Ans1) Yankee presently is using the qualitative method for forecasting future demand. Qualitative method as we know is subject to experts’ intuition, experience, and opinions. So each person according to his/her past experience, forecasts the demand for the future. For example, Phil Stanton who is in the operations makes his decision of producing in the future on the basis of demand forecast of Ron Adams (who also makes his forecast on the basis of his gut feel) and on his personal experience.
Ron Adams makes his forecast on general demand trend of the past and sales force composite method where each salesperson provides an estimate of sales for his/her territory, and then the results are aggregated for all territories.
Other factors that are kept in mind while forecasting is the seasonality of the demand and the increase in expected demand due to promotional offers that are likely to be made by marketing department.
Main aim for forecast of demand is to minimize inventory and also not lose any sales due to lack of availability of inventory. We feel that the present method being used by Yankee is a little too subjective and that the company should bring in the quantitative method of time series methods to analyze the pattern in past demand to project demand in future period. This would also reduce the probability of disagreement among executive members and hence the chances of communication gap between departments.
Question 2: Develop your own forecast for bow rakes for each month of the next year ( Year 5). Justify your forecast and the method used.
Ans2) Our forecast is based on Time series method which takes seasonal influences into account. This method is pretty much justified as we factor the seasonal influences occurring thought the year for four years in order to forecast the demand for the next year. Also as Garden tools being a major industry