PROJECT SUBMISSION by Ram prasad

Task 1

Method of forecasting: Moving Average

Justification for the choice of method:By using the Moving Average method, demand values are
averaged over a predetermined time period,with equal weight assigned to each data point. This
method works well for highlighting underlyingdemand trends and mitigating random fluctuations. It
is also simple to use and computationallyeffective, which makes it a useful option for short-term
forecasting.One key assumption underlying the Moving Average method is that demand patterns
observed inrecent periods will continue into the near future. For short-term forecasts, this
assumption is generallytrue because demand patterns typically show some degree of consistency
over short time horizons. It iscrucial to understand, though, that this presumption might not apply to
longer-term projections becausedemand patterns can be impacted by a variety of variables that
aren't always evident in recentlyavailable historical data.In conclusion, because the Moving Average
approach can identify recent trends and patterns indemand data, it is a good option for estimating
demand for the ensuing six months. It's crucial to acceptthe presumption that current demand
trends will continue for some time to come.

Task 2

The formula used for forecasting demand:Simple Exponential Smoothing =

Forecast for next month (Fn)= α * Actual demand for the current month (Dn) + (1

α) * Forecast for the previous month (Fn-1)Calculate the forecast for

January (Month 13) as the average of previous year’s January demand:

Forecast for January = (1

α) * Demand for January + α * Forecast for December Forecast for

January = (1- 0.3) *1500 +0.3 *2300Forecast for January = 0.7 * 1500 + 0.3 *2300 Forecastfor
January = 1050 + 690Forecast for January = 1740This process was continued for the remaining
months (March to June) using the previous forecastedvalue and actual demand for each month.
Repeat this process for each product category(Smartphones, Laptops, and Smartwatches).

The demand forecast for the next six months is shown in the table below


Month

Smartphones (Forecast)

Laptops (Forecast)

Smartwatches (Forecast)

00:0303:49



Jan



1740



941



361



Feb


1642



872



345



Mar



1644



876



346



Apr



1592



838



332



May



1607



843



335



Jun


1598



845



337

Task 3

The formula used for calculating forecast errors:Forecast Formula = Actual Demand

Forecast Demand

The forecast errors for the six months is shown in the table below

Month

Smartphones

Laptops

Smartwatches



Jan



140



186


102


Feb



7




53



Mar



75





96



Apr



158



85



118



May



313



157



135


Jun



442



255



141

Task 4

The formula for calculating MAPE:Mean Absolute Percentage Error is the measure of accuracy of a
forecasting method. It measures theaverage absolute percentage difference between the forecasted
values and the actual values.W

here,nisthenumberofmonths(isthiscase,6.) ActualDemandistheactualdemandfo
ragivenmonth.ForecastDemandistheforecasteddemandforthesamemonth.

MAPE for all product categories for the six months:

Month

Smartphones

Laptops

Smartwatches



Jan


8.75%



24.83%



39.38%

MAPE = (1/n)

*∑

(| (Actual Demand

Forecast Demand)/ Actual Demand|) *100



Feb



0.43%


0.80%



18.15%



Mar



4.24%



0.11%



38.40%



Apr



8.32%



9.24%



35.76%



May



16.14%



15.57%



43.55%

Jun27.64%30.24%41.97%

●
The formula for calculating Bias:Bias measures the overall tendency of forecasts to be consistently
higher than lower than actual values. Itis the sum of forecast errors divided by the number of
monthsWhere,n is the number of months (is this case ,6.) Actual Demand is the actual demand for a
given month.Forecast Demand is the forecasted demand for the same month.

Bias for all product categories for the six months:

Month

Smartphones

Laptops

Smartwatches

Jan

-140

-186

-102




Feb

-7

-7

-53

Bias = (1/n)

*∑

[Actual Demand

Forecast Demand]



Mar

-75

-96

Apr

158

85

-118

May

313


157

-135

Jun

442

255

-141

These Bias values represent the tendency of the forecasts to be consistently higher or lower than
actualdemand for each product category over the six-month period. Positive values Indicate an
overestimation ofdemand, while negative values indicate an underestimation of demand. These
metrics provide insights into thedirection and magnitude of forecast errors for each month and
product category.

Task 5

Recommendations: Analyzing the forecast errors and key performance metrics (MAPE and Bias)
provides insights into the the

supply chain’s performance in forecasting and meeting actual demand. Based on this analysis, here
are

recommendations for improving the supply chain planning process for each product category:

SMARTPHONES


MAPE Analysis

The MAPE for each smartphone over the past 6 months indicates that the forecastingaccuracy has
room for improvement, with significant errors in March and June.

Bias Analysis

The Bias Value Is generally negative, indicating a tendency to underestimate

demand forsmartphones.

Recommendation for Smartphones:

Improve Demand Sensing: Put in place a more adaptable system that can detect shifts in
market trendsand consumer preferences fast. In order to spot new trends, this can involve social
media monitoringand real-time data analytics.

Collaborate with suppliers: Work closely with suppliers to shorten lead times for
essential componentsused in the manufacturing of smartphones. Creating a supply chain that is
more responsive and nimblecan aid in meeting an unexpected spike in demand.

Advanced Forecasting Techniques: Investigate more complex forecasting

methods, such as machinelearning algorithms, and include additional variables, such as competitor
and promotional data, toincrease forecast accuracy.
LAPTOPS

M PE nalysis

The MAPE for laptops indicates relatively good forecasting accuracy for most months.

Bias Analysis

The Bias Value is close to Zero, suggesting that forecasts are relatively unbiased, but thereis room
for improvement.

Recommendation for Laptops:


Establish Demand Collaboration: Share demand and inventory data by working closely withretailers
and distributors. By doing this, the supply chain can be optimised and the chance ofoverstocking or
understocking laptops can be decreased.

Inventory Buffer: Keep a modest inventory buffer for laptop parts that are vulnerable to
supply chaininterruptions. Lead times can be shortened and a more steady supply can be guaranteed
as aresult.

Continuous Improvement: Invest in supply chain initiatives aimed at continuous improvement,

witha particular focus on supply chain efficiency and demand forecasting methods. Review and
improveforecasting models often to keep up with shifting market conditions.

SMARTWATCHES

MAPE Analysis

The MAPE for smartwatches indicates significant forecast errors, especially in the latermonths (May
and June)

Bias Analysis

The Bias Value is negative, indicating a tendency to underestimate demand forsmartwatches.

Recommendation for Smartwatches:

Market Segmentation: Use market segmentation techniques to gain a deeper understanding of

variouscustomer segments and their inclinations towards smartwatches. Forecasts of demand may
becomemore accurate as a result.

Cooperation with Retailers: To better match production with actual demand, closely collaborate
withretailers and e-commerce partners. To guarantee more precise replenishment, put vendor-
managedinventory (VMI) systems into place.

Product Diversification: Expand the selection of smartwatches to accommodate different

consumertastes. By offering a larger selection of products, this can aid in lowering the chance of
forecastingerrors.In conclusion, TechHub Electronics can enhance demand sensing, work with
retailers and suppliers, applysophisticated forecasting techniques, keep inventory buffers, and
prioritise continuous improvement to improveits supply chain planning process.

In order to effectively address particular challenges and capitalise on opportunities for improved
supply chainperformance in a market that is changing quickly, differentiated strategies are required
for each productcategory