1. How accurate was the demand forecast for the first quarter of 2005?

The Forecast overestimates the real demand in every single product. For the first quarter,

Connors and Fields have forecasted the sales to be 53,560 units of PVB and 559 units of Fire

valves. However, with reference to the Exhibit 2, we find that the actual sales of PVB were less

than the forecast i.e. 48,159 units and that of Fire Valves were more than the forecast i.e. 580

units. Hence, Connors and Fields have over forecasted the sales of PVB by 11.21% and under-

forecasted the sales of Fire valves by 3.62%

m
2. What is the current demand forecasting method? Who uses the demand forecast?

er as
co
What are the consequences, if any, if the forecast is inaccurate?

eH w
o.
The current forecasting method is a spreadsheet called the Forecast Master, which lists the
rs e
ou urc
average weekly sales history for each product family by quarter and year. For each product

family, they divide the total quarters in weeks to determine the average weekly sale per quarters.
o
aC s

Then they plug in their expected demand for the five or six quarters.
vi y re

Connors and Rick Fields, the sales / marketing managers are primarily responsible for the
ed d

preparation of the current demand forecast. They develop a quarterly demand forecast for each
ar stu

product family on the basis of their knowledge about the industry trends, Competitive Strategies
is

and sales history. The sales forecast is prepared for next five to six quarters.
Th

The demand forecast will be used by Bernie Barge, a newly promoted inventory manager at

Wilkins Plant in Paso Robles, California.

sh

If the Demand forecast is inaccurate it can cause various problems like:

 Lack or excess of resources as the case may be.

This study source was downloaded by 100000817168970 from CourseHero.com on 03-29-2021 00:18:21 GMT -05:00

https://www.coursehero.com/file/20017984/WILKINS/
  If demand more than the forecast: Lack of resources
 If demand less than the forecast: Excess of resources
 Increase in operational cost
 May lead to late customer deliveries.
 Impact the repute of the organization.

3. Create a demand forecast for the PVB product family for the next three quarters.

How does your demand forecast compare to Wilkins’ demand forecast?

Calculation of the sales forecast on the using the planning Bill (Units)

m
er as
PVB Product Quarter 1 Quarter2 Quarter3 Quarter4 Total

co
(Actual) (Forecast) (Forecast) (Forecast)

eH w
Family

o.
12-720 6235 9152 11429 7320 34136
34-720 28020 rs e 21672 27063 17334 94089
ou urc
1-720 11163 38076 47549 30456 127244
34-420 384 10361 12938 8287 31970
1-420 2357 7078 8841 5663 23939
o

Total 48159 86339 107820 69060 311378

aC s

Total Sales will be estimated at 11.21% lower than the forecast made by Connors and fields.
vi y re

The sales are distributed according to the proportion provided in the Planning Bill.
ed d
ar stu

4. As Bernie Barge, what would you recommend to management and why? How
is

should Barge convince management to follow his recommendations? Develop an

Th

action plan.
sh

As Bernie Barge, I would also recommend that the sales should be forecasted in weeks rather

than quarters. Because when we prepare weekly forecasts making adjustments becomes easy.

Adjustments are required because there are so many controllable and uncontrollable factors

This study source was downloaded by 100000817168970 from CourseHero.com on 03-29-2021 00:18:21 GMT -05:00

https://www.coursehero.com/file/20017984/WILKINS/
 affecting the demand. In short, weekly preparation helps in reviewing the forecast on a regular

basis.

The Forecast will be prepared according to the planning bill mainly because each product family

has its own planning bill which provides the following five components:

i. Sales History of each product.

ii. Calculation of the average number of units sold within that product family each day

within each quarter.

iii. Projection of the average daily sales for the family expected to be sold in the next 12

m
months.

er as
iv. Disaggregation of the family forecast into each product based on the percentage of sales

co
eH w
of product family.
v. Calculation of the annual sales forecast within the family.

o.
rs e
ou urc
o

I will convince the management to follow my recommendations on the following grounds:

aC s
vi y re

i. Planning Bill is available for each product family.

ii. The method will lead to more accurate results.
iii. Weekly forecast will make it easier to review and make adjustments. Review becomes
ed d
ar stu

complicated in case of Quarterly Forecast.

iv. Better functioning of the organization and will help in better inventory management.
v. Regular review will ensure less operational cost
is
Th

Action Plan
sh

i. Study the Planning Bill of the each Product Family.

ii. Study the various Controllable factors like, new product development and innovations,

marketing effectiveness, promotions and prices and Uncontrollable factors like weather,

This study source was downloaded by 100000817168970 from CourseHero.com on 03-29-2021 00:18:21 GMT -05:00

https://www.coursehero.com/file/20017984/WILKINS/
 macroeconomic change, new market entrants, and the competition’s marketing campaign,

such as promotions and prices

iii. Prepare weekly forecast for the quarter.
iv. Weekly review the forecast.

m
er as
co
eH w
o.
rs e
ou urc
o
aC s
vi y re
ed d
ar stu
is
Th
sh

This study source was downloaded by 100000817168970 from CourseHero.com on 03-29-2021 00:18:21 GMT -05:00

https://www.coursehero.com/file/20017984/WILKINS/
Powered by TCPDF (www.tcpdf.org)