ISCOM471 - Company Research
ISCOM471 - Company Research
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Date Created: 11/09/15
Running head: COMPANY RESEARCH: FORECASTING AND PLANNING 1 Company Research: Forecasting and Planning Angie Killion ISCOM 471 September 9, 2013 Paul Yakob University of Phoenix COMPANY RESEARCH: FORECASTING AND PLANNING 2 Company Research: Forecasting and Planning The chosen company for the research is Gulf Winds International (GWI). Forecasting techniques used by GWI will be discussed, as well as the pros and cons of the company’s chosen forecasting technique. How GWI prepares operational budgets will also be examined. Finally, material requirement planning (MRP) concepts will be reviewed along with which of these concepts are accepted and possible adopted by GWI. Forecasting Techniques According to Chase, Jacobs, and Aquilano (2006), there are four forecasting techniques: qualitative, time series analysis, casual relationships, and simulation. Qualitative techniques are subjective and judgmental. Time series analysis uses past data to predict the future demand. Casual relationships are when one occurrence causes another to happen. Finally, there are simulation models. These models involve assumptions in regards to internal variables and the external environment. It was stated previously in a separate document that GWI did not use a specific forecasting method, after further research into how GWI predicts the workload for the year, that information is incorrect. GWI uses time series analysis in the prediction of the expected yearly workload. GWI takes the forecast volumes from their top 10 customers and uses that information in conjunction with the data collected from the previous two years to estimate the workload for the upcoming year. Once the yearly forecast is predicted, GWI management also monitors the volumes on a monthly basis by using monthly data from the previous year and 30 and 60 day forecasts from their top 10 customers. Pros and Cons of Time Series Analysis COMPANY RESEARCH: FORECASTING AND PLANNING 3 There are both positive and negative aspects of Time Series Analysis. On the positive side, the predictions are based off of actual true data. Because data is based off of the actually history of previous workloads and actual customer forecasts, the predictions are more likely to be accurate. On the negative side, there are variables that can throw the whole prediction off track. Change in the economy is the variable that can have the biggest impact on the predictions. But the economy can have both a positive and negative effect. If the economy is in a good place, volumes could be higher than estimated and if the economy moves in a downward slope, imports can decline, lowering the estimated workload. Another variable is another carrier coming and under bidding the business and GWI loses the business. The one thing that is certain in logistics is that nothing is certain, so any kind of forecasting is just that forecasting and is not 100% accurate. MRP: Material Requirement Planning MRP is an approach that is an understandable, logical way to determine the number of parts, components, and material to produce each end product (Chase, Jacobs, Aquilano, 2006). MRP has evolved into 20 plus modules controlling all aspects of the manufacturing system. Although GWI is not a manufacturing company, Time Fences would be one of the concepts closest to what fits GWI. One of the flexibility factors within a master production schedule is relationship between customer and vendor. GWI falls within this portion. Time fences help control the flow. As in manufacturing, operating rules are necessary in trucking and warehousing to keep the flow of delivery and loading schedules in sync. Time fences are defined as periods of time that are opportunistic for customers to make changes. This time is not just for external customers but also internal. Because nothing is certain in logistics, it is COMPANY RESEARCH: FORECASTING AND PLANNING 4 important to be flexible to any changes or variables that may arise. GWI tries to be completely flexible to the needs to their customers and the market in which they operate. A specific feature that fits the vision of GWI is available to promise. Available to promise is the number of loads the customer put on the schedule and the number of loads actually available for delivery in a specified time period. In the research for this paper, it was discovered that GWI did have a forecasting technique unlike previously stated. GWI uses time series analysis to determine their expected workload for the year. Although there are both pros and cons to this technique, the pros outweigh the cons because it is based on actually data. Because GWI is not a manufacturer, applying MRP cannot be fully applied, however, as shown, there is one area that fits and that is time fences and available to promise. The one thing that is certain in logistics is that nothing is certain, so any kind of forecasting is just that forecasting and is not 100% accurate. COMPANY RESEARCH: FORECASTING AND PLANNING 5 Reference Chase, R. B., Jacobs, F. R., & Aquilano, N. J. (2006). Operations management for competitive advantage (11th ed.). New York, NY: McGrawHill Companies
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