Sullivan College of Technology and Design Yankee Fork and Hoe Company Case Questions Answer all questions related to the Case Study. Should be at least 2 p

Sullivan College of Technology and Design Yankee Fork and Hoe Company Case Questions Answer all questions related to the Case Study. Should be at least 2 pages long project future inventory levels?
Os, and
3. What factors make forecasting at Deckers particularly challenging? How
can forecasts be made for seasonal, fashionable products for which there
is no history file? What are the costs of overforecasting demand for such
items? Underforecasting?
only small safety stocks are needed to service the retailers. Occasionally, the
purchase order from Deckers to one of its suppliers matches the sales order
from the customer. In such a case, Deckers uses a “cross-dock” system. When
the shipment is received at the distribution center, it is immediately checked in
and loaded on another truck for delivery to customers. Cross docking reduces
the need to store vast quantities of product for long periods of time and cuts
down on warehousing expenses for Deckers. The company has been success-
ful in turning its inventory over about four times a year, which is in line with
footwear industry standards.
The online sales traffic is all managed centrally. In fact, for ordering and
inventory management purposes, the online side of the business is treated
just like another major retail store account. As forecasted seasonal orders are
generated by each brand’s sales team, a manufacturing order for the online
business is placed by the e-commerce sales team at the same time. However,
4. What are the benefits of leveling aggregate demand by having a portfolio
of products that create a 365-day demand?
5. Deckers plans to expand internationally, thereby increasing the vol-
ume of shoes it must manage in the supply chain and the pattern of
ing, order quantities, logistics, and relationships with its suppliers and
customers?
material flows. What implications does this strategy have on forecast-
CASE
Yankee Fork and Hoe Company
The Yankee Fork and Hoe Company is a leading producer of garden tools
ranging from wheelbarrows, mortar pans, and hand trucks to shovels, rakes,
and trowels. The tools are sold in four different product lines ranging from the
top-of-the-line Hercules products, which are rugged tools for the toughest jobs,
to the Garden Helper products, which are economy tools for the occasional
user. The market for garden tools is extremely competitive because of the
simple design of the products and the large number of competing producers. In
addition, more people are using power tools, such as lawn edgers, hedge trim-
mers, and thatchers, reducing demand for their manual counterparts. These
factors compel Yankee to maintain low prices while retaining high quality and
dependable delivery
Garden tools represent a mature industry. Unless new manual products
can be developed or a sudden resurgence occurs in home gardening, the
prospects for large increases in sales are not bright. Keeping ahead of the
competition is a constant battle. No one knows this better than Alan Roberts,
president of Yankee.
The types of tools sold today are, by and large, the same ones sold 30
years ago. The only way to generate new sales and retain old customers is
to provide superior customer service and produce a product with high cus-
tomer value. This approach puts pressure on the manufacturing system, which
has been having difficulties lately. Recently, Roberts has been receiving calls
from long-time customers, such as Sears and True Value Hardware Stores,
complaining about late shipments. These customers advertise promotions for
garden tools and require on-time delivery.
Roberts knows that losing customers like Sears and True Value would be
disastrous. He decides to ask consultant Sharon Place to look into the matter
IN
FORECASTING
CHAPTER 8
325
and report to him in 1 week. Roberts suggests that she focus on the bow rake
source of customer complaints of late.
as a case in point because it is a high-volume product and has been a major
Planning Bow Rake Production
A bow rake consists of a head with 12 teeth spaced 1 inch apart, a hardwood
strip that is welded to the ends of the rake head and bent in the middle to
reinforces the area where the bow inserts into the handle. The bow is a metal
form a flat tab for insertion into the handle. The rake is about 64 inches long.
goes straight to Phil Stanton, who gives the following account:
Because the marketing department provides crucial information to
Stanton, Place decides to see the marketing manager, Ron Adams. Adams
explains how he arrives at the bow rake forecasts.
Things do not change much from year to year. Sure, some-
times we put on a sales promotion of some kind, but we try to give
Phil enough warning before the demand kicks in—usually a month
or so. I meet with several managers from the various sales regions
to go over shipping data from last year and discuss anticipated
promotions, changes in the economy, and shortages we experi-
enced last year. Based on these meetings, I generate a monthly
forecast for the next year. Even though we take a lot of time getting
the forecast, it never seems to help us avoid customer problems.
Place decides to find out how Yankee plans bow rake production. She
Planning is informal around here. To begin, marketing
determines the forecast for bow rakes by month for the next year.
The Problem
Place ponders the comments from Stanton and Adams. She understands
Stanton’s concerns about costs and keeping inventory low and Adams’s
concern about having enough rakes on hand to make timely shipments. Both
are also somewhat concerned about capacity. Yet she decides to check actual
customer demand for the bow rake over the past 4 years (in Table 8.6) before
making her final report to Roberts.
Then they pass it along to me. Quite frankly, the forecasts are
usually inflated—must be their big egos over there. I have to be
careful because we enter into long-term purchasing agreements
for steel, and having it just sitting around is expensive. So I usually
reduce the forecast by 10 percent or so. I use the modified forecast
to generate a monthly final-assembly schedule, which determines
what I need to have from the forging and woodworking areas. The
system works well if the forecasts are good. But when marketing
comes to me and says they are behind on customer orders, as they
often do near the end of the year, it wreaks havoc with the sched-
ules. Forging gets hit the hardest. For example, the presses that
stamp the rake heads from blanks of steel can handle only 7,000
heads per day, and the bow rolling machine can do only 5,000 per
day. Both operations are also required for many other products.
QUESTIONS
1. Comment on the forecasting system being used by Yankee. Suggest
changes or improvements that you believe are justified.
2. Develop your own forecast for bow rakes for each month of the next year
(year 5). Justify your forecast and the method you used.
TABLE 8.6 FOUR-YEAR DEMAND HISTORY FOR THE BOW RAKE
DEMAND
Year 3
Month
Year 4
Year 2
Year 1
d
39,875
32,180
62,377
1
55,220
64,128
66,501
38,600
2.
57,350
25,020
31,404
47,653
3
15,445
51,300
43,050
36,504
4.
27,776
31,790
16,888
39,359
5
21,408
32,100
18,909
10,317
6
17,118
35,500
59,832
45,194
7
18,028
51,250
30,740
46,530
the
erts
34,443
8
19,883
47,800
22,105
68,088
9
73,890
15,796
53,665
0 30
IS is
41,350
68,175
10
60,202
46,024
61,100
CUS-
11
83,269
55,200
41,856
which
calls
tores,
ns for
12
72,991
Wd be

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