Presented by the Outliers

April 25, 2011

Introduction
M&L Manufacturing manufactures approximately 20 items
in the copier and printer industry
Two markets: whole merchandise and replacement parts
The company has not used any formal forecasting
techniques for its production
 Creates the problem of too much excess inventory of some
items;
 Or not having enough inventory of a particular item.
Company has decided to introduce more formal
forecasting techniques on two of its products to that
constitute a large portion of the company’s profits
Table 1 – Past 14 Weeks’
Orders
Week Product 1 Product 2
1 50 40
2 54 38
3 57 41
4 60 46
5 64 42
6 67 41
7 90 41
8 76 47
9 79 42
10 82 43
11 85 42
12 87 49
13 92 43
14 96 44
Benefits of Forecasting
Helps managers plan the system then use the system
to its full advantage.
Improve overhead because managers can properly
staff based on the forecast
Reduce carrying costs of holding excess inventory
Improve turn times on delivery of a finished product
Enhance credibility
Better customer relations
Ultimate benefit: increase the throughput and
decrease the inventory and operational expense
Table 2 – Forecast of Weeks 15 -
18
Week Product 1 Product 2

15 92 45
16 93 46
17 93 47
18 93 48
Methods Chosen and Rationale
Product 1 – Weighted average forecast
Based on the premise that the most recent weeks have
the highest likelihood of predicting the upcoming weeks
low cost and easy to obtain
More reflective of recent occurrences in the company’s
orders for that product.
Product 2 – Naïve forecasting
Relies on intuition but also takes into account the
recent trends for that product.
This tool is also low cost and easy to obtain
Questions