...MGT314.8 DEMAND FORECASTING, PRODUCTION OPTIMIZATION AND CAPACITY MANAGEMENT FOR PRAN FOOD PRODUCTS BANGLADESH LIMITED Prepared By: Abdullah Al Rafi 111 0129 530 SM Nabil Afroj 113 0818 030 Faculty: Dr. Kais Zaman North South University Table of Contents Objectives 3 Brief Company Profile 4 Methodologies 5 Need for the forecasting 5 Forecasting Methods 8 Qualitative Analysis 10 Linear Programming 13 Conclusion 17 Objectives The primary objective is to find the demand and supply management techniques and the tools that the company uses to predict the demand for their products. The project will also determine the appropriate changes the company makes in their production process and their capacity management with regard to their forecasted demands. Many companies were and are still established to derive financial profit. In this regard the main aim of PRAN RFL Group is to maximize (optimize) profit. This report is on using Linear programming technique along with forecasting methods to derive the maximum profit from production of soft drink for PRAN RFL, Bangladesh Ltd. Linear Programming of the operations of the company was formulated and optimum results derived using Microsoft Excel. The result shows that two particular items should be produced even when the company should satisfy demands of the other - not - so profitable items in the surrounding of the plants...
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...issue was described by Hammond’s management as late delivery from the cabinetry plant to the Guelph plant what displeased customers and caused numerous delays on production site. All problems can be divided in 5 general groups and will be described in detail further: 1. Forecasting Issues 2. Production Scheduling Issues 3. Organizational Issues 4. Process Strategy Issues 5. New Demand Management Issues 2.1. Forecasting Issues The sales team created forecasts in October for the following calendar year by product lines for all products, based on this forecast the both plants planned their productions and orders accordingly. The company revised its forecasts on a quarterly basis. Production planners reviewed performance monthly and weekly then changed the production schedule when its original forecast proved inaccurate. But frequent changes in customer demand and design caused serious production disorder and delays in orders fulfilment. Creating a new production schedule on a monthly basis did not help as the supply chain had been already filled in based on the old one. Moreover, forecasting inaccuracy resulted in too little or too much inventory, which was not enough to fulfil unexpected sales demands. 2.2. Production Scheduling Issues Production scheduling issues were mainly caused by lack of production capacity for customized products on cabinetry plant as well as by delays, shutdowns and unneeded changeovers. 2.3. Organizational Issues The cabinetry plant treated...
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...uncertain. To cope with future risk and uncertainty, the manager needs to predict the future event. The likely future event has to be given form and content in terms of projected course of variables, i.e. forecasting. Thus, business forecasting is an essential ingredient of corporate planning. Such forecasting enables the manager to minimize the element of risk and uncertainty. Demand forecasting is a specific type of business forecasting. Concepts of Forecasting: The manager can conceptualize the future in definite terms. If he is concerned with future event- its order, intensity and duration, he can predict the future. If he is concerned with the course of future variables- like demand, price or profit, he can project the future. Thus prediction and projection-both have reference to future; in fact, one supplements the other. Suppose, it is predicted that there will be inflation (event). To establish the nature of this event, one needs to consider the projected course of general price index (variable). Exactly in the same way, the predicted event of business recession has to be established with reference to the projected course of variables like sales, inventory etc. Projection is of two types – forward and backward. It is a forward projection of data variables, which is named forecasting. By contrast, the backward projection of data may be named ‘back casting’, a tool used by the new economic historians. For practical managers concerned with futurology,...
