PROJECT SUBMISSION: Arman Khan

Task 1
● Method of forecasting:

Time series forecasting method, specifically Exponential Smoothing method, like Holt-Winters
method to forecast demand for next six months. It is ideal for short-term forecasts and data with
trends and seasonality - common in the electronics industry due to seasonal sales, holidays,
and product launches.

● Justification for the choice of method:

- Seasonality: Demand data shows that sales of smartphones, laptops, and

smartwatches peak during certain months, like the holiday season. The Holt-Winters
method effectively captures and incorporates this seasonality into forecasts.
- Trend: The data reveals an upward trend in sales for all three product categories over
the past year. This method adapts to changing trends, crucial for the rapidly evolving
electronics market.
- Data Sensitivity: By assigning different weights to recent and past observations, the
Holt-Winters method accurately responds to current changes in demand patterns. This is
important as the data is sensitive to recent trends.
- Assumption: This method assumes that past trends will continue, meaning the
seasonality and patterns from the last 12 months will persist in the next six months.
While this may not always hold in a dynamic market like electronics, it provides a
reasonable starting point for short-term forecasting.

Task 2

● The formula used for forecasting demand:

ESF = α * Actual demand + (1 - α) * Forecast demand

● The demand forecast for the next six months is shown in the table below

Month Smartphones (Forecast) Laptops (Forecast) Smartwatches (Forecast)

 Jan 2044.92 1023.10 352.48

Feb 2121.44 1061.17 360.74

Mar 2175.01 1087.82 366.52

Apr 2212.51 1106.47 370.56

May 2238.76 1119.53 373.39

Jun 2257.13 1128.67 375.37

Task 3

● The formula used for calculating forecast errors:

Forecasting Error = (Actual Demand – Foresting Demand) * 100 / Actual Demand

● The forecast errors for the six months is shown in the table below

Month Smartphones Laptops Smartwatches

 Jan 444.92 268.10 93.48

Feb 472.44 196.17 68.74

Mar 606.01 210.82 116.52

Apr 462.51 183.47 156.56

May 318.76 119.53 173.39

Jun 217.13 28.67 179.37

Task 4
● The formula for calculating MAPE:

MAPE = Σ|(Actual - Forecast)|/ Σ Actual

● MAPE for all product categories for the six months:

Month Smartphones Laptops Smartwatches

Jan 27.81 35.51 36.09

 Feb 28.65 22.68 23.54

Mar 38.62 24.04 46.61

Apr 26.43 19.88 73.16

May 16.60 11.95 86.70

Jun 10.64 2.61 91.52

● The formula for calculating Bias:

Bias = Total Variances (Forecast - Actual) / Total Actual

● Bias for all product categories for the six months:

Month Smartphones Laptops Smartwatches

Jan 0.042 0.0486 0.0662

Feb 0.045 0.0355 0.0487

 Mar 0.058 0.0382 0.0825

Apr 0.044 0.0332 0.1109

May 0.030 0.0217 0.1228

Jun 0.021 0.0052 0.1271

Task 5
● Recommendations:

Considering the forecast errors and metrics computed for each product category (Smartphones,
Laptops, and Smartwatches) and the objective of refining the supply chain planning process,
here are the three recommendations, tailored to each product category:

○ Recommendation 1 + Justification
For Smartphones: Diversify Suppliers and Implement Risk Mitigation

Rationale: It's imperative to broaden the spectrum of smartphone component suppliers and
establish robust partnerships with several vendors, given the volatility in demand and potential
disruptions in the electronics industry. This approach aims to reduce dependency on single
sources, thus averting production delays and shortages during unexpected events like natural
calamities or geopolitical tensions.

Action to Take:

 Identify vital smartphone components and assess the concentration of suppliers for
each.
 Procure essential components from multiple suppliers, preferably situated across
different regions to cushion the impact of regional disruptions.
 Develop backup plans and risk-mitigation strategies, such as maintaining buffer stocks
and exploring alternative sourcing options, to effectively tackle supply chain disruptions.
 ○ Recommendation 2 + Justification
For Laptops: Implement Advanced Inventory Management Techniques

Rationale: To navigate demand fluctuations and minimize lead times for laptops, it's pivotal to
embrace sophisticated inventory management techniques. The intricate manufacturing
processes of laptops often result in prolonged lead times, making it challenging to promptly
respond to sudden spikes in demand.

Actions to Take:

● Introduce Just-In-Time (JIT) inventory management practices to optimize inventory

levels while ensuring product availability.
● Employ demand sensing and shaping tools to anticipate and influence customer
demand, facilitating proactive inventory management.
● Fine-tune safety stock levels considering factors such as seasonal variations, supplier
reliability, and transportation lead times.

○ Recommendation 3 + Justification

For Smartwatches: Enhance Demand Collaboration with Retailers

Rationale: Smartwatches typically maintain a more consistent demand pattern throughout the
year compared to smartphones and laptops. Enhancing supply chain performance for
smartwatches necessitates establishing improved collaboration and communication channels
with retailers to synchronize production with actual demand.

Actions to Take:
 Implement a Vendor-Managed Inventory (VMI) system or Collaborative Planning,
Forecasting, and Replenishment (CPFR) with key retailers to exchange demand
forecasts and inventory data.
 Regularly analyze sales data and collaborate with retailers to adjust production plans
based on real-time demand insights.
 Consider incentivizing retailers for timely and accurate demand information sharing to
enhance forecast accuracy and mitigate issues related to excess or insufficient
inventory.