EBBD EMAIL - for Internal Use Only
From: Danny Wilco <[email protected]>
Subject: Re: Forecasting at EBBD
The Management Team is all for your efforts to investigate EBBD's forecasting situation. We want you to thoroughly analyze what we are doing, what other forecasting methods and techniques are available, and make a recommendation on how we should proceed. We are particularly interested in how to improve our short term forecasting on an annual, quarterly, and monthly basis. We also would like to know how we could do longer term forecasting, say over two or three years. And we want to know how we can generate quarterly inflation forecasts.
The Management Team wants to know
• What are the various methods that we should use?
• Who will do the forecasting?
• How will the forecasting methods be implemented?
• Why should EBBD spend any money on this new methodology? Why do we care about improving our forecasting and why is it worth the costs to improve it?
The report should provide an initial section on the background of the situation, assumptions that we need to make, discussion of your analysis of various forecasting methods, and then a recommendation with a justification as to why you are making the recommendation.
One more thing - the Management Team might want you to make an oral presentation. So you should also prepare a draft version of a PowerPoint presentation. This does not need to be a finished product, but a draft version.
The written report should be comprehensive and articulate. Send me the report and the draft PowerPoint when you have them finished. Let me know if you have any questions along the way.
~DW, VP LogOps.
Use the readings in the Background to familiarize yourself with forecasting and forecasting methods. You should also search for additional information pertaining to forecasting in logistics and distribution.
Specific Information you need to identify to use in your report:
• Why is forecasting important in a distribution company? What is it you are specifically forecasting and what is this used for?
• Why is forecasting accuracy important? How accurate does a forecast need to be?
• What is the difference between forecasting for existing product lines and for new products?
• Why should companies spend time and money to improve forecasting accuracy?
• How should a company use different methods but yet integrate these methods?
• How does strategic planning fit in with forecasting (at least for long term forecasting/planning)?
You should know the answers to these questions and use this information in your Report to Danny Wilco.
Using the background information about EBBD's forecasting situation and the information you obtain from the background readings and your research, write a report to Danny Wilco, addressing the questions that he posed. Then develop a draft Powerpoint presentation.
Assignment Expectations of the Written Report - Be sure to write this report to your boss, Wilco.
The report should thoroughly address these aspects in depth and breadth:
• Problem situation: clearly elucidate the current situation at EBBD
• Assumptions: assumptions that need to be made and critical evaluation
• Evidence: identifying information about different forecasting methods relevant to the problem
• Possible solutions: combinations of different methods and techniques to meet the requirements
• Recommendations: which methods and techniques are best for which specified needs
• Justification & Explanation: clear reasoning as to why the recommendations were made
• Writing style & Organization: well-formed sentences and paragraphs, well organized with flow of reason, and good use of language that pertain to concepts and terminology
• Use of references & Citations: at least four references. Appropriate use of APA Style is required in this paper.
Expectations of the Draft Presentation
The draft PowerPoint should address these aspects:
• Organization: the deck has a cover slide and at least 4 content slides, and information is arranged in understandable order
• Content: the deck uses bullet points that articulate and interpret key points of the report and shows relevant data, charts, graphs; notes are used in Note section of slides and possible themes of the presentation are suggested.
Report to Danny Wilco
To: Danny Wilco
Subject: Forecasting at EBBD
Following are suggestions for how to improve EBBD's short term forecasting on a monthly, quarterly and annual basis, as well as suggestions for longer term forecasting over two or three years. I have also included suggestions for the generation of quarterly inflation forecasts.
The purpose of forecasting is to determine how much inventory EBBD will need to order from our supplier in order to meet customer demands. Since EBBD is a distributor, it buys and sells instead of producing; as a result, these forecasts are based on what the retail customer is expected to order (1).
Accurate forecasting is important in order to determine the type and amount of transportation that will be needed, and the locations that the products will be shipped to. Inaccurate forecasts can lead to our receiving large stocks of inventory that need to be stored, or insufficient stock to send to our customers. The forecast needs to be accurate enough insofar as to avoid excessive holding costs and to avoid losing customers (1).
Existing product lines have historical sales data that can be used to create more reliable forecasts. New product lines, due to the lack of historical sales data, are difficult to forecast for as it is unknown how popular the new product lines will be.
Accurate forecasts are important because they decrease the holding costs of the products as well as allow us to provide better customer service by avoiding stockouts. The latter can cause EBBD to lose customers to competing distributors. The time and money spent in forecasting accurately can be well worth it.
It is a good idea to use different forecasting methods to provide an overall picture of the amount of product that is needed. ...
Answered in 1000 words in the Word file attached. Six sources are cited. The Powerpoint draft with 8 slides is provided.