Case study forecasting

In the particular case of the Merriwell Bag Company, Ed Merriwell could improve the operations of the family business by putting in capital on depreciating facilities. Demanding forecasting in this case may be possible if the company could invest in new facilities which could improve output just in time for the seasonal upsurge of demand in their product. Life cycle analogy, a qualitative measure of demand forecasting, could influence the informed judgment of Ed Merriwell in this case. First of all, there is available data to back up the business decisions.Second, the facilities such as production equipment and delivery trucks are already out of date and could affect the logistical competence of the company (Schroeder, 2008).

Facility Management, commonly abbreviated as FM, is a fairly new business and management discipline; widespread use of the term dates from the creation of the Facility Management Institute at Ann Arbor, Michigan, in 1979 and the founding of the National Facility Management  Association in 1980 (Cotts 3). According to Cotts (1999), the common definition of facility management is “the practice of coordinating the physical workplace with the people and work of the organization; integrates the principles of business administration, architecture, and the behavioral engineering sciences”. This would be perfect in the case of Merriwell Bag Company as it emphasizes on the investment in equipment for improved productivity. Similarly, it is often simplified to mean that the owner, Ed Merriwell, could integrate the people of an organization with its purpose (work) and place (facilities).

            Once the Merriwell Bag Company is able to employ this in their demand forecast, they would also  embrace the concepts of cost-effectiveness, productivity improvement, efficiency, and employee quality of life; for example, many facility managers  finds themselves sinking in the quicksand of diminishing white collar-productivity, placed at the precipice of office air-quality problems, or embroiled with waste-management issues that predate their employment (Cotts 7). Based on Cotts (1999), research in many of these areas is nonexistent or has produced existing results; employee expectations and concerns almost always come before clear-cut technical solutions.

            We should view facility management as a business function in this case; safety is always the first concern. Second, effeciency is tied with customer service; someone should be directly responsible for every physical asset and function.  There would be a low cost of ownership of facilities not to mention maintenance of depreciated equipment – it is therefore the task of the Merriwells’ to improve physical attributes of the company for a favorable demand forecast (Schroeder, 2008).

            Once the Merriwell Bag Company improve the physical attributes of the company, demand forecast for the current year will be as follows. Stable figures of 5000 bales at January and May until July, at least 4000 bales for February to April at par with historical mean, and should pick up for the rest of the year during the peak season. At this point, it is still difficult to analyze demand under a new forecasting model. What the Merriwells could do is to analyze data for the year in contrast to the previous ones without the model and improve it from there for the next fiscal year.

            In this case, availability of demand is not a significant variable since it was already given in the case that there is a ready market for the products of the company. However, just to be safe, the company should also employ a retaining strategy which would aim to retain customers in the long run. This could be done by diversifying the product offerings and product output share. The 15% limit per customer should also be scrapped off in order to retain competency. These points are all in line with the life cycle demand forecast model. Furthermore, the Merriwell Bag Company, given new physical capital, could even improve operations into a wider scope in the future once this model would be deemed successful.

References:

Cotts, D. G. (1999) The Facility Management Handbook. New York: AMACOM Div American Management.

Schroeder, R. (2008) Operations Management – Contemporary Concepts and Cases, 4th Edition. New York, NY. McGraw-Hill Irwin Publishers