1

DEMAND/ ORDER PATTERN & FORECASTING

Marketing team of the Company send the projection & sales forecast values according to the
open capacity. The orders are placed seasonally. Sri Lankan factory order RM (Raw material)
only for the confirmed orders & sometimes order greige fabric for continuous styles even
without confirmation, but coloring take place only after the order confirmation.
Demand values (which were set by marketing team) for the financial year 2013-2014 is as
follows;

No of season = 3

The demand pattern is more likely varying seasonally but with trend, where trend line equation
was given by y= 181.3x +2447.9& centralized moving average method is used to calculate
forecast value.





0
2000
4000
6000
8000
10000
0 5 10 15
Demand
Demand
demand values
(Month) Period Demand
Apr 1 0
May 2 0
Jun 3 9041
Jul 4 3000
Aug 5 2181
Sep 6 6436
Oct 7 3276
Nov 8 3400
Dec 9 5381
Jan 10 2621
Feb 11 2800
Mar 12 5381



2

Calculation
Number of periods for moving average (MA) = No of seasons = 3
Step 1: Calculate centralized moving average values.(
3
)

= (
1
+

+
+1
)/3
(
3
)
1
= (0+0+9041)/3 =3013.67 similarly other
3
values are calculated.
Step 2: Calculating ratiodemand (seasonal factor) for each period.
Ratio demand =

/
3

Step 3: Calculateaverage seasonal factors (SF)
Average seasonal factor (Avg. SF for season 1) =(0+0.56+0.85)/3 = 0.47
Step 4: Calculate corrected seasonal factors.
Corrected seasonal factor =
average seasonal factor Number of seasons
(average seasonal factors )

(average seasonal factors) =0.47+1.76+0.7 = 2.94
Corrected seasonal factor (for season 1)= 0.47 * 3/2.94 = 0.48
Step 5: Calculate the best fit line.

0
=
(x

) (x

2
y

)
(x

)
2
x

1
=
(x

) (Tx

)
(x

)
2
x

2

Trend line equation was given by; y= 181.3x +2447.9
Step 6: Using the best fit line equation find the regression values (linear trend base forecast
values)
Step 8: Find corrected forecast values.
Corrected forecast value = (Corrected seasonal factor)x(Calculated trend value)

1 =
181.3042

y=
0
+
1
x

0 =
2447.939

3

Error Calculation
Calculating error for each period; Error (e
i
) = D
i
- F
i

For period 1 (e
1
) = D
1
-F
1
= 9041-5390.46 =3650.54 .Similarly error was calculated for each period.
Mean Absolute Deviation (MAD) = ( |e
i
|)/n =14519.05/12 = 1209.92
Mean Square Error (MSE) = ( (e
i
)
2
)/ n =31918967.81/12= 2659913.98
Mean Absolute Percent deviation Error (MAPD/E) = (|ei /Di|)/ n =2.87/12=0.24
P
e
r
i
o
d

x
2

Deman
d
xy
S
e
a
s
o
n
s

CMA
3

Dem
and
ratio
(SF)
Avg.
SF
C
o
r
r
e
c
t
e
d

S
F

Linear
trend
values
F
o
r
e
c
a
s
t
e
d

v
a
l
u
e
s


Error
(Di-Fi)
ei /Di
1 1 0 0 2629.24 0
0.00
2 4 0 0 1 3013.67 0.00 0.47 0.48 2810.55 1348.48
-1348.48
3 9 9041 27123 2 4013.67 2.25 1.76 1.80 2991.85 5390.46
3650.54 0.404
4 16 3000 12000 3 4740.67 0.63 0.70 0.72 3173.16 2279.88
720.12 0.240
5 25 2181 10905 1 3872.33 0.56 0.47 0.48 3354.46 1609.45
571.55 0.262
6 36 6436 38616 2 3964.33 1.62 1.76 1.80 3535.76 6370.44
65.56 0.010
7 49 3276 22932 3 4370.67 0.75 0.70 0.72 3717.07 2670.68
605.32 0.185
8 64 3400 27200 1 4019.00 0.85 0.47 0.48 3898.37 1870.42
1529.58 0.450
9 81 5381 48429 2 3800.67 1.42 1.76 1.80 4079.68 7350.42
-1969.42 0.366
10 100 2621 26210 3 3600.67 0.73 0.70 0.72 4260.98 3061.48
-440.48 0.168
11 121 2800 30800 1 3600.67 0.78 0.47 0.48 4442.29 2131.38
668.62 0.239
12 144 5381 64572 2 2727.00 1.97 1.76 1.80 4623.59 8330.39
-2949.39 0.548
13