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...Competitive Advantage Introduction This Praxis paper focuses on four areas that can improve Royal Dutch Shell Group’s (Shell) ability to be more competitive with other integrated oil majors in the global supply chain. Shell’s goal is to be “the world’s most competitive and innovative energy company” (Shell 2013). First, the macro-processes involved in the supply chain of Shell are introduced. Forecasting techniques were researched to see how these can be applied to demand management in Shell. Third, business process integration was investigated to improve the supply chain in Shell. Finally, operations and production strategy was synthesized to respond to the changing demands in the modern global environment. Discussion The Macro-processes Involved in the Supply Chain of Shell Company Chosen and the Reason. The company I chose for this assignment is Shell. The key reason is I work for Shell. I have access to global supply chain managers who will help with this assignment. I contribute to the planning operations in the global supply chain. My contribution is the production of petroleum liquids for refinery processing. Gas produced is sold directly to customers as fuel. I believe a lot was learned during the review and analysis of Shell’s global supply chain. Shell’s Problem. Shell uses a global scorecard to monitor its yearly success. Figure 1 shows the scorecard for 2012. As a global energy company, Shell did not perform well in delivering the oil and gas required...
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...Assignment on Demand Forecasting: Hamza Imam Ansari Erp#10040 Q#1) S t = 12.70 + 1.415t 2007 to 2012 Year= 6 Qtr= 24 2013 will start from 25 Qtr# 1) 12.70 + 1.415*(25) = 48.075 Qtr# 2) 12.70 + 1.415*(26) = 49.49 Qtr# 3) 12.70 + 1.415*(27) = 50.905 Qtr# 4) 12.70 + 1.415*(28) = 52.32 Q#2) Ln Sn = 3.51 + 0.037t Sn = e 3.51 + e 0.037 t Sn = 33.45 + 1.038t Qtr#1) 33.45 + 1.03825 = 35.991 Qtr#2) 33.45 + 1.03826 = 36.087 Qtr#3) 33.45 + 1.03827 = 36.187 Qtr#4) 33.45 + 1.03828 = 36.291 Q# 3) Y = 130.96 + 1.06 D2 – 1.57 D3 + 2.71 D4 + 43.88t Qtr# 1) Y = 130.96 +43.88 (25) = 1227.96 Qtr #2) Y = 130.96 + 1.06 + 43.88(26) = 1272.90 Qtr #3) Y = 130.96 – 1.57 + 43.88(27) = 1314.15 Qtr #4) Y = 130.96 + 2.71 + 43.88(28) = 1362.31 Q#4a) RMSE= SQRT of ( sum of (A-F)2 / n.o of years) 3 MOV AVG = SQRT(2797.667/9) = 17.63 5 MOV AVG = SQRT(3785.4/7) = 23.25 SO 3 Moving Average has given the better answer. b) 3 Moving Average has given the better answer. c) RMSE= SQRT of ( sum of (A-F)2 / n.o of years) 0.4 Weightage= SQRT(3102.247/12) = 16.078 0.5 Weightage= SQRT(2728.635/12) = 15.079 So we will choose 0.5 weightage result. Case Study # 2 Pg # 259 1) Model T was the first affordable car produced by the Henry Ford’s Ford Motor Company since its commencement. It was the first car launched by the Henry Ford to target middle class people and it was the first car which was produced in a large quantity...
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...Forecasting or estimating the demand for finished goods or services is the starting point for all operating activities. It is the trigger that sets the supply chain in motion including the preparation of: * Capital budgets for plant and equipment and shorter term operating budget * Production plans * Short-term operating cash requirements * Personnel needs either full time, part time or contract basis * Capacity levels of equipment, machines, and buildings * Purchase requirements of raw materials, components and services * Plans for subcontractor requirement s * Transportation requirements for raw materials, finished goods and/or personnel Forecasting product, customer demand or other activity is one of the most inexact functions in management. An individual has to understand and evaluate the external environment where there is considerable uncertainty including the market, clients, and changing technology. Poor forecasting of client needs by the marketing department often is the reason for slack production planning and as a result contributes to friction between marketing and production personnel. \ A medium – range forecast is one that covers about three months up to one year. In this case it would include forecasting items such as: Sales plans, production plans and operating cash budgets. Forecasting technique used in this case study is time series. A time series is historic or past date that have been collected over a regular period of time, representing...
