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    The document contains a project submission analyzing demand forecasting and errors for smartphones, laptops, and smartwatches over a 6 month period. It finds that forecast accuracy was lowest for smartwatches, with significant errors in later months, and a tendency to underestimate demand. For smartphones, errors were largest in March and June, also with a bias toward underestimation. Laptop forecasts saw relatively low errors. The submission recommends improving demand sensing, supply chain responsiveness, and forecasting techniques for smartphones. For laptops, it suggests demand collaboration and inventory buffers. Smartwatch forecasts would benefit from market segmentation, retailer cooperation, and vendor-managed inventory systems.

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    The document contains a project submission analyzing demand forecasting and errors for smartphones, laptops, and smartwatches over a 6 month period. It finds that forecast accuracy was lowest for smartwatches, with significant errors in later months, and a tendency to underestimate demand. For smartphones, errors were largest in March and June, also with a bias toward underestimation. Laptop forecasts saw relatively low errors. The submission recommends improving demand sensing, supply chain responsiveness, and forecasting techniques for smartphones. For laptops, it suggests demand collaboration and inventory buffers. Smartwatch forecasts would benefit from market segmentation, retailer cooperation, and vendor-managed inventory systems.

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    275 views7 pages

    OPSCM Project - Shahzar Ahmed

    Uploaded by

    Shahzar Ahmed
    The document contains a project submission analyzing demand forecasting and errors for smartphones, laptops, and smartwatches over a 6 month period. It finds that forecast accuracy was lowest for smartwatches, with significant errors in later months, and a tendency to underestimate demand. For smartphones, errors were largest in March and June, also with a bias toward underestimation. Laptop forecasts saw relatively low errors. The submission recommends improving demand sensing, supply chain responsiveness, and forecasting techniques for smartphones. For laptops, it suggests demand collaboration and inventory buffers. Smartwatch forecasts would benefit from market segmentation, retailer cooperation, and vendor-managed inventory systems.

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    of 7

    PROJECT SUBMISSION by Shahzar Ahmed

    Task 1
    ● Method of forecasting: Moving Average
    ● Justification for the choice of method:
    By using the Moving Average method, demand values are averaged over a predetermined time period,
    with equal weight assigned to each data point. This method works well for highlighting underlying
    demand trends and mitigating random fluctuations. It is also simple to use and computationally
    effective, which makes it a useful option for short-term forecasting.
    One key assumption underlying the Moving Average method is that demand patterns observed in
    recent periods will continue into the near future. For short-term forecasts, this assumption is generally
    true because demand patterns typically show some degree of consistency over short time horizons. It is
    crucial to understand, though, that this presumption might not apply to longer-term projections because
    demand patterns can be impacted by a variety of variables that aren't always evident in recently
    available historical data.
    In conclusion, because the Moving Average approach can identify recent trends and patterns in
    demand data, it is a good option for estimating demand for the ensuing six months. It's crucial to accept
    the presumption that current demand trends will continue for some time to come.

    Task 2

    ● The formula used for forecasting demand:

    Simple Exponential Smoothing =


    Forecast for next month (Fn)= α * Actual demand for the current month (Dn) + (1 - α) * Forecast for the
    previous month (Fn-1)

    Calculate the forecast for January (Month 13) as the average of previous year’s January demand:

    Forecast for January = (1 – α) * Demand for January + α * Forecast for December Forecast for
    January = (1- 0.3) *1500 +0.3 *2300
    Forecast for January = 0.7 * 1500 + 0.3 *2300 Forecast
    for January = 1050 + 690
    Forecast for January = 1740

    This process was continued for the remaining months (March to June) using the previous forecasted
    value and actual demand for each month. Repeat this process for each product category
    (Smartphones, Laptops, and Smartwatches).

    ● The demand forecast for the next six months is shown in the table below

    Month Smartphones (Forecast) Laptops (Forecast) Smartwatches (Forecast)


    Jan 1740 941 361

    Feb 1642 872 345

    Mar 1644 876 346

    Apr 1592 838 332

    May 1607 843 335

    Jun 1598 845 337

    Task 3

    ● The formula used for calculating forecast errors:

    Forecast Formula = Actual Demand – Forecast Demand

    ● The forecast errors for the six months is shown in the table below

    Month Smartphones Laptops Smartwatches

    Jan 140 186 102


    Feb 7 7 53

    Mar 75 1 96

    Apr 158 85 118

    May 313 157 135

    Jun 442 255 141

    Task 4
    ● The formula for calculating MAPE:
    Mean Absolute Percentage Error is the measure of accuracy of a forecasting method. It measures the
    average absolute percentage difference between the forecasted values and the actual values.
    Where,
    MAPE = (1/n) *∑ (| (Actual Demand – Forecast Demand)/ Actual Demand|) *100
    n is the number of months (is this case ,6.)
    Actual Demand is the actual demand for a given month.
    Forecast Demand is the forecasted demand for the same month.

