Period 1 2 3 4 5 6 7 8 9 10 Actual 173 177 180 151 168 184 198 191 167 177
Forecast 166.7 183 174.7 163.2 155.6 187.6 192.9 194.6 149.8 195.2
1) What is the largest value for the tracking signal (either under or overforecasting)?
2) Demand is forecast for the next five months as 200, 300, 500, 300, 200. The production planner decides to adopt a level strategy, so over the next five months they should produce?
A fishing consortium anticipates highly seasonal demand for their product, yellowtail tuna steaks that can be made into the new drink sensation, the tuna colada. Their estimate of the demand profile appears below. This forecast is based on the demand profile of last year's drink, the okra colada with one key difference. The tuna colada is being positioned as a healthier alternative to eggnog, so demand is expected to climb throughout the planning period with a peak in December.
Month Demand Forecast
The costs for the managerial levers appears in this table
Materials cost/unit- $10
Inventory holding cost/unit/month- $4
Marginal cost of stockout/unit/month- $12
Hiring and training cost/worker- $200
Layoff cost/worker- $800
Labor hours required/unit- $3
Regular time cost/hour- $16
Over time cost/hour- $24
Period beginning inventory equals- 0
Period ending inventory equals- 0
Marginal subcontracting cost/unit- $80
The base price per tuna colada is $75 and there is currently no promotion, hence, no forward buying, but management is seriously considering different promotional plans. The beginning workforce level is 80 employees.
3) Use the Tuna Colada scenario to answer this question. Suppose a promotion in month 1 results in 10% consumption and a 20% forward buy. What is the maximum profit possible throughout the planning period?