PROJECT SUBMISSION

Task 1
● Method of forecasting:
The method of forecasting that I would suggest for TechHub Electronics is
Simple Exponential Smoothing method.

● Justification for the choice of method:

One of the main advantages of exponential smoothing is that it is simple and
intuitive to understand and apply.
We only need to specify one parameter, the smoothing factor, which controls
how much weight we give to the past data. The higher the smoothing factor,
the more responsive the forecast is to the latest changes. The lower the
smoothing factor, the more stable the forecast is over time. we can easily
adjust the smoothing factor to fit your data and preferences.
As we want the forecast for six months, simple exponential smoothing
method as works for short term forecast and generates minimal noise, the
method will be beneficial.
Also, the method works well for data that is sensitive for recent changes, as
here the data is sensitive, it will be appropriate to go with Simple
Exponential smoothing method.
Assumption: Assuming that there is a variation of 5% between the
forecasted and actual demand for the last year since there will definitely be a
difference between the forecasted and actual demand. Meaning, assuming
that the forecasted demand is 5% less than the actual demand.

Task 2

● The formula used for forecasting demand:

The formula used for simple exponential smoothing:
Ft+1 = αDt + (1-α) Ft
Where,
Ft+1 is the forecast for next period,
α is the smoothing constant, between 0 and 1,
Dt is the actual demand in present period,
 Ft is the forecast of present period.

Here, α is considered as 0.3

● The demand forecast for the next six months is shown in the table below

Month Smartphones (Forecast) Laptops (Forecast) Smartwatches (Forecast)

Jan 1448 772 290

Feb 1544 791 299

Mar 1737 869 309

Apr 1834 888 318

May 1641 820 299

Jun 1930 965 338

Task 3
● The formula used for calculating forecast errors:
Forecasting error = (Actual demand - forecast demand) * 100 / actual
demand

● The forecast errors for the six months is shown in the table below

Month Smartphones Laptops Smartwatches

Jan 9.5 -2 -12

Feb 6.3 8.5 -2

Mar -10.7 1 -23.6

Apr -4.8 3.7 -48.5

May 14.5 18 -49.5

 5.3
Jun 12 -72.4

Task 4
● The formula for calculating MAPE:
MAPE = ∑│ (Actual – Forecast) │/ ∑ Actual.

● MAPE for all product categories for the six months:

Month Smartphones Laptops Smartwatches

Jan 10 2 12

Feb 6 9 2

Mar 11 1 24

Apr 5 4 49

May 15 18 50
Jun 5 12 72

● The formula for calculating Bias: Total Variances (Forecast – Actual) / Total
actual.

● Bias for all product categories for the six months:

Month Smartphones Laptops Smartwatches

Jan -153 17 31

Feb -105 -74 7

Mar 168 -9 59

Apr 84 -35 104

May -280 -180 99

Jun -110 -135 142

Task 5
● Recommendations:
○ Recommendation (Smart phones) + Justification
Balancing of supply against demand in future.
We can see there is a downfall in March but we can still produce to
maintain an average surplus supply since there is a good increase in
demand observed in May and June, so the extra units produced will
compensate that.

Diversify Suppliers and Implement Risk Mitigation Rationale: It's

critical to diversify smartphone component suppliers and forge solid
bonds with a number of vendors given the high demand volatility and
potential supply chain interruptions in the electronics sector. By
employing this technique, the danger of single-source dependence will
be reduced, which can result in production delays and shortages in the
event of unforeseen circumstances

Increasing the supply for upcoming months.

We have seen a shortage in supply in the January demand against the
forecasted and we have seen a trend for increasing demand by the
June. Therefore, it is better to prepare a stock in a surplus than
required as the extra stock will be utilized in the upcoming months.
○ Recommendation (Laptop)+ Justification

Maintaining an average surplus stock for upcoming months.

We have seen a small surplus in supply in the January demand
against the forecasted and have seen a trend for increasing demand till
June in the subsequent month. Therefore, it is better to prepare a stock
in a surplus than required to meet the increasing demand

Small Increase the value of α for future prediction

The forecasted demand is falling slightly short as compared to the
actual and data is sensitive to the recent changes, so we need emphasis
a little more on the last year’s actual demand.

Implement Just-In-Time (JIT) inventory management practices to

minimize carrying costs while ensuring product availability. Employ
demand sensing and demand shaping tools to better predict and shape
customer demand, allowing for more proactive inventory
management. Optimize safety stock levels by considering factors like
seasonality, supplier reliability, and transportation lead times.

○ Recommendation (Smart Watch) + Justification

Enhance Demand Collaboration with Retailers Rationale:
Smartwatches exhibit relatively stable demand throughout the year
compared to smartphones and laptops. To enhance supply chain
performance for smartwatches, it's crucial to establish better
collaboration and communication channels with retailers to align
production with actual demand

Implement a Vendor-Managed Inventory (VMI) system or

Collaborative Planning, Forecasting, and Replenishment (CPFR) with
key retailers to share demand forecasts and inventory data. Regularly
review sales data and collaborate with retailers to adjust production
plans based on real-time demand insights. Consider offering
incentives to retailers for timely and accurate demand information
sharing to improve forecast accuracy and reduce overstocking or
understocking issues

Reducing the stock production for upcoming months.

We have seen a reducing demand against the forecasted till June.
Therefore, it is better to reduce the production of stock and maintain a
lower number. It will also reduce our inventory cost, which can also
be used to stock other items.