CASE STUDY

Yankee Fork and Hoe Company

Abstract
This case study is based on demand forecasting and how to prepare exact forecasting for any
product

Sohaib syed
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Q.no.1

Comment on the forecasting system being used by Yankee. Suggest changes or improvements
that you believe are justified.

A forecast is prediction of future events used for planning purposes. There are some problems
that Yankee Fork are facing from with the current system.
 Firstly, the production department is unaware of how marketing arrives as its forecast.
Also, production views the forecasts as the result of an overinflated estimate of actual
customer demand. However, forecasting done by marketing is based on actual shipment
data rather than actual demand.
 Forecasting figures are based on the meeting with managers, using only qualitative
analysis, no mathematical technique is involved.
 Production capacity seemed not to be a problem as rake head & bow could be produced
7,000 & 5,000 units per day respectively, compared to the highest sales record in the
last 4 years (month 11 year 1) at 83,269 units.
 Although marketing adjusts for shortages in the actual shipment data, it is still reflecting
past problems and no future demand.
 There is lack of communication between Marketing and production department.

We examine forecasting in three basic categories 1) judgment (2) casual (3) time series
methods. Forecasts are useful for both managing processes and managing supply chains
(Malhotra & Ritzman, 2019a).
Forecasting systems offer a variety of techniques, and no one of them is best for all items and
situations. The forecaster’s objective is to develop a useful forecast from the information at
hand with the technique that is appropriate for the different patterns of demand. (Malhotra &
Ritzman, 2019a).

There are some suggestions to improve forecasting system.

 As there is past data available, Implementation of quantitative method which handle the
seasonality such as seasonal forecast method, the weighed moving average method,
moving average method.
 Forecasting based on actual demand will help production department to schedule the
production line more effectively.
 Improve the lines of communication between marketing and production regarding the
preparation of forecasts. This will eliminate arbitrary adjustments to the forecasts.
 Consider a combination forecasting approach like both quantitative and then reviewed
by experts. Experts can provide insights based on their experience and knowledge,
considering factors that might not be captured by quantitative models. It is also called
contextual knowledge such as cause and effect relationship, environmental cues, and
organizational information. (Malhotra & Ritzman, 2019a)

Q.no.2
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Develop your own forecast for bow rakes for each month of the next year. Justify your
forecast and the method you used.

Adams only uses qualitative analysis rather than quantitative analysis to forecast production for
the following years. He explains that they attain the predicted figures by meeting with managers
from various sales locations to discuss the shipping information for the previous year. Adams
never stated that they used mathematical procedures to forecast the production for the
following year. The qualitative method is beneficial as it holds the advantage of experience from
the sales managers and ensures quick forecasting.
Yet, the method has some disadvantages as it often results in overly inflated forecasting figures.
The production manager, Stanton, states that the predicted production figures for each month
are inflated and applies a 10% reduction to keep production costs and inventory low.
The best suggestion for the Yankee is to use quantitative methods when forecasting production.
Qualitative methods are less effective in that they difficult to replicate and is, thus, not reliable
in the data-centric world of manufacturing (Queirós et al., 2017).
The method is best suited to forecast existing products with a stable demand using the historical
demand data. The demand for the bow rake for the past four years tends to decrease in a
seasonal trend, and the company never made any changes in each year.
Other methods are available that analyse all past data, using one model to forecast demand for
all the seasons. We can use a multiplicative method whereby seasonal factors are multiplied by
an estimate of average demand to arrive at a seasonal forecast. (Malhotra & Ritzman, 2019a)

1. For each year calculate the average demand per season by dividing annual demand per
season
2. For each year divide the actual demand for a season by the average demand per season.
The result is a seasonal factor for each season in the year, which indicates the level of
demand relative to average demand.
3. Calculate the average seasonal factor for each season, add the seasonal factors for a
season and divide by the number of years.
4. Calculate each season forecast for next year, I calculate 5 th year demand by moving
average method. Finally make the seasonal forecast by multiplying the average demand
per season by the appropriate seasonal factor.
5. Moving average formula to calculate 5th year demand is.

Average demand = demand 2nd year+ 3rd year+4th year

3
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Month Year 1 Year 2 Year 3 Year 4 Average 5th year

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1 55,220 39,875 32,180 62,377 44,810.67

2 57,350 64,128 38,600 66,501 56,409.67

3 15,445 47,653 25,020 31,404 34,692.33

4 27,776 43,050 51,300 36,504 43,618.00

5 21,408 39,359 31,790 16,888 29,345.67

6 17,118 10,317 32,100 18,909 20,442.00

7 18,028 45,194 59,832 35,500 46,842.00

8 19,883 46,530 30,740 51,250 42,840.00

9 15,796 22,105 47,800 34,443 34,782.67

10 53,665 41,350 73,890 68,088 61,109.33

11 83,269 46,024 60,202 68,175 58,133.67

12 72,991 41,856 55,200 61,100 52,718.67

           
sum of
demand 457,949 487,441 538,654 551,139 525,744.67
Average
demand 38,162 40,620 44,888 45,928 43,812.06

Seasonality factor = actual demand per month/ average demand

Actual demand with seasonal factor= demand 5th year* seasonal factor

Average Actual
Month year 1 year 2 year 3 year 4 seasonal factor demand

1 1.4470 0.9817 0.7169 1.3581 1.1259 50,453

2 1.5028 1.5787 0.8599 1.4479 1.3473 76,003

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0.4047 1.1731 0.5574 0.6838 0.7048 24,449

4 0.7278 1.0598 1.1428 0.7948 0.9313 40,623

5 0.5610 0.9690 0.7082 0.3677 0.6515 19,118

6 0.4486 0.2540 0.7151 0.4117 0.4573 9,349

7 0.4724 1.1126 1.3329 0.7729 0.9227 43,222

8 0.5210 1.1455 0.6848 1.1159 0.8668 37,134

9 0.4139 0.5442 1.0649 0.7499 0.6932 24,112

10 1.4062 1.0180 1.6461 1.4825 1.3882 84,832

11 2.1820 1.1330 1.3412 1.4844 1.5351 89,243

12 1.9126 1.0304 1.2297 1.3303 1.3758 72,529

As I calculate demand with quantitative analysis than I review it by qualitative judgmental

method and make some changes based on my experience. From cutting costs to keeping
consumers happy, forecasting is a vital component of supply chain management, helping
companies fill orders on time, avoid unnecessary inventory expenses and plan for price
fluctuations.

Both an art and a science, effective forecasting is a complex process that requires educational
qualifications and practical experience. General knowledge about supply, demand and price
factors must be distilled into hard data, which then must be analysed in conjunction with other
information and used to generate meaningful projections.

References
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Almeida, F., Faria, D., & Queirós, A. (2017, September). Strengths and limitations of qualitative

and quantitative research methods. ResearchGate; www.researchgate.net.

https://www.researchgate.net/publication/319852576_Strengths_and_Limitations_of_Qu

alitative_and_Quantitative_Research_Methods

Malhotra, M. K., & Ritzman, L. P. (2019b). Operations management. Processes and supply

chains (12th ed.). Pearson.

Abolghasemi, M., Beh, E., Tarr, G., & Gerlach, R. (2020). Demand forecasting in supply chain:

The impact of demand volatility in the presence of promotion. Computers & Industrial

Engineering, 142, 106380. https://doi.org/10.1016/j.cie.2020.106380