M&L Manufacturing
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The document discusses operations management and forecasting techniques. It presents a case study of M&L Manufacturing, which makes printer and copier components. M&L does not currently use forecasting for production planning and has experienced being overstocked on some items and out of others. This has caused tensions with retailers. To address competitive pressures and falling profits, the manager decides to introduce formal forecasting to improve planning and inventory management. They will start forecasting two important products that account for large profits and future growth. After implementing forecasting techniques, the company was able to reduce its losses from $6 million to $1 million the next year.
M&L Manufacturing
- 1. Operations Management PRESENTED BY: ZUBAIR AFZAL 52-FMS/BSAF/S-16 PRESENTED TO : Sir Mansoor Jamil Qureshi & rest of the class mates
- 2. A Case Study on M&L Manufacturing Regarding Forecasting
- 3. Forecasting is a decision-making tool used by businesses to help in planning and estimating future growth. Forecasting is the attempt to predict future outcomes based on past events. FORECASTING
- 4. M&L Manufacturing makes various components for printers and copiers. In addition to supplying these items to a major manufacturer, the company distributes these and similar items to office supply stores and computer stores as replacement parts for printers and desktop copiers. In all, the company makes about 20 different items. The two markets (the major manufacturer and the replacement market) require somewhat different handling. For example, replacement products must be packaged individually whereas products are shipped in bulk to the major manufacturer. CASE
- 5. The company does not use forecasts for production planning. Instead, the operations manager decides which items to produce and the batch size, based on orders and the amounts in inventory. The products that have the fewest amounts in inventory get the highest priority. Demand is uneven, and the company has experienced being overstocked on some items and out of others. Being understocked has occasionally created tensions with the managers of retail outlets. Another problem is that prices of raw materials have been creeping up, although the operations manager thinks that this might be a temporary condition. Company bears a loss of $6 million in one year. CASE
- 6. Primary forecasting techniques help organizations plan for the future. Some are based on subjective criteria and often amount to little more than wild guesses or wishful thinking. Others are based on measureable, historical quantitative data and are given more credence by outside parties, such as analysts and potential investors. While no forecasting tool predict the future with complete certainty, they remain essential in estimating an organization’s forward prospects. Forecasting Techniques
- 7. Delphi Technique Scenario Writing Subjective Approach Time-Series Forecasting Forecasting Techniques
- 8. The RAND Corporation developed the Delphi Technique in the late 1960s. In the Delphi Technique, a group of experts responds to a series of questionnaires. The experts are kept apart and unaware of each other. The results of the first questionnaire are compiled, and a second questionnaire based on the results of the first is presented to the experts, who are asked to re-evaluate their responses to the first questionnaire. This questioning, compilation and re- questioning continues until the researchers have a narrow range of opinions. Delphi Technique
- 9. In Scenario Writing, the forecaster generates different outcomes based on different starting criteria. The decision- maker then decides on the most likely outcome from the numerous scenarios presented. Scenario writing typically yields best, worst and middle options. Scenario Writing
- 10. Subjective forecasting allows forecasters to predict outcomes based on their subjective thoughts and feelings. Subjective forecasting uses brainstorming sessions to generate ideas and to solve problems casually, free from criticism and peer pressure. They are often used when time constraints prohibit objective forecasts. Subjective forecasts are subject to biases and should be viewed by decision-makers. Subjective Approach
- 11. Time-series forecasting is a quantitative forecasting technique. It measures data gathered over time to identify trends. The data may be taken over any interval: hourly; daily; weekly; monthly; yearly; or longer. Trend, cyclical, seasonal and irregular components make up the time series. Time-Series Approach
- 12. Helps to Predict The Future. Keep Your Customers Happy. Learn From The Past. Keeps Companies Looking Ahead. Save on Staffing Costs. Remain Competitive. Reduce Inventory Costs. Benefits of Forecasting
- 13. Because of competitive pressures and falling profits, the manager has decided to undertake a number of changes. One change is to introduce more formal forecasting procedures in order to improve production planning and inventory management. With that in mind, the manager wants to begin forecasting for two products. These products are important for several reasons. SOLUTION
- 14. First, they account for a disproportionately large share of the company’s profits. Second, the manager believes that one of these products will become increasingly important to future growth plans; and After using forecasting techniques, company declines its loss from $6 million to $1 million in next year. SOLUTION
- 15. Businesses should use Forecasting Techniques to forecasts about their future to make their business profitable, to make their customer satisfied and to remain competitive in market. With the help of forecasting techniques businesses diminish the chances of loss. CONCLUSION
Editor's Notes
- #9: RAND corporation is an American non-profit global policy think tank created in 1948 by Douglas Aircraft company to offer research and analysis to the United States Armed Forces.