The Yankee Fork and Hoe Company is a manufacturer of gardening tools. The company has been in business for over 100 years and is known for its high quality products. The company’s products are sold in stores across the United States.
The company’s sales are normally distributed, with a mean of $10 million and a standard deviation of $2 million. The company’s sales have been forecasted to be $12 million next year.
What does this forecast mean for the company?
Well, first, it’s important to remember that forecasting is an estimate, and nothing is ever 100% certain. That being said, the forecast does give us some insight into what the company can expect next year.
Based on the forecast, we can see that the company’s sales are expected to increase by $2 million, or 20%. This is significant growth, and it indicates that the company is doing well.
However, it’s also important to remember that the forecast is based on a normal distribution. This means that there is a chance that the company’s sales could be lower than $12 million. In fact, there is a 68% chance that the company’s sales will fall within one standard deviation of the mean, which would put sales somewhere between $8 million and $12 million.
There is also a 95% chance that the company’s sales will fall within two standard deviations of the mean, which would put sales between $6 million and $14 million. This means that there is a small chance that the company’s sales could be as low as $6 million or as high as $14 million.
Overall, the forecast indicates that the company is doing well and that its sales are likely to increase next year. However, there is some uncertainty involved, and the company’s sales could end up being lower or higher than expected.
The Yankee Fork and Hoe Company is one of the most prevalent producers of garden tools, but as of late, they have been facing some issues with their manufacturing that has led to several customer shipments being delayed. Phil Stanton- who is in charge of inventory is starting to become concerned about both the high costs and dwindling resources.
Stanton decides to investigate the problem and hires a statistician to help. Together they collect data on shipment times for the past year. They also gather information on customer complaints. They find that there is a normal distribution of shipment times, with a mean of 10 days and a standard deviation of 2 days. They also find that there are more complaints when shipments are late by more than 3 days.
Based on their findings, Stanton and the statistician develop a forecasting model that takes into account the variability in shipment times. They use this model to predict demand for the next month and plan accordingly. This helps them avoid overstocking inventory, which would lead to high costs, and understocking, which would result in late shipments and customer complaints.
The use of a forecasting model, along with the standard deviation of shipment times, helps the Yankee Fork and Hoe Company avoid overstocking or understocking inventory, and keeps costs low while satisfying customers.
However, Ron Adams, the marketing manager, is concerned about having enough rakes on hand for quick deliveries. There’s a dispute between Yankee Fork and Hoe Company over which agency to use. Because of Phil’s forecasting technique, they have fallen behind on client demands.
In this instance, the philosophy is not matching up with what is actually happening in the market. Adams goes to Phil and says, “Look, I know we’ve been using your forecasting method for a while now, but it’s just not giving us the results we need. We’re constantly behind on customer demand, and I think it’s time to try something new.”
Phil responds, “What do you suggest?”
Adams replies, “Well, I’ve been doing some research, and I think we should start using the normal distribution for our forecasting. It’s a more accurate representation of reality, and it will help us be more responsive to customer demand.”
Phil is hesitant at first, but after doing some research of his own, he realizes that Adams is right. The normal distribution is a more accurate way to forecast demand, and it will help Yankee Fork and Hoe Company be more responsive to their customers.
What is the Normal Distribution?
The normal distribution is a continuous probability distribution that is defined by its mean and standard deviation. It is often used in statistics and forecasting because it is a very accurate representation of reality. The normal distribution is also known as the bell curve because of its shape.
How can the Normal Distribution help with Forecasting?
The normal distribution can help with forecasting because it is a more accurate representation of reality. It can help Yankee Fork and Hoe Company be more responsive to customer demand because it takes into account the variability of demand.
What is the Standard Deviation?
The standard deviation is a measure of variability. It is calculated as the square root of the variance. The standard deviation can be used to forecast demand because it measures how muchdemand varies. A high standard deviation means that demand varies a lot, while a low standard deviation means that demand is more consistent.
150,000 bows per month is the capacity of the bow machines at Yankee Fork and Hoe Company. This equates to 150,000 bows each month. To create a monthly final-assembly timetable, Phil is cutting demand estimates by 10%. In an effort to avoid being overstocked, Phil is reducing his demand forecast by 15,000 items. The marketing department, on the other hand, urges Phil to produce more goods.
They are requesting 18,000 units to be produced. This is due to the fact that they want to maintain a certain inventory level so they can offer a discount to their customers which will in turn generate more revenue.
The standard deviation of monthly demand for Yankee Fork and Hoe Company’s bows is 2,500. The marketing department’s requested production level of 18,000 would put them at a 95% chance of being able to cover customer demand. However, Phil is only comfortable with a 90% chance of being able to cover customer demand, so he decreased the production forecast by 15%. This puts them at a 87.5% chance of being able to cover customer demand, which still meets his criteria.