In operations management, it is important to implement appropriate planning tools such as forecasting. Forecasting is basically the prediction of the future. Forecasts are mainly focus on the demand for a product or service, and are used as a point for planning and preparation to successfully and competently meet demand. When working from a forecast, the objective is to predict the future demand for the company’s product in by considering the synchronizing events which are most likely to take place within the service providers in the supply chain (Russell & Taylor 2006, p7).
The supplier (Great Northwest Outdoor Company) and the customer need to continuously share updated data in a strategy known as continuous replenishment. This strategy is supported by accurate forecasting which determines the inventory the company must have at particular points along its supply chain. Continuous replenishment ensures the inventory is reduced as well as speeding deliveries to the customer (Russell & Taylor 2006, p8).
Good quality service is made possible by accurate forecasting which eases the process flow by eliminating defective items, and ensuring on-time delivery of products.
Companies must adopt the forecasting model that best suits the nature of their business. The Great Northwest Outdoor Company specializes in products whose demand is seasonal. Therefore among the various forecast models available it will be prudent to adopt that which is most appropriate in relation to the seasonal demand trend of their products.
Seasonally Adjusted Forecast Model
As seen earlier, the demand for the products of Great Northwest Outdoor Company has a seasonal pattern.
A seasonal pattern is basically a periodical up- and – down repetitive shift in demand. Bearing this in mind, it is possible to use a seasonal factor to adjust forecast assuming that the total annual demand factor is 1. 0 and divide it into seasonal factors that are based on proportion of demand for each particular season (Russell & Taylor 2006, p19). Below is a seasonally adjusted forecast model for Great Northwest Outdoor Company based on order data available. Read also the Abco company manufactures electrical assemblies
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