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...PRODUCTION AND OPERATION MANAGEMENT PART ONE 1. Inputs in to outputs 2. The first operation to the finished product 3. Demand that is controlled by the company 4. Complete Enterprise wide business solution 5. Computer aided design 6.Technological forecast 7. All of the above 8. Production planning and scheduling & control system 9. Functional layout 10. Work measurement PART TWO 1. Define job shop production? Job Shop Production: In this system, products are manufactured to meet the requirements of a specific order. Quality is not given too much importance and the manufacturing of a product takes place as per the specifications given by the customer. This system may be further classified into the following categories: The Job produced only once: Here, a customer visits a firm and places their order. When the product is ready, the customer takes it and leaves. The customer may not visit the firm again to place an order for the same product. Such a firm will have little scope for pre-planning the production of a product. The norm will be that it will plan for the materials, manpower and the process to be followed only after it has received an order from a customer. The job produced at irregular intervals: Here, a customer visits a firm to place orders for the same type of the product at irregular intervals. The firm will not have any idea of the customer's visits. Here as well, the planning for materials, manpower and the process to be followed will start...
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...Forecasting is a critical component of balancing supply in order to meet customer needs while ensuring costs are kept low. Without proper forecasting, companies can see a direct hit to their bottom line by keeping too much inventory resulting in capacity issues, as well as by losing customers due to not having enough inventory. In the case of Yankee Fork and Hoe Company there are several issues with the forecasting system used in each department and these issues need to be rectified in order to improve cross-functionality and customer service for the company. The Marketing Department When Sharon Place is tasked with figuring out the issues in forecasting within the company, one of the people she sees is Ron Adams, the marketing manager. Adams explains that he meets with several managers from each sales region and goes over the shipping data from the prior year as well as upcoming promotions, economic conditions, and shortages from the prior year. He then creates a monthly forecast for the following year. This process is clearly not working, and since the production department relies heavily on the forecasting from marketing, adjustments must be made. Recommendation: Adams needs to find a quantitative method to create a forecast as opposed to the qualitative one he is currently using. He is also using the shipping data to make his suggestions as opposed the actual demand data. This is a problem since the company has had issues meeting the demand, therefore relying on the shipping...
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...Team B Week Four: Supply Chain Design OPS/571 March 4, 2014 Team B Week Four: Supply Chain Design Riordian Manufacturing is a manufacturing company specializing in the production of plastic products and fans. The fan manufacturing plant is located in Hanzhou, China. The manufacturing of the fans is a make-to-stock operation. Future demand for the fans is forecasted based on the average sales of the last three years. Inputs for the production of the fans are acquired locally. The China plant uses the services of a local Chinese shipping company for delivery of goods. The plant uses FedEx or another Chinese shipping company for international shipments. Process flows, performance evaluation metrics, supply chains, lean production principles, and forecasting are all components in maintaining the success of Riordian Manufacturing. Supplier Relationships and the Effects on the Supply Chain Riordian Manufacturing’s plant in Hangzhou, China requires two major inputs for the electric fan production process. The first is high-density polyethylene plastic pellets (HDPE). Not much is mentioned on Riordian’s intranet other than the HDPE is purchased locally. The second major input is the electric motors that power the fans. The motors are produced locally by the Yin Motor Company (YMC). The Yin Motor Company became Rioridan’s supplier due to previous business or family relationship between YMC and Riordian’s partners in China. Rioridan receives the electric motors...
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...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...
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... Select a business forecasting technique (qualitative or quantitative) for the electric fans and describe the forecasting process to be used at Riordan. Create a sales forecast for electric fans using selected techniques. Lean Production A business’s operation is only as fast as its slowest process. In order for Riordan Manufacturing to be successful, it needs to seek out and remove bottlenecks. By Riordan identifying these bottlenecks in the operation, they can improve the output of the entire process, which would make it definitely worth the effort. Lean production aims to combine the flexibility and quality of craftsmanship with the low costs of mass production (Economist, 2009). In a lean production setting Riordan will organize its workers into cross functional teams that are expected o accomplish a variety of tasks. This differs from mass-production assembly lines where worker repeat monotonous tasks. Product components are delivered to the various teams just-in-time, and each worker is expected to stop production if an error is discovered. Mass production lines rarely shut down to correct errors. It is expected that an established lean-production line is more efficient than a conventional mass-production assembly line because problems are confronted and solutions are implemented in order to avoid repeating mistakes. Communication is open and transparent in a lean production environment. It is common for production, design, and supply to have...
