Description
NutCo is a leading grower/processor of nut products in the United States. The company grew, processed, and shipped products from their own farms for the first 20 years; however, five years ago, the company established its own private label and the demand for its products skyrocketed. During this period of growth, the company?s previous ?stationary? forecasts no longer apply. As such, the company hired you to help forecast the demand for the upcoming crop year. Diane Avison is the VP of Sales and discusses the matter with you below?.
BCOR 3750 — Operations and Supply Chain Management Analytics
Project 1A — Forecasting
NutCo Historical Shipments from 2016 to 2020 (MM Lbs)
Year
2016 2017 2018 2019 2020 2021
Jan
1.2
1.2
1.2
1.8
1.9
Feb
0.8
0.9
1.1
1.4
1.6
Mar
1.5
1.6
1.9
2.5
2.4
Apr
0.9
0.9
1.0
1.5
1.7
May
0.8
0.7
0.9
1.1
1.3
Jun
0.9
1.0
1.1
1.6
1.7
Jul
0.8
0.7
0.8
1.2
1.1
Aug
1.9
2.2
2.2
3.0
3.0
Sep
1.7
1.8
2.0
2.9
2.6
Oct
1.6
1.9
2.1
2.9
2.8
Nov
2.0
1.9
2.1
2.7
3.0
Dec
1.3
1.4
1.9
2.3
2.3
Total
15.4
16.3
18.5
24.8
25.5
BCOR 3750 ? Project 1 (Part A)
(70 Points)
NutCo is a leading grower/processor of nut products in the United States. The company grew,
processed, and shipped products from their own farms for the first 20 years; however, five years
ago, the company established its own private label and the demand for its products skyrocketed.
During this period of growth, the company?s previous ?stationary? forecasts no longer apply. As
such, the company hired you to help forecast the demand for the upcoming crop year. Diane
Avison is the VP of Sales and discusses the matter with you below?.
Diane:
?This business has been in my family for 25 years. The first 20 years were
easy because we just farmed, grew, processed, and sold our crops under a
generic label; however, five years ago, we launched our own brand of
products and the demand has grown year-on-year. The problem is that our old
approach of ?next year will be like last year? no longer works because of the
growth as well as the month to month trends we are now seeing for our
products.?
You:
?How do estimate your numbers now??
Diane:
?We try to use the previous years? monthly and annual volumes (and just add
a ?fudge? factor as needed) but we are constantly finding ourselves chasing the
eight-ball.?
You:
?Do you have the sales volumes for the previous year??
Diane:
?Yes. Here are the numbers provided by the sales manager??
Table 1: NutCo Historical Shipments from 2016 to 2020 (MM Lbs)
Year
2016
2017
2018
2019
2020
Jan
1.20
1.17
1.22
1.76
1.87
Feb
0.83
0.92
1.15
1.37
1.61
Mar
1.55
1.64
1.87
2.50
2.36
Apr
0.89
0.91
1.05
1.47
1.72
May
0.75
0.74
0.93
1.15
1.28
Jun
0.94
1.03
1.1
1.58
1.67
Jul
0.77
0.72
0.82
1.19
1.15
Aug
1.87
2.16
2.23
2.99
3.04
Sep
1.67
1.75
2.04
2.92
2.63
Oct
1.62
1.93
2.12
2.87
2.83
Nov
1.98
1.89
2.09
2.70
3.01
Dec
1.34
1.44
1.9
2.35
2.34
Diane:
?We called your company because we would like your help forecasting the
monthly and annual demand for 2021.?
You:
?In order forecast the monthly and annual demand, we will perform the
following:
?
Create a Stacked Monthly Demand for all Years (5 Points)
?
Calculate the Monthly Seasonality using all years provided (5 Points)
?
Chart the Annual Demand from 2016 to 2020 (5 Points)
?
Forecast the demand for 2021 (using 2016-20 Annual) (10 Points)
Total
15.41
16.30
18.52
24.85
25.51
BCOR 3750 ? Project 1 (Part A)
?
Provide a summary which shows the percentage of variation the model would
explain, the change in forecast demand for each subsequent year, and the
relevance of the annual constant (i.e. Summary Output) (5 Points)
?
Calculate how many millions of lbs the model?s Annual Forecast can be ?off?
(also known as the ?Mean Absolute Deviation?) (5 Points)
?
Calculate what ?percentage off? the annual forecast (also known as the Mean
Absolute Percentage Deviation) (5 Points)
?
Calculate the monthly demand for 2021 using the combination of the annual
forecasted demand and the monthly seasonal index (5 Points)
?
Create a Monthly Demand Table for 2016 ? 2020 Actuals PLUS the 2021
monthly Forecasts (5 Points)
?
Calculate how many millions of lbs the model?s monthly forecast can be ?off?
(also known as the ?Mean Absolute Deviation?) (2.5 Points)
?
Calculate what ?percentage off? the monthly forecast (also known as the Mean
Absolute Percentage Deviation) (2.5 Points)
?
Create a chart which shows the monthly 2016 to 2021 actuals and forecasts (with
all of the proper labels) (5 Points)
MEMORANDUM
Write no more than a two-page memorandum summarizing your estimated annual and monthly
demand for 2021. Briefly describe the type of data you identified to develop your forecast, then
identify the methodology you received (no more than three or four sentences on this). Then
identify the predictability level (i.e. the percentage of variation your annual forecast model would
explain), whether your variable constants are statistically valid, identify the annual and monthly
?average error and percentage error rates? of your model (you must include both the annual and the
monthly number for full credit) and then provide the three charts showing the ?Stacked Year-OnYear Monthly Demand?, the ?Annual Demand and Forecast?, and the ?Monthly Actual and
Forecast Demand for 2016 to 2021.? (10 Points)
DUE DATE:
Fri, Feb 11 @ 11:59 PM (70.0 Points ? 100%)
————————————————————————-Sat, Feb 12 @ 11:59 PM
(63.0 Points ? 90%)
Sun, Feb 13 @ 5:59 AM
(52.5 Points ? 75%)
Sun, Feb 13 @ 11:59 AM
(35.0 Points ? 50%)
Sun, Feb 13 @ 5:59 PM
(17.5 Points ? 25%)
Sun, Feb 13 @ 6:00 PM
( 0.0 Points ? 0%)
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