tastiing techniques, and check your empirical results against your judgments for
ID: 420546 • Letter: T
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tastiing techniques, and check your empirical results against your judgments for part 1. Give other techniques which could be applied if additional informatio could be acquired 4. State what occurrences or factors could affect forecasting based on historical demand or qualitative input. What might be done to compen- sate for these? CASE 2: COLD WAR The Tundra Company manufacturers heating, air conditioning, and refrigera- tion products. The manufacturing of truck/trailer refrigeration units is a major part of its operation. Tundra sells truck/trailer refrigeration units to truck manufacturers and also sells the units and their replacement parts to Cross Country Supplies, another division of its parent organization. Cross-Country in turn, sells the units and replacement parts to a dealer organization of approximately 180 authorized dealers. Given the size of Cross-Country's dealer network, the inventory investment in the Tundra-Cross-Country s enormous -dealer system The continual use of refrigeration units causes parts to wear rapidly, and their replacement is a frequent occurrence. However, intense usage tends to be seasonal. Tundra finds Cross-Country's demand for spare parts to parallel its demand for new units. To obtain forecasts, Tundra uses a method based on Cross-Country's actual orders for units and spare parts from the previous year The type and number of units and spare parts ordered by Cross-Country in a particular month of the previous year are used to derive forecast figures for the current year. On the other hand, Cross-Country orders each item (units and replacement parts) from Tundra in economic order quantities and uses an average of the past three years' demands from its dealers as a parameter Tundra does not follow a stable production schedule year round, but generally bases its manufacturing schedule on a combination of firm customer orders from truck manufacturers and forecasted demand for the units it plans sell to Cross-Country. Tundra receives component parts to support manu facturing and to fill replacement parts orders for Cross-Country from various suppliers: for example, compressors from one supplier, casings from another and thermostats from a third. As components must meet Tundra's specifica to Cross-Country fills dealer orders for replacement parts from its central warehouse. Likewise, Tundra fills the orders it receives from Cross-Country ons, it is difficult to expedite parts by ordering from another supplier from its own stock. Unfortunately, it is common for suppliers to delay filling and if Tundra's orders. When this happens, Tundra will accept backorders, necessary, ask Cross-Country to accept backorders as well. During previous waiting periods, Cross-Country has been prone to panic due to the pressureExplanation / Answer
1.Drawbacks of forecasting and stocking policies at both Tundra and cross country
The forecasting and stocking policies of both the companies are different hence there is no synchronisation between the two. Both should follow similar forecasting and stocking policies. Cross Country takes the average of past 3 years in order to determine the economic order quantity for the current year. Whereas Tundra consider the demand of previous year to determine the demand of current year. Hence there is discrepancy between the two companies in order to determine the safety stock.
2. Alternative stocking and forecasting methods for Tundra and cross country are regression method to find out historical averages,time series method, you comic approach, Heuristic methods.
3. General consideration for organisations
Identify the trend of demand and keep track of potential uncertainty in the demand
Consider reliable Modes of transport to avoid delay and damage of stock
Provide operations managers with right training program in order to facilitate operations planning and measurement of safety stock and inventory management
Have access to alternate mode of transport in case of increased demand.
Define key performance indicator to maximize the efficiency of operations and Logistics
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