Case 8

Yankee Fork and Hoe Company

By:
David Sigler
Cole Carlson
John Federiuk
Melissa Kirkman

History

Alan Roberts, long time President of Yankee

Leading producer of garden tools

Wheelbarrows, mortar pans, hand trucks, shovels, rakes, trowels

Use four different product lines

Product Range:

Top-of-the-line Hercules tools for the toughest jobs

Garden Helper economy tools for occasional user

Continued

Market is increasingly competitive while keeping low

prices and retaining high quality and dependable
delivery.
Early rapid growth has now leveled off
Generate new sales and retain old customers by
providing superior customer service and producing
products with high customer value

The Problems

Sales forecasting for Pareto items such as their Bow

Rake have been unreliable
Receiving complaints from long-time customers
(Sears and Tru-Value) about late deliveries causing their
customers to be unhappy

Current Forecasting Problems

Ron Adams, Marketing Manager

Ron uses shipment data because they are hard
numbers to forecast sales.
Meets with sales managers to modify shipping numbers
based from:

Anticipated Promotions
Changes in the economy
Previous years shortages

Current Forecasting Problems

Phil Stanton, Production Manager

Phil takes marketing depts. forecast and reduces it by
10% or so Because they have big egos over there
This info is used to prepare the monthly final assembly
schedule (MPS)

Forecast is always worst at the end of the year

Current Forecasting Variations

Month

Shipment
Variation
Year 1

Demand
Year 1

Shipment
Variation
Year 2

Demand
Year 2

Shipment
Variation
Year 3

Demand
Year 3

Shipment
Variation
Year 4

Demand
Year 4

-15,171

53,630

-8,474

51,078

-17,910

53,977

-10,637

50,040

-10,511

56,289

-20,338

59,298

-26,409

60,998

-25,473

63,781

19,030

17,345

15,337

20,223

19,152

22,568

20,432

23,266

12,788

26,199

12,010

25,970

12,996

26,504

12,169

28,140

-5,619

23,099

-1,067

24,705

2,337

26,932

-319

27,566

604

15,700

-5,479

13,400

3,259

16,421

-4,327

15,898

700

16,560

4,587

17,788

-2,291

13,045

4,293

18,209

-7,551

18,200

-3,068

16,465

2,918

18,991

2,022

17,690

7,380

15,510

2,967

17,433

-1,113

21,604

-8,085

22,887

10

-19,371

55,088

-420

57,400

-56,257

59,297

-16,479

54,777

11

21,605

84,188

223

85,455

-1,217

81,521

26,547

83,709

12

4,121

71,088

358

73,886

3,733

74,699

2,223

75,432

Forecasting Error
Bias error due to use of wrong model
RSFE = At Ft = Error
Month

1 Actual (At)

1 Forecast (Ft)

RSFE

2 Actual (At)

2 Forecast (Ft)

RSFE

38,459

53,630

-15,171

42,604

51,078

-8,474

45,778

56,289

-10,511

38,960

59,298

-20,338

36,375

17,345

19,030

35,560

20,223

15,337

38,987

26,199

12,788

37,980

25,970

12,010

17,480

23,099

-5,619

23,638

24,705

-1,067

16,304

15,700

604

7,921

13,400

-5,479

17,260

16,560

700

22,475

17,788

4,587

10,649

18,200

-7,551

13,397

16,465

-3,068

22,890

15,510

7,380

20,400

17,433

2,967

10

35,717

55,088

-19,371

56,980

57,400

-420

11

105,793

84,188

21,605

85,678

85,455

223

12

75,209

71,088

4,121

74,244

73,886

358

8,005

-3,364

Tracking Signals
Only in range 5 times in 2 years
Month

RSFE

Tracking Signal

RSFE

Tracking Signal

-15,171

-22.7

-8,474

-30.2

-10,511

-15.8

-20,338

-72.6

19,030

28.5

15,337

54.7

12,788

19.2

12,010

42.8

-5,619

-8.4

-1,067

-3.8

604

0.9

-5,479

-19.5

700

1.0

4,587

16.4

-7,551

-11.3

-3,068

-10.9

7,380

11.1

2,967

10.6

10

-19,371

-29.0

-420

-1.5

11

21,605

32.4

223

0.8

12

4,121

6.2

358

1.3

Total Error

8,005

-3,364

MAD

667

280

Our New Forecast Method

Use demand and capacity to produce data not shipment

data

Do not reduce by 10% or so

Incorporate seasonality on a month by month basis

Used simple moving average of last two years to get

demand for year 5

Our Modified Forecast

Using demand data versus supply data
Year 2

Seasonal
Factor

Year 4

Average
Seasonal
Factor

Year 5
Forecast

Month

Year 1

53,630

1.421

51,078

1.324

53,977

1.359

50,040

1.247

1.338

54,721

56,289

1.491

59,298

1.537

60,998

1.536

63,781

1.590

1.538

62,930

17,345

0.460

20,223

0.524

22,568

0.568

23,266

0.580

0.533

21,800

26,199

0.694

25,970

0.673

26,504

0.667

28,140

0.701

0.684

27,978

23,099

0.612

24,705

0.640

26,932

0.678

27,566

0.687

0.654

26,767

15,700

0.416

13,400

0.347

16,421

0.413

15,898

0.396

0.393

16,086

16,560

0.439

17,788

0.461

13,045

0.328

18,209

0.454

0.421

17,201

18,200

0.482

16,465

0.427

18,991

0.478

17,690

0.441

0.457

18,694

15,510

0.411

17,433

0.452

21,604

0.544

22,887

0.571

0.494

20,219

10

55,088

1.460

57,400

1.487

59,297

1.493

54,777

1.365

1.451

59,369

11

84,188

2.231

85,455

2.214

81,521

2.053

83,709

2.087

2.146

87,785

12

71,088

1.884

73,886

1.915

74,699

1.881

75,432

1.880

1.890

77,304

AVG

37,741

Total
Demand

452,896

38,592
N/A

463,101

Year 3

Seasonal
Factor

Seasonal
Factor

Seasonal
Factor

39,713
2.25%

476,557

40,116
2.91%

481,395

40,905
1.02%

2 yr SMA
1.965%

490,854

Missing Information

What promotions are being run

Delivery service

how often / where / method / what is consumer complaint

Inventory Accuracy

how often / what products / where

Cycle Counting how often

What other products are machines used to produce

What effect does this have on bow rake production

Is this a job shop / batch shop / assembly line

What is our budget

How we plan to get the info

Plant Visit

Interview Ron Adams

Production layout

Promotion info
Non-adjusted sales projections
Regional sales breakdown

Interview Phil Stanton

Delivery service use

Machine usage
Inventory accuracy

Our Recommendations

Change forecasting method

Demand based
Seasonality

Pareto items need to be batch shopped

Class A SKUs

Coordinate marketing and production more efficiently

Have a finished goods warehouse

Two-bin system
Ensure order fulfillment in a timely manner

Continuing Actions

Forward Integration Acquire own delivery service

Ensure Six-Sigma Quality

Ensure on-time delivery

Define identify customers and their priorities

Measure the process and how it is performed
Analyze the most likely causes of defects
Improve the means to remove defect causes
Control how to maintain the improvements

Set up Poka-Yokes to ensure product quality

Continuing Actions

Continuing Actions

Assembly line balancing

Reduce slack time to improve efficiency

Benchmarking

Competitive core functions with direct industry competitor

Functional non-core operational functions
Internal comparison made within the organization

Questions?