathrm{.}614\mathrm{.}584\mathrm{.}524\mathrm{.}214\mathrm{.}1$

Demand Forecast $4\mathrm{.}64\mathrm{.}494\mathrm{.}54\mathrm{.}254\mathrm{.}324\mathrm{.}584\mathrm{.}524\mathrm{.}664\mathrm{.}714\mathrm{.}584\mathrm{.}354\mathrm{.}22$

Production Data Previous Period Review Planning Horizon $-$ Forward $12$ Months

Operations Parameters Jan$-20$ Feb$-20$ Mar$-20$ Apr$-20$ May$-20$ Jun$-20$ Jul$-20$ Aug$-20$ Sep$-20$ Oct$-20$ Nov$-20$ Dec$-20$ Jan$-21$ Feb$-21$ Mar$-21$

Actual Sales $4\mathrm{.}524\mathrm{.}214\mathrm{.}1$

Actual Production $4\mathrm{.}64\mathrm{.}024\mathrm{.}25$

Production Plan $4\mathrm{.}374\mathrm{.}153\mathrm{.}94\mathrm{.}54\mathrm{.}514\mathrm{.}64\mathrm{.}254\mathrm{.}954\mathrm{.}74\mathrm{.}454\mathrm{.}754\mathrm{.}64\mathrm{.}484\mathrm{.}74\mathrm{.}44$

Demand Forecast $4\mathrm{.}584\mathrm{.}354\mathrm{.}224\mathrm{.}74\mathrm{.}34\mathrm{.}824\mathrm{.}14\mathrm{.}84\mathrm{.}744\mathrm{.}64\mathrm{.}794\mathrm{.}774\mathrm{.}434\mathrm{.}794\mathrm{.}4$

Production Capacity $4\mathrm{.}44\mathrm{.}54\mathrm{.}554\mathrm{.}64\mathrm{.}74\mathrm{.}584\mathrm{.}654\mathrm{.}774\mathrm{.}744\mathrm{.}524\mathrm{.}84\mathrm{.}574\mathrm{.}674\mathrm{.}724\mathrm{.}5$

Unit of Measure $[$UOM$]$ is in Million Kgs

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