Operations and Supply Chain Management The Core

FORECASTING chapter 3 89
Using a procedure that you develop that captures the change in demand from last
year to this year and also the seasonality in demand, forecast expected sales for the
fourth quarter of this year.
31. The following are sales revenues for a large utility company for years 1 through
11. Forecast revenue for years 12 through 15. Because we are forecasting four
years into the future, you will need to use linear regression as your forecasting
method.
YEAR REVENUE (MILLIONS) YEAR REVENUE (MILLIONS)
1
2
3
4
5
$4,865.9
5,067.4
5,515.6
5,728.8
5,497.7
6 5,197.7
7
8
9
10
11
$5,094.4
5,108.8
5,550.6
5,738.9
5,860.0
LO3–3 32. What forecasting technique makes use of written surveys or telephone
interviews?
33. Which qualitative forecasting technique was developed to ensure that the input
from every participant in the process is weighted equally?
34. When forecasting demand for new products, sometimes firms will use demand
data from similar existing products to help forecast demand for the new product.
What technique is this an example of?
LO3–4 35. Often, firms will work with their partners across the supply chain to develop
forecasts and execute production and distribution between the partners. What
technique does this describe?
36. How many steps are there in Collaborative Planning, Forecasting, and
Replenishment (CPFR)?
37. What is the first step in CPFR?
ANALYTICS EXERCISE: FORECASTING SUPPLY CHAIN DEMAND—
STARBUCKS CORPORATION (LO3–2)
As we discussed at the beginning of the chapter, Starbucks
has a large, global supply chain that must efficiently supply
over 17,000 stores. Although the stores might appear to be
very similar, they are actually very different. Depending on
the location of the store, its size, and the profile of the customers
served, Starbucks management configures the store
offerings to take maximum advantage of the space available
and customer preferences.
Starbucks’ actual distribution system is much more complex,
but for the purpose of our exercise let’s focus on a single
item that is currently distributed through five distribution
centers in the United States. Our item is a logo-branded coffeemaker
that is sold at some of the larger retail stores. The
coffeemaker has been a steady seller over the years due to its
reliability and rugged construction. Starbucks does not consider
this a seasonal product, but there is some variability in
demand. Demand for the product over the past 13 weeks is
shown in the following table.
The demand at the distribution centers (DCs) varies
between about 40 units on average per week in Atlanta and
48 units in Dallas. The current quarter’s data are pretty close
to the demand shown in the table.
Management would like you to experiment with some
forecasting models to determine what should be used in a new
system to be implemented. The new system is programmed
to use one of two forecasting models: simple moving average
or exponential smoothing.