Module 2 Assignment - Worksheet

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Auburn University *

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2150

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Economics

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Apr 3, 2024

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docx

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4

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Assignment – Long Range Planning CAPACITY AND DEMAND PLANNING SCENARIO After reviewing the long-range planning demonstration video (posted on Canvas) and looking over the related PowerPoint slides, complete the following case. Transfer your answers to the Canvas quiz. You have been hired as a demand planning intern for Heavenly Creations (HC). They want you to develop a forecast for their popular line of telescopes. The goal is to project how many telescopes they should produce in September to meet future demand. During your first meeting, the supply chain director tells you that demand peaks in August and then slowly drops for a few months before a Christmas rush. At the end of the meeting, you are handed some data to analyze. Month Production Output Actual Demand Forecast of Demand May 2023 6,875 5,980 5,805 June 2023 7,250 6,555 7,090 July 2023 7,375 6,670 7,440 August 2023 7,500 7,245 7,775 Effective production capacity = 8,000 units per month Overtime production capacity = 500 units per month Historical demand forecasting error = ± 400 units per month Other useful information about the company: Design production capacity = 9,000 units per month
Assignment – Long Range Planning 1. Evaluate the capacity of HC’s internal production capacity to serve demand. Calculate production capacity utilization for August 2023: Based on HC's available resources, will they realistically have enough internal production capacity to serve anticipated demand of 8,600 telescopes in September 2023? Based solely on what you see in the table (before doing any calculations), what is your evaluation of the marketing team’s demand forecast relative to the actual demand for the previous four months? 2. Calculate the demand forecast for September 2023 using the methods listed below. Work with the data provided in the table on the previous page. Three-Month Simple Moving Average Three-Month Weighted Moving Average Weight factors t – 1 = .45 t – 2 = .35 t – 3 = .20 Exponential Smoothing Alpha smoothing constant = .7
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