Name - Kushi Jain
PROJECT SUBMISSION
Task 1
● Method of forecasting: For short-term demand forecasting for the next six months
using the provided data, the moving average method emerges as a highly appropriate
option. The rationale behind this choice lies in its capacity to effectively smooth out data,
its user-friendly simplicity, its adaptability to evolving conditions, its focus on historical
data for informed predictions, its inherent stability, its ease of implementation, and its
ability to provide real-time updates, all of which collectively render it a practical and
efficient tool for our specific forecasting needs.3 Period Moving Average
● Assumption: In this approach, it is assumed that as we enter the forecast period, the
demand for the current month will be estimated as equal to the forecasted demand for
the same month in the previous year. In other words, to predict February's demand, we
use the forecasted value for February of the previous year as the estimate for January,
and so on. This assumption also implies that the factors influencing demand, such as
seasonality or market dynamics, will remain relatively consistent during the short-term
forecast period.
We forecasted and calculated the Errors and found that the 3 Period Moving Average
gave us the least error.
SES
Smartphones Laptop Smartwatches
MAPE 25 19 60
BIAS 24% 18% 56%
MA
Smartphones Laptop Smartwatches
MAPE 21 17 56
BIAS 20% 14% 53%
WMA
Smartphones Laptop Smartwatches
MAPE 23 19 58
BIAS 22% 17% 54%
Task 2
● The formula used for forecasting demand:
● (Oct Actual + Nov Actual + Dec Actual) = January Forecast
3
● The demand forecast for the next six months is shown in the table below:
Month Smartphones (Forecast) Laptops (Forecast) Smartwatches (Forecast)
Jan 2033 1017 350
Feb 2111 1056 360
Mar 2148 1074 363
Apr 2098 1049 358
May 2119 1059 360
Jun 2122 1061 360
Task 3
● The formula used for calculating forecast errors:
Forecasting error = (Actual demand - forecast demand) * 100 / actual
demand
● The forecast errors for the six months are shown in the table below:
Month Smartphones Laptops Smartwatches
Jan -27 -35 -35
Feb -28 -22 -23
Mar -37 -22 -45
Apr -20 -14 -67
May -10 -6 -80
Jun -4 4 -84
Task 4
● The formula for calculating MAPE:
MAPE = Ʃ l(Actual-Forecast)l / Ʃ Actual
• MAPE for all product categories for the six months:
Month Smartphones Laptops Smartwatches
Jan 27 35 35
Feb 28 22 23
Mar 37 22 45
Apr 20 14 67
May 10 6 80
Jun 4 4 84
MAPE 21% 17% 56%
● The formula for calculating Bias:
Bias = Total Variances (Forecast - Actual) / Total Actual
● Bias for all product categories for the six months:
E.g.: (Forecast – Actual) = 2033-1600 = 433 Smartphones and So on …
Month Smartphones Laptops Smartwatches
Jan 433 262 91
Feb 462 191 68
Mar 579 197 113
Apr 348 126 144
May 199 59 160
Jun 82 -39 164
Total Variance 2103 795 741
Total Actual 10528 5520 1411
BIAS=Total Variance (Forecast-Actual) x100
Total Actual 20.0% 14.4% 52.5%
Task 5
● Recommendations: Smart Phones
○ Enhance Forecasting Strategies:
For smartphones, where demand forecasts have consistently
demonstrated precision, it is prudent to retain the utilization of the moving
average method. This approach facilitates the maintenance of an optimal
stock inventory, avoiding the pitfalls of overstocking. Conversely, in the
case of laptops and smartwatches, it is advisable to consider the adoption
of more advanced forecasting methodologies or undertake a refinement of
the weighting factor to elevate the accuracy of predictions.
● Recommendations: (Laptops)
○ Demand Collaboration: Establish a strong collaborative effort with the
sales and marketing teams to actively collect real time market intelligence.
This collaborative approach will enable the refinement of forecasts by
incorporating evolving consumer preferences.
○ Supplier Agility: Foster strong supplier partnerships to minimize lead
times, particularly for laptops, where demand fluctuates significantly.
Investigate opportunities for enhancing production and shipping agility.
● Recommendations: (Smart Watches)
○ Safety Stock Strategy: Due to the volatility in smartwatch demand and
the significant Mean Absolute Percentage Error (MAPE), it is
recommended to maintain elevated safety stock levels as a preventive
measure to mitigate the risk of stockouts.
○ Continuous Enhancement: Conduct periodic assessments and
refinements of forecasting methods through empirical performance
analysis and feedback mechanisms. The establishment of a robust Sales
and Operations Planning (S&OP) process is imperative to enhance the
overall efficiency of the supply chain.
In conclusion, these recommendations are designed to enhance the
supply chain's capability to effectively manage variations in demand,
reduce lead times, and optimize overall performance, with a specific focus
on products characterized by less precise forecasting.