Forecast Plan Packaging Demand in Global Supply

Case (SCM): Forecast Plan Packaging Demand in Global Supply
Chain (GSC) Sharjah Logistics Ltd.

Case Learning Objectives:
1) Design time series demand plan models in GSCM.
2) Understand Bullwhip Effect in SC demand Planning.
3) Develop seasonal forecast and estimate reliability of forecast models.
4) Create 3and 6 forecast accuracy in SC
5) Evaluate and understand demand planning related KPIs in SCM.
6) Understand role of demand planning in SCM for lean and agile production strategy.
Background
Kathryn McCormick had a lot on her mind when she left the conference room at Sharjah Logistics Ltd, (SLL).
Her divisional manager had informed her that she would be assigned to a team consisting of SLL’s marketing
vice president and several staff members from their key customers. The goal of this team was to improve supply
chain performance, as SLL had been unable to meet all the demand of their customers over the past several
years. This often-left SLL’s customers scrambling to meet new client demands. Kathryn had little contact with
SLL’s customers and wondered how she would add value to this process. She was told by her division manager
that the team’s first task was to establish a collaborative forecast using data from both SLL and their customers.
This forecast would serve as the basis for improving their performance as they could use this more accurate
forecast for their production planning. With this in place, SLL would have a key tool to improve delivery
performance. The packaging process is shown in figure.
SLL
SLL turns polystyrene resin into recyclable/disposable containers for the food industry. Polystyrene is
purchased as a commodity in the form of resin pellets. The resin is unloaded from bulk rail containers or
overland trailers into storage silos. Making the food containers is a two-step process. First, resin is conveyed to
an extruder, which converts it into polystyrene sheet wound into rolls. The plastic comes in two forms: clear and
black. The rolls are either used immediately to make containers or are put into storage. Second, the rolls are
loaded onto thermo-forming presses, which form the sheet into containers and trim the containers from the
sheet.
Over the past five years, the plastic packaging business has grown steadily. Demand for containers made from
clear plastic comes from grocery stores, bakeries, and restaurants. Demand for black plastic trays comes from
caterers and grocery stores, who use them as packaging and serving trays. Demand for clear plastic containers
peaks in the summer months, whereas demand for black plastic containers peaks in the fall. Capacity on the
extruders is not sufficient to cover demand for sheets during the peak seasons. As a result, the plant is forced to
build inventory of each type of sheet in anticipation of future demand. Table below and Figure display historical
quarterly demand for each of the two types (clear and black) of containers. This demand data was modified
from SLL’s sales data by the team to take into account the lost sales when SLL was out of stock. Without the
customers involved in this team, SLL would never have known this information as they did not keep track of
lost orders.

I I I I I I I V I I I I I I I V I I I I I I I V I I I I I I I V I I I I I I I V
FIGURE: PLASTIC DEMAND

Figure: Processing and Packaging
Forecasting
As a first step in the team’s decision making, they want to forecast quarterly demand for each of the two types
of the containers for the years 2021 to 2023. Based on historical trends, demand is expected to grow until 2023,
after which it is expected to plateau. Kathryn must select the appropriate forecasting method and estimate the
likely forecast error. Which method should she use and justify your selection?
Case Questions
(Case-Q1) Plot the data to characterize the demand pattern. What challenges do you face?
(Case-Q2) Discuss possible suggestions to develop forecast model with the demand profile.
(Case-Q3) What types of forecast models are appropriate for this demand profile?
(Case-Q4) Discuss error analysis with at least 3 forecast models for appropriate model for this business.
(Case-Q5) How can you address demand that is not at the level of the planning horizon?
(Case-Q6) Can you possibly identify supply chain “Bullwhip” effect in this business?
(Case-Q7) Based on the information you are given in the case study, discuss the possible positioning of the
Customer Order Decoupling Point.
(Case-Q8) Based on the information you are given in the case study, discuss what capacity planning strategy to
use, either Level or Chase?
(Case-Q9) Why do improved forecasts allow improving delivery performance?
(Case-Q10) In general, discuss what are the related Supply Chain performance indicators in this case.
(Case-Q11) What are the consequences of over or under estimation of demand in SCM??
Sample Scoring Rubric (An indication: Do independent research from SDL/Library/ and References provided)

Format case report / Project Report as per the following format guidelines:
Basis of report Process Analysis/Value Adulation of a case and case presentation follows the listed contents.
A case report must satisfy the following format and content. Create a word template with the following format to prepare a written
report
(Font – 12 Times New Roman, Margin all sides – 1 Inch, double space, Reference Harvard style). Prepare a PowerPoint presentation.
The contents are Problem definition or problem statement, Executive summary (main findings/issues/assumptions / describe briefly
what issues addresses, how it is solved, main findings and benefits of the study), Methodology, Analysis/tables/figures/flow charts,
Major findings/results, Managerial implications, Recommendations.
Hard copy and softcopy of the report is due before the class presentation (Class presentation: PowerPoint), Written report (Word
format) is assessed, Presentation is assessed: 20 Minutes (15 minutes presentation, 5 minutes discussions).

Format Rules
Abstract: Insert your extract/summary (main features of the report) here. The section of the report should summarize the scope, aims,
results, and conclusions of the work. It should very brief about 10-12 lines.
Keywords: these are your keywords, but at least 4 keywords
1. Problem definition or problem statement
2. Executive summary (contains main findings/issues/assumptions / describe briefly what issues addresses, how it is solved, main
findings and benefits of the study: max one page)
Summary of the report (One-page important summary highlighting the entire content of the report)
2.1 Section subheadings
This is an example of section subheading.
Depending on the content of the report you can create subsections in the report.
3. Methodology
What method (s) you are using here in this analysis?
4. Analysis / tables / figures / flow charts
How do you analyze with the method(s) you proposed or selected….
5. Major findings/results, engineering/managerial implications
6. Conclusions, Recommendations.
Hard copy and softcopy of the report is due before the class presentation (Class presentation: PowerPoint and), Written report both are
assessed. Presentation is assessed: 15 Minutes presentation and 5 minutes of discussions.
4. References
Example of listing a book reference:
1. Fishwick, P. A. (1995), “Simulation Model Design and Execution: Building Digital Worlds”, Prentice-Hall
Example of listing a journal reference:
2. Harper, P., Phillips, S., and Gallagher, J. (2005). “Geographical simulation modeling for the regional planning of oral and
maxillofacial surgery”, Journal of the Operational Research Society, Vol 56, pp. 134-143
Example of listing an URL reference:
3. Therapeutic Goods Administration (2004), “Department of Health and Ageing”, Canberra, viewed 13 October 2004,
<http://www.tga.gov.au/recalls/index.htm>
Example of listing a proceedings reference:
4. Ahmed, S., and Amagoh, F., (2007), “AED patient arrival policy in a hospital”, Proceedings of the International Academy of
Business and Public Administration Disciplines, Orlando, Florida, USA, pp. 21-33
Example of listing a book chapter reference:
5. Gould, S.J., (2000), “More things in Heaven and Earth”, in H. Rose & S. Rose (eds.), Alas, poor Darwin: arguments against
evolutionary psychology, Harmony Books, New York