Yankee Fork and Hoe Company Case Questions

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

It seems as if Ron Adams is forecasting his figures by meeting managers from various sale regions to go over shipping data from last year. He did not use an calculations in order to explain his forecast. Ron has been using only qualitative analysis as opposed to quantitative analysis. By using quantitative analysis, Ron could gain some advantages of quick forecast and experiences from managers. He could also come across disadvantages in qualitative analysis such as group thinking and the forecasts usually tends to be overly inflated. This is especially related to Phil Stanton the production manager since he said that forecasts are usually inflated and he usually reduces the forecast by 10%. The quantitative method should be used in this forecast. The quantitative analysis is suitable for the existing products that have stable demand and historical data. Looking at the demand from the last 4 years, the product tends to fall in seasonal pattern and not much has been changed in each year. A suggestion for Ron is to use the seasonality technique with linear trend equation to calculate the future demand for the following fifth year. In doing so, Ron could be exposed to more accurate forecast in regards to the difference in demand for each month.
The forecasting technique used by the marketing department is based on actual shipment instead of actual demand. The marketing department is trying to adjust for shortages in actual shipment data that were brought from environmental and economic changes. This is however still being reflected on past experience and not for future demand. A suggestion is that the marketing department should focus on the past demand in order to project the future demand. In