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Pullover Forecaset
Pullover Forecaset
Sachin, the COO of Sheetamber, a woollen garments manufacturing unit was developing a
production plan for production of pullovers for the coming winter season.
Pullovers were the most expensive and fast moving item out of their offerings. Forecasting was a
very critical decision as it could make-or-break the organization. Pullovers were made in various
designs, colours and sizes. Each design was made in six colours and four sizes, which completed a
set. For economies of scale, as well as, to serve all the outlets, a large number of sets for each design
were produced. The company started its production three months before the start of winter season
and continued producing till the end of the season. This gave the company three months lead time
before the season start; however, the trends were available only once the season started.
Sachin called a meeting of all the managers to understand the demand forecast. To start with he
asked for the opinion from each manager about demand of each style. Table 1 provides the forecast
by six senior executives of Sheetamber, for the ten designs under consideration. Subsequently, they
had a discussion, and they arrived at following estimates of demand by consensus.
Based on the forecast provided by various executives, Sachin desired to decide on the monthly
production of each of the designs. The total production capacity was 100 sets per month. Sachin was
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convinced that the actual standard deviation in the demand for any design was twice the standard
deviation of the forecasts made by the executives. The minimum set-up quantity was 18 sets for
each round of production. How much do you think he must produce every month for each design?
Please fill in Table 3 to help Sachin.
Sachin believes that from the next year his sales for Pullovers will increase significantly, as he is
planning to enter new markets. What are the options available to him for increasing the capacity?
Should he increase capacity of his plant? Alternatively, should he outsource? In case he increases the
capacity for how many months, should he use the same? With overtime? With extra labour? With
part time staff? What else is possible?