Merriwell Bag Company Merriwell Bag Company Case Study 1. What forecasting method would be best suited for Merriwell Bag Company to determine the 2008 forecast? Justify you answer. In my opinion, Merriwell Bag Company should use one type of quantitative forecasting methods called time-series forecasting, because this method is “used to make detailed analyses of past demand patterns over time and to project these patterns forward in the future” (Schroeder, 2008).
The main reason Merriwell Bag Company should use the time-series forecasting method is because the “demand can be decomposed into components such as average level, trend, seasonality, cycle, and error” (Schroeder, 2008). The case study states “that the Merriwell family needs a forecasting method that would take the seasonal factor into consideration, stability, and anticipates the growth patterns of their custom
...ers”. The time-series method would be perfect for this family owned company. 2. In addition to forecasting demand of larger customers and aggregate demand, how might the accuracy of the forecast be improved?
To improve the accuracy of the forecast, Merriwell Bag Company needs to identify the magnitude and form of each component on the basis of available past data. These components are then projected forward into the future. A reliable forecast will be obtained after this is done. This company needs to invest in better forecasting methods, build more flexibility into the company, and reduce the lead time over which forecasts are required to also improve the accuracy of the forecast. 3. What role should Ed Merriwell’s gut feelings of the market play in establishing new sales forecasts?
Ed Merriwell’s gut feeling should know that the numbers of bales’ sales are increasing
every month of every year, so it should know that Ed needs to come up with a better plan immediately. The company currently doesn’t have a forecasting method in place, but from what I read, they are in a dire need for one. This is why I suggested the time-series forecasting method help detail analyses of past demand patterns over time and use components such as seasonality. This method fits the Merriwell Bag Company like a glove.
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