A-CAT Corp.: Forecasting

A-CAT Corp., a company that produces domestic electrical appliances in a poor region of India, largely caters to the price-sensitive rural market. During the past several months, there has been an alarming dip in sales of its major product, a voltage regulator that is used for varied purposes but most commonly as a protective device for refrigerators and television sets, to protect the latter from the vagaries of load fluctuations and/or frequent power failures, which are a very common phenomenon in the region. At the same time, the production department has been complaining about shortages of spares and components. Placing orders beyond a certain limit for the vital transformers used in most of its products has also stretched the system — whereas the company previously had access to four suppliers of transformers, now there is only one. The vice president has asked the chief operations manager to look into the problem. The operations manager traces the production planning process and its reliance on accurate forecasts. The manager’s job is to collect the data, analyze the data patterns, use forecasting methods, carry out back-testing and submit recommendations to management to solve the problem.

This case can be used in a core course in quantitative techniques, decision sciences and/or production and operations management at the graduate level, preferably during or after a basic statistics module of the course. It can also be effectively utilized in elective courses on sales and marketing, managerial economics, econometrics and financial engineering (techno-economic feasibility analysis).<br><br><ul><li>To grasp the basics of the forecasting process and to discuss the choice of proper forecasting methods.</li><li>To illustrate and highlight the significance of various patterns in the historical data.</li><li>To understand the relationship between a dependent and an independent demand for a product.</li><li>To quantitatively analyze forecasting data and provide forecasts of the following year.</li><li>To use various accuracy measures in assessing.</li></ul>

• Forecasting
• back testing
• errors
• India