    ● MAPE for all product categories for the six months:

    Month Smartphones Laptops Smartwatches

    Jan 8.75% 24.83% 39.38%


    Feb 0.43% 0.80% 18.15%

    Mar 4.24% 0.11% 38.40%

    Apr 8.32% 9.24% 35.76%

    May 16.14% 15.57% 43.55%

    Jun 27.64% 30.24% 41.97%

    ● The formula for calculating Bias:


    Bias measures the overall tendency of forecasts to be consistently higher than lower than actualvalues. It
    is the sum of forecast errors divided by the number of months

    Bias = (1/n) *∑ [Actual Demand – Forecast Demand]

    Where,
    n is the number of months (is this case ,6.)
    Actual Demand is the actual demand for a given month.
    Forecast Demand is the forecasted demand for the same month.

    ● Bias for all product categories for the six months:

    Month Smartphones Laptops Smartwatches

    Jan -140 -186 -102

    Feb -7 -7 -53
    Mar -75 1 -96

    Apr 158 85 -118

    May 313 157 -135

    Jun 442 255 -141

    These Bias values represent the tendency of the forecasts to be consistently higher or lower than actual
    demand for each product category over the six-month period. Positive values Indicate an overestimation of
    demand, while negative values indicate an underestimation of demand. These metrics provide insights into the
    direction and magnitude of forecast errors for each month and product category.

    Task 5
    ● Recommendations:
    Analyzing the forecast errors and key performance metrics (MAPE and Bias) provides insights into the the
    supply chain’s performance in forecasting and meeting actual demand. Based on this analysis, here are
    recommendations for improving the supply chain planning process for each product category:

    SMARTPHONES
     MAPE Analysis
    o The MAPE for each smartphone over the past 6 months indicates that the forecasting
    accuracy has room for improvement, with significant errors in March and June.
     Bias Analysis
    o The Bias Value Is generally negative, indicating a tendency to underestimate demand for
    smartphones.

    Recommendation for Smartphones:


     Improve Demand Sensing: Put in place a more adaptable system that can detect shifts in market trends
    and consumer preferences fast. In order to spot new trends, this can involve social media monitoring
    and real-time data analytics.
     Collaborate with suppliers: Work closely with suppliers to shorten lead times for essential components
    used in the manufacturing of smartphones. Creating a supply chain that is more responsive and nimble
    can aid in meeting an unexpected spike in demand.
     Advanced Forecasting Techniques: Investigate more complex forecasting methods, such as machine
    learning algorithms, and include additional variables, such as competitor and promotional data, to
    increase forecast accuracy.
    LAPTOPS
     MAPE Analysis
    o The MAPE for laptops indicates relatively good forecasting accuracy for most months.

     Bias Analysis
    o The Bias Value is close to Zero, suggesting that forecasts are relatively unbiased, but there
    is room for improvement.

    Recommendation for Laptops:


     Establish Demand Collaboration: Share demand and inventory data by working closely with
    retailers and distributors. By doing this, the supply chain can be optimised and the chance of
    overstocking or understocking laptops can be decreased.
     Inventory Buffer: Keep a modest inventory buffer for laptop parts that are vulnerable to supply chain
    interruptions. Lead times can be shortened and a more steady supply can be guaranteed as a
    result.
     Continuous Improvement: Invest in supply chain initiatives aimed at continuous improvement, with
    a particular focus on supply chain efficiency and demand forecasting methods. Review and improve
    forecasting models often to keep up with shifting market conditions.

    SMARTWATCHES
     MAPE Analysis
    o The MAPE for smartwatches indicates significant forecast errors, especially in the later
    months (May and June)

     Bias Analysis
    o The Bias Value is negative, indicating a tendency to underestimate demand for
    smartwatches.

    Recommendation for Smartwatches:


     Market Segmentation: Use market segmentation techniques to gain a deeper understanding of various
    customer segments and their inclinations towards smartwatches. Forecasts of demand may become
    more accurate as a result.
     Cooperation with Retailers: To better match production with actual demand, closely collaborate with
    retailers and e-commerce partners. To guarantee more precise replenishment, put vendor-managed
    inventory (VMI) systems into place.
     Product Diversification: Expand the selection of smartwatches to accommodate different consumer
    tastes. By offering a larger selection of products, this can aid in lowering the chance of forecasting
    errors.

    In conclusion, TechHub Electronics can enhance demand sensing, work with retailers and suppliers, apply
    sophisticated forecasting techniques, keep inventory buffers, and prioritise continuous improvement to improve
    its supply chain planning process.
    In order to effectively address particular challenges and capitalise on opportunities for improved supply chain
    performance in a market that is changing quickly, differentiated strategies are required for each product
    category.

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