Using only Qualitative Analysis, Instead of Quantitative Analysis

Using only Qualitative analysis, instead of Quantitative analysis.

According to the marketing manager, Ron Adams explained on how he arrives at the forecast figures by meeting with managers from various sale regions to go over shipping data from last year. There was no mathematical technique explained in his calculation for the forecast. It seems that Adams has been using the Qualitative method rather than Quantitative method.

In qualitative method, Adams could gain advantages of quick forecast and experiences from each manager. However there are some disadvantages such as group-think and since he's meeting with sale managers, the forecast tend to be overly inflated which related to Phil Stanton, production manager said that the forecasts are usually inflated and he usually reduce the forecast by 10 percent.

Our suggestion is that a quantitative method should implement here. This method is suitable for the existing products that have stable demand and historical data are provided. According to demand from last four years, it tends to fall in seasonal pattern and there was not much changed in each year. Adams could use seasonality technique with the linear trend equation technique to calculate the future demand of year five. This method could provide more accuracy forecast regarding the different demand in each month.

 Using Actual Shipment figure, instead of Actual Demand figure

The forecasting technique by used by the Marketing Department is based on actual shipment rather than on actual demand. Even though the Marketing Department tries to adjust for shortages in actual shipment data by meeting with various sales regions to go through the anticipated promotions and environmental and economical changes that brought about the shortages they has experienced last year, it is still reflecting past experience not for the future demand.