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...shells, ski pants, sweaters, turtlenecks and accessories. They categorized their target market into five different groups namely men, women, boys, girls and preschoolers. The company holds a commanding 45% share of the children ski wear and an 11% share of the adult ski wear market. The first production facility was based in China Lo village and through growth Sport Obermeyer opened another production plant in Hong Kong. Klaus Obermeyer and Raymond Tse established Obersport LTD which coordinates the production that currently takes place in Hong Kong and China which is then transported by ship to warehouses in Seattle and then moved by truck to Denver, furthermore, air transport is also used to supplement the transport of goods in order to meet deadlines. The current challenges that are being faced by Sport Obermeyer are firstly, as a result of inaccurate forecasting which has thus led to a mismatch between supply and demand. Secondly the production location decisions between China and Hong Kong has led to inefficiencies in production and inventory management. Problem statement: Sports Obermeyer is experiencing problems with inaccurate forecasting and decisions dealing with factory production allocation. Important variables: ...
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...second-hand bagging machine to provide bags for a small discount store chain and a regional chain of drug stores. These two organizations have grown tremendously over the years, and Ed Merriwell proudly points out that the Bag Company has grown with them. Today, these two original clients are Merriwell’s largest customers. The Merriwell family does not want its business to be too heavily reliant on any one customer. Hence, they have a policy that no single customer can account for over than 15% sales. In fact, Merriwell Bag Company encourages its major customers to establish alternative sources of bag supply for insurance against stock outs because of paper shortages, freight line difficulties, local trucking/warehousing strikes, and production problems that may...
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...SCM Notes Chapter 5 Demand forecasting Note: Demand-how much you expect to sell in a specified period Slide 1: Data Matters—Video Data driven decision making Focused on how much data is out there All data is not relevant you need to focus on the data that is necessary and you need ot know how to separate that which is important. IBM- “A smarter planet” their quote 5 times as expensive to go get a new customer than to just keep the existing one Slide 2- Learning objectives You should be able to: -Explain the role of demand forecasting -Identify the components of a forecast -Be able to calculate the following forecast: -simple moving average forecast -weighted Moving Average Forecast -Understand the principles behind calculating: -exponential smoothing forecast -linear Trend forecast -Simple and Multiple regressions Note: for data forecasting you will use historical data to calculate future data Slide 3- The Role of Demand Forecasting -Designed to estimate future demand for planning -purchasing Decisions -Inventory decisions -production Decisions -Important to match supply with demand -Results of increased forecast accuracy -lower inventories -reduced stock-outs -smoother production plans -reduced costs -improved customer service Notes: purchasing needs to know how much to buy…or how much will be made in order to know how much to buy… need to know how much inventory to hold.. Production schedule--- how many units will...
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...provide all that is required from raw materials to final products and at the same time get the products to the end users. Successful supply chain management requires a change from managing individual functions to integrating activities into key supply chain process; hence, accurate information is of essence. One of the key factors that can adversely affect effective and efficient supply chain process is information distortion. Demand forecasting and ordering policies have been recognized as two key causes of bullwhip effect in supply chain management. This study explored the simulation approach in quantifying the effect of bullwhip in supply chain, using various forecasting methods. ____________________________________________________________ ______________________________ Keywords: information distortion, supply chain, simulation, quantifying bullwhip effect, forecasting methods ____________________________________________________________ ______________________________ I TRODUCTIO Supply chain is the integration of the decision of the fact that the demands of customers for products...
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