Alternative Fuel Company Case

Our reading this week emphasizes the role of demand management in
creating a coordinated flow of demand across the supply chain.
Experience shows that selecting the best method of estimating demand
will vary with the maturity of the business and the data available.
Address the following:

1. A start-up alternative fuel automobile company has a first year
   market forecast of 1000 units. Identify the forecasting model that is in
   use here and explain why it is the obvious choice.
2. During its first three full years of operation the automobile company had actual sales of:
   1. Year One: 800 units
   2. Year Two: 1200 units
   3. Year Three: 2000 units
   4. Using a simple three year moving average, calculate the predicted demand for Year Four. Explain your reasoning.
3. The sales department expects the growth in Year Four to more closely
   resemble the average growth experienced in the last two years. Predict
   the number of units expected in Year Four. Discuss whether you would
   recommend this quantity as the manufacturing plan or the quantity found
   using the simple three year moving average in step two and why.
4. In Year Three, one fourth of the production was sold in China. The
   marketing department has just learned of a new tax that will be imposed
   on all luxury imports into China beginning in Year Four. It is expected
   that this will decrease sales to China by 50%. Apply this market
   intelligence to the simple three year moving average method discussed in
   step two and recalculate the predicted demand for Year Four. Explain
   how you arrived at your answer.(4 page)