Case Title: M&L MANUFACTURING

Problem: 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.

Objectives:

 To introduce more formal forecasting procedures in order to improve production planning

and inventory management.

Areas of Consideration:

 The company does not use forecasts for production planning.

 Demand is uneven, and the company has experienced being overstocked on some items and
out of others.
 Prices of raw materials have been creeping up.

Alternative Courses of action:

 Use a more formalized forecasting method

Advantage:

1. The company will be able to improve production planning and inventory management.

Conclusion and Recommendation:

The company needs to use a formalized forecasting method in order to determine how much
capacity or supply will be needed to meet demand. A less formalized approach is more likely to utilize
personal intuition. This intuition may involve personal bias, which may be reflected in the forecast.
As the forecasting problem gets larger, it will be impossible to rely solely on a less formalized
approach because a person’s intuition will be unable to process the large quantity of information.