MGMT617 ASSIGNMENT 1 SOLUTION 2023 | MGMT617 ASSIGNMENT 1 FALL 2023 | MGMT617 ASSIGNMENT 1 2023 | PRODUCTION PLANNING & INVENTORY CONTROL | VuTech

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Objective:

The purpose of this assignment is to enhance your understanding of various forecasting methods used in production planning and inventory control. By engaging with real-world scenarios, you will demonstrate your ability to analyze different business situations and select the most appropriate forecasting method. You are expected to justify your choice based on the scenario characteristics, the pros and cons of each method, and the overall business objectives.

Tasks:

• Below are some hypothetical business scenarios, each with unique characteristics and challenges.

• Your task is to read each scenario carefully.

• Choose the single most appropriate forecasting method for each scenario from the following Scenarios:

• Provide a justification for your choice, relating it to the scenario specifics such as demand patterns, data availability, and the nature of the product or service.

• Your justification should be grounded in concepts covered in MGMT 617, showing a clear understanding of the forecasting methods and their ideal contexts.

Forecasting Methods to be Used:

• Time Series Analysis

• Moving Averages

• Exponential Smoothing

• Seasonal Indexes

Scenarios: (2.5 marks for each)

Local Bakery Bliss:

A local bakery has two years of daily sales data. The data shows consistent patterns each week and significant spikes during local events and holidays.

Garden Essentials:

A gardening supplies store has collected monthly sales data over three years. They have observed steady growth but want to account for variations due to weather seasons.

Urban Apparel:

An urban clothing store in a large metropolitan area with weekly sales data for the past 18 months. The store's promotions lead to irregular sales spikes.

Cozy Reads Bookstore:

This bookstore has five years of monthly sales data. While overall sales are stable, there are peaks during summer and winter holidays.

Solution:

Here are the most suitable forecasting methods for each scenario along with justifications based on the characteristics provided:

Local Bakery Bliss:

Forecasting Method:

Seasonal Indexes

Justification:

Seasonal Indexes would be the most appropriate method for the local bakery. Since the data shows consistent weekly patterns and significant sales spikes during local events and holidays, the seasonal nature of demand is evident. Seasonal Indexes are adept at capturing periodic fluctuations and adjusting forecasts to account for these seasonal variations. This method will allow the bakery to anticipate and plan for the expected spikes during events and holidays accurately.

Garden Essentials:

Forecasting Method:

Time Series Analysis

Justification:

With the monthly sales data over three years and the need to account for variations due to weather seasons, a Time Series Analysis would be the suitable choice. This method accounts for trends, seasonality, and irregular variations in the data over time. As the store observes steady growth but wishes to consider seasonal effects (like weather variations), a time series analysis would provide insights into the trends and cyclical patterns, enabling adjustments to reflect weather-dependent fluctuations in sales.

Urban Apparel:

Forecasting Method:

Moving Averages

Justification:

Given the urban clothing store's irregular sales spikes due to promotions, Moving Averages would be the most appropriate method. This method smooths out random fluctuations and short-term irregularities in the data, allowing the store to get a clearer trend by averaging the sales over time. It would help in discerning underlying sales patterns while reducing the impact of promotional spikes on the forecast.

Cozy Reads Bookstore:

Forecasting Method:

Exponential Smoothing

Justification:

The bookstore's sales data indicates stable overall sales with peaks during summer and winter holidays. Exponential Smoothing is the ideal method here as it focuses on recent data, giving more weight to the most recent observations. It is particularly effective in handling data with trends and variations while being responsive to sudden changes. The peaks during holidays can be better captured using this method, allowing the bookstore to forecast the variations more accurately.

These choices align with the characteristics of each scenario, considering the nature of demand, available data, and specific business contexts, while leveraging the strengths of the respective forecasting methods to address the challenges presented in each case.

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