Skifemme

Carl Riiber Knudsen

Regents University

Operations Management: GB.21.LDR502.T1

Michael Talalay

25.03.2022

1
Report
In this report I will look at how we can forecast the demand of the women’s jackets for the
upcoming winter season 2022/2023. I have decided to use the exponential smoothing
approach due to the uncertainty of the post-pandemic market which allows us to take a
pragmatic approach. I will use the data from the sales report from 2018/2019 to determine our
forecast for this season.

Exponential smoothing

This method involves little record keeping of past data. To use this method, you will need to
use the previous seasons forecast and the actual demand. You as a forecaster will determine
the smoothing constant which is a number between 0 and 1. The more stable you think the
market is the closer to 0 the smoothing constant should be.

We write the formula as: F t=F t −1 +α ( At −1−F t−1)

F t= new Forecast

F t−1 = Previous periods forecast

α = Smoothing constant

At −1 = Previous periods actual demand

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Data from 2018/2019 season

NET SALES
Size \ colour Strawberry Kiwi Peach Banana White Totals
Petite 4,763 1,721 5,731 7,653 6,021 25,889
Moyenne 8,251 10,659 11,691 11,601 5,850 48,052
Grande 10,356 8,512 10,333 3,287 2,786 35,274
X-Grande 2,145 3,987 876 543 234 7,785
Totals 25,515 24,879 28,631 23,084 14,891 117,000

Returns
Size \ colour Strawberry Kiwi Peach Banana White Totals
Petite 325 118 391 523 411 1,768
Moyenne 564 728 798 792 400 3,282
Grande 707 581 706 225 190 2,409
X-Grande 147 272 60 37 25 541
Totals 1,743 1,699 1,955 1,577 1,026 8,000

Lost Orders
Size \ colour Strawberry Kiwi Peach Banana White Totals
Petite 0 0 0 0 0 0
Moyenne 600 800 200 400 150 2,150
Grande 2,500 1,500 600 950 300 5,850
X-Grande 3,500 1,850 700 950 7,000

Totals 6,600 4,150 1,500 2,300 450 15,000

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Forecast 18/19

I calculated the forecast from 18/19 by adding up the net sales with the returns.

Forecast 18/19
Size \ colour Strawberry Kiwi Peach Banana White Totals
Petite 5,088 1,839 6,122 8,176 6,432 27,657
Moyenne 8,815 11,387 12,489 12,393 6,250 51,334
Grande 11,063 9,093 11,039 3,512 2,976 37,683
X-Grande 2,292 4,259 936 580 259 8,326

Totals 27,258 26,578 30,586 24,661 15,917 125,000

Actual demand

The actual demand was calculated by adding the forecast from 18/19 and the lost orders
(demand that was not fulfilled)

Actual Demand
Size \ colour Strawberry Kiwi Peach Banana White Totals
Petite 5,088 1,839 6,122 8,176 6,432 27,657
Moyenne 9,415 12,187 12,689 12,793 6,400 53,484
Grande 13,563 10,593 11,639 4,462 3,276 43,533
X-Grande 5,792 6,109 1,636 1,530 259 15,326
Totals 33,858 30,728 32,086 26,961 16,367 140,000

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Forecast 2022/2023

Assumptions:

1. Consumer spending is lower post pandemic.

The consumer spending has drastically lowered during the pandemic. There is a lot of reasons
but mainly because of people experiencing losing their job or uncertainty for the future. I
factored this in the forecast due to our latest sales report coming from pre-pandemic.

2. The Ski wear market will be similar

I believe our product is a luxury item and we will not see a massive drop off in demand for
our products even in a post-pandemic market. The reason for this is our customer base holds
a lot of spending power and is not a demographic that will have been wrecked economically
from the pandemic.

The assumptions contradict each other, but I believe we should factor in both. I believe the
demand will be similar but not as much pre pandemic this is mainly due to people not
travelling freely as much as pre pandemic.

Based on my assumptions that the market will be stable, and the consumer spending will be a
bit lower post pandemic I decided with a smoothing constant of 0.5. This is to protect the
company from distributing to many jackets and ultimately lose money on returns or
overestimating the demand.

I calculated first the total quantity by taking the forecast from 18/19 TQ number 125,000,
adding that with the smoothing constant 0.5 x forecast 18/19 - actual demand 18/19
140,000.
The formula looks like this: Forecast 2022/2023 = 125,000(F 18/19) + 0.5(SC) x 140,000(AD
18/19) – 125,000 (F 18/19)

I believe this approach will ensure profits based on the assumptions that the market is stable,
I believe this pragmatic approach also protects the company form losing money should we
experience a decline in demand post pandemic.

Total Quantity 132,500

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 Size \ colour Strawberry Kiwi Peach Banana White Totals
Petite 5,088 1,839 6,122 8,176 6,432 27,657
Moyenne 9115 11787 12589 12593 6325 52,409
Grande 12313 9843 11339 3987 3126 40,608
X-Grande 4042 5184 1286 1055 259 11,826
Totals 30,558 28,653 31,336 25,811 16,142 132,500

Assumptions:
1. Consumer spending is lower post pandemic
2. The market will besimilar

Smoothing constant 0.5