0.70 0.72 4315.78 3100.85

14

0.47 0.48 4545.57 2180.94

15

1.76 1.80 4775.35 8603.83

78 650 43517 308787

1103.51 2.87
4


Even though the demand varies with trend the trend follows a varying pattern, thus the variation
between demand & forecast doesnt follow a unique path.
AGGREGATE PLANNING METHOD
Existing method: Company uses level production method & sometimes subcontracts some of the
orders. If any critical issue occurs in the production, through critical path meeting the company
gets the customer approval to delay order placement, sometimes with reduced cost to compensate
the delay or sometime air freight some of the urgent quantity & rest will be sent via sea freight at
a lesser price than the normal.
Workers are categorized according to main product types & the necessary line wise efficiency
ladder was maintained. Current workforce (882 operators) is categorized as follows;
Product type Number of operators
Body 124
Bonded brief 128
Bra 526
Brief 72
C/S/V (Camis/Slips/Vests) 32
Total 882
-2000
0
2000
4000
6000
8000
10000
0 2 4 6 8 10 12 14 16
Demand
Forecast
5

Ideas on development: If the production is properly monitored, the company can avoid
unnecessary cost by increasing shifts with feasible incentive scheme. As the company has high
extra labour force in the cutting & trim stores they can be hired for packing & trimming in the
production floor, thus can maintain an internal hiring & firing without much problem. The
combination of level production & chase demand will result much affective output. Therefore it
is necessary to set proper forecast values accordingly for smooth flow a constant operator level
should be maintained & for high variations hiring or firing can be done either internally (through
job rotation) or externally (through Human Resource people)
MASTER PRODUCTION SCHEDULE
Existing method:Master production schedule was created using fast react software. Line wise
capacity determined by providing necessary data such as, number of operators per line, working
hour, S.M.V, efficiency ladder, style wise peak efficiency ladder, etc. If all necessary data
supplied to the system, it will automatically create the Master production schedule. It should be
updated with practical problems by continuously assessing it with the data provided through
production & work-study departments.
Ideas on development: The efficiency ladders are maintained weekly, but it will be more
effective if the daily efficiency was measured, so that day by day improvement in efficiency can
be obtained. Also it will result in efficient output in case of small order quantities, where style is
only flow for 2-3 weeks.
MATERIAL ORDERING SYSTEM
Existing method: Sage system is used to place purchase orders. Critical path, which was
prepared based on costing & CCS (Contract Control Sheet) & considering all general lead times
provide RM (Raw material) in-house date. The relevant merchandiser should deal with the
customer & should obtain delivery confirmation from supplier. Also prior to the placement of
order the merchandiser should check in the common warehouse (where the balance raw material
which was not used in previous styles & not allocated for any styles were placed). If any RM
was available it should be allocated (after confirming suitability of colour, quality from the
internal testing lab [Fabric technical department]).
6

Also should consider supplier limitations of the quantity such as MOQ (Minimum order
quantity), MCQ (Minimum colour quantity), MSQ (Minimum shipment quantity) & Minimum
machine requirements, etc. If any continuous orders are with high material usages, according to
the demand the order is split (considered as a split-order) and lot to lot ordering system or period
ordering system was used to obtain cost advantages. (This is done to minimize storage cost
/handling cost)
Also sometimes for some continuous styles to maintain the efficiency level & to continue the
production in the line at least one weeks RM were obtained via air freight (similar to safety
stock). In general RM was set considering the lead time of sea freight.
Ideas on Improvements:Most of the time lot to lot ordering system was in practice as the ease of
the ordering. Also the EOQ method also can be implemented in-line with the period order, in
order to get cost advantages.

MATERIAL REQUIREMENT PLANNING
Existing Method: Material requirement planning is done department wise, separately for
moulding unit, trims, cutting, fabric stores & packaging. According to Master production
planning, considering lead times all other planning is set & according to the priority of the styles
lot to lot method was used.
Ideas on Improvements:According to the style & the forecast, for continuous styles a safety stock
maintenance will enable to ensure delivery on set time even with problems in the production.
Currently only few of the MRPs are set on system & some of them are handled manually (e.g.
daily cut plan was set manually). This need to be updated on to a platform (through intranet) thus
the necessary lead-times can be properly changed & production can be speed up accordingly.