Question

1. Please describe a scenario that you have encountered recently as a consumer where a business has either under forecast or over forecast demand for a product that you were planning to purchase. You will generally notice under forecasting if the product is out of stock or over forecasting if there is excess inventory for the item. Please describe the implications to the retailer, manufacturer, and broader supply chain. You can present your response through the lens of your own discipline (accounting, marketing, etc.) if you wish.

2.  Give three examples from your life in which you may forecast the future. Highlight the importance of accurate forecasting in the three examples you provide.

Answer 1

1. The product that I was planning to purchase was a particular type of sauce. Unfortunately, the sauce was not available in the shop. There was under forecast and the products were out of stock. The implications to the retailer are:

- Customers might switch to other retailers

- Customers are dissatisfied and irritated

- Difficult to retain the existing customers

- Once the stock is available, the retailer should invest for the advertising and marketing programs which might involve cost and time.

- Reduces the overall reputation of the firm.

The implications to the manufacturers:

- Excess inventory due to over forecasting might lead to cost to the company for warehousing and storing the stock.

- Poor forecasting with leads to shortage of supply of the products might result in customer loss eventually resulting in loss of business.

- Reputation might be impacted due to poor forecasting

- On-time production is difficult as the company needs additional time to procure raw materials and other supplies to produce the product.

The implications to the distributor or agents-

- Under stocking- There might be intense competition between the retailers to buy the products that eventually result in rivalry.

- Over stocking- High investment is involved in holding and carrying cost.

2. From my experience, the three examples in which we can forecast the future are:

- As a Journal Manager in-charge of handling a portfolio of journals, I would forecast the future issues for each journal and proactively discuss with the Publisher of the journal to decide on the publishing dates on the journal. Accurate forecasting is one of the competencies for the Journal Manager in this task because there is a zero tolerance policy for missing any journal issue.

- In my personal life, the trend of the expenses made in the past can be used to forecast future budget for the household expenses. Accurate forecasting is important to avoid any cash-out situation.

- In the education and career field, accurate forecasting is important to understand the requirements of the future that would make the individual successful. Hence, I would forecast the future options available for education and its related careers.