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Decision making :Forecasting

We manufacture wood front doors with glass inserts
We $5 of wood, $2 of glass, $10 of metal fixtures, and $1.50 of plastics
We assemble and finshed the wooe, cut the glass, and assemble
the product in our two plants (Idaho and North Carolina). One plant
ships to customers west of the Mississippi, the other to customers
east of the Mississipi. Shipping averages $22 per door. Packaging
material costs $4. Labor is -

Hrly Rate Time Activity
$20 1 hr wood assembly
$25 0.6 hr wood finishing
$18 0.8 hr glass and metal assembly
$15 0.15 hr packaging

Overhead of the plant is $25 per door
Sales and advertising is $30 per door
Doors sell for an average price of $225 each
One door in 12 has some damage or flaws on arrival at the customer site.

a. How should we approach forecasting to support our business decsions.
Explain in detail.

b. What can we do to keep our business running at optimum
return - max profit? What options might we consider over time?

c. What options do we have for handling damaged/flawed merchandise?
Which do you recommend give the state of the economy and the outlook
for the next few years? Explain.


Solution Summary

Excel file contains the solution of forecasting problem.