Who wants to help?

I’m working on a dynamic regression forecast. My software thinks it’s smarter than me. It’s wrong. I must find a way to defeat it in this battle of wits.

So, I am responsible for forecasting and scheduling production for a manufacturing company in the Midwest. They manufacture critical surgical equipment, so they can’t really afford to be short on stuff… on the other hand, manufacturing is low margin and having a lot of inventory on the shelf can be devastating. If you plot the demand points for the past 25 years looks a little like a kid threw up dipping dots on canvas…. no identifiable pattern whatsoever.

That means I have to try and use creative thought (not my strong suit) to come up with some influencing factors… I don’t know what they might be. They could be economic… could even be how many wars are going on in the world at the moment. I haven’t yet nailed it down. I know there must be something causing this “random walk,” in the demand. I just don’t know what it is. Yet.

It got me to thinking about the new minimum wage crap the Democrats are working on. If the minimum wage goes up two bucks an hour, that could crush a small business like this one, and let me be perfectly clear… NO ONE else on earth makes these products. NO ONE else on earth repairs and services these products. So if they go out of business, I guess a lot of people will just have to suffer and/or die.

I’ll bet they didn’t teach you THAT in economics.

  2 comments for “Who wants to help?

  1. February 3, 2007 at 9:18 am

    I need more information. For a quick and semi accurate forecasting you need to know how many are made for each month and how many are sold for each month and then bump the average up by +/- 10-20% and viola, there is your magic number. But I think what you need to do is focus on the variables of manufacturing. base costs, looking for cheaper, yet more reliable or more inexpensive vendors. Ask them when the last time was that they did a cost per unit analyst? Do they have service agreements or warranties with their clients? If they do have service agreements have they kept the agreements up to date with cost of living, inflation? What about the pricing structure? if they are truly the only one out there, then I’m guessing that they haven’t priced themselves correctly. How do they track inventory? Do they have bar code scanners, or RFID tags, or just a three ring binder and are relying on humans to count? How must loss or waste is created in the manufacturing? If there is no discernible or obvious buying patterns, maybe it is the sales guys. With a bad sales team, or a lackluster sales staff, then there will be no fluctuation in the sales of this equipment. Email me with more of the details and I’ll see if I can’t lend a hand.

  2. Jodie
    February 3, 2007 at 8:19 pm

    potential influencing factors:
    weather (is hot or cold weather, storms etc. relative to the need for these products), buying power of the customer (is it related to a structured budget allowance), number of customers and how often they purchase (is their purchasing random or patterned), exclusivity of the product (are there possible alternatives that are less costly, even tho potentially less effective and has the introduction of those products coincided with the lull in purchases), is government funding available to the purchasers and if so, when is it allotted (perhaps that is when they spend), is the equipment specifically linked to voluntary surgical procedures (if so then national and regional economic would certainly be a factor), insurance costs and coverage………… blah blah blah. how’s that?

    this is what happens on days I do my taxes.

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