Leitax Essays

Words: 1987
Pages: 8

Leitax
2004
Leitax
2004

Analysis of the new forecasting process

Analysis of the new forecasting process

Assignment questions

1. Based on the description of planning system before the Redesign Project which function or individuals should be held responsible for the planning problems in FY 2002? In FY 2004?

In 2002, Leitax had suffered through poor planning of 3 camera models: the launch of one camera delayed (cost: $19.5 million), another outsold its inventory (costs: $4.5million) and a third model reported sluggish sales ($2.5million). To compensate, Leitax extended the life of an existing model and made a mad scramble to find product and customers but the most costumers preferred to wait for the delayed camera. These
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Also, if a company doesn’t have adequate forecast it could fail to ensure an adequate supply of product when the market would be still showing a proper growth rate, as it happened to this case. We could also add that operational efficiency could be even more vital for survival at this point.
Internally, the consequence about wrong forecasts is that they do not allow the company to meet its financial plans, finance would urge sales to increase its forecasts to meet the new goals. The case said that the operations group frequently created its own forecasts when it felt it could not trust the forecasts from sales, because of the inventory shortages or excess, or issues with suppliers that were directly the consequence of wrong forecasts. The forecast must be realistic and built in cooperation with all parties concerned.
We can also consider marketing, when we talk about the effects of possible promotions, would invent its own forecasts as another option to the sales forecasts when they suspected a large difference between the two.

Another consequence of wrong forecasts are write-off cost which happens when the products become obsolete. This can happen when we produce too much and we cannot sell. Then, the write-off cost arises, thus, expense increases
In addition to the lack of consensus on forecasts, the data most relevant to forecasting was usually inaccurate incomplete or unavailable. Furthermore, the firm has no system for monitoring