What are some potential forecasting errors that could bediscovered by Playtime Inc? Which specific forecasting techniqueswould you recommend to alleviate any errors from taking place? why?See case below

Playtime, Inc. / Supply Chain Management10e

Playtime, Inc. manufactures toys for children under the age of12 and has been in business for 50 years. While Playtime does nothold a major share of the toy market, it has experiencedsignificant growth over the last five years because of itscollaboration with major movie studios to introduce action figuresto coincide with new movie releases. Playtime is a publicly heldcompany.

Playtime’s executive council consists of vice presidents ofmarketing (includes sales), operations (manufacturing), supplychain (procurement, inventory, warehousing, and transportation),and finance. This group is ultimately responsible for approving theforecast for the upcoming year.

The forecast is developed using last year’s sales as historicaldata. This forecast is then given to the supply chain andoperations groups to determine if capacity is sufficient toaccommodate the new volumes. If capacity is sufficient, theforecast is then moved to finance where it is analyzed to determineif volumes are sufficient to satisfy the needs of theinvestors.

Jim Thomas, manager of supply chain, and Gail Jones, manager ofoperations, had a meeting to discuss the first version of theforecast. “I know we use last year’s sales to project for nextyear, but this forecast has me worried,” said Jim. “One of ourmajor movie studio partners is coming out with a blockbuster movienext year and we have no idea what the impact of that might be onour distribution capacity.” Gail agreed, saying “I know. We havethe capacity right now based on this forecast, but if volumes surgewe are in trouble from a manufacturing perspective.” Jim and Gailalso know that if the projected volume does not satisfy the needsof inventors, finance will send the forecast back to marketing toincrease volumes until financial goals will be met.

This forecast process has resulted in a disconnect among thesupply chain, operations, and marketing functions within Playtime.The managers in these functions typically end up developing theirown forecasts based on what they think demand will really be,regardless of what finance presents to the investors. Over the lastseveral years, this has presented some problems for the operationsand supply chain areas because of manufacturing capacity issues(toys are very seasonal) and inventory issues. Although Playtimehas been able to handle these issues, Jim and Gail are veryconcerned about next year because of the uncertainty the new movierelease will have on the demand for their toys.