The document contains sales forecasts from multiple employees for 10 different styles of products. It calculates the average forecast, standard deviation, and coefficient of variation for each product style. It recommends using the coefficient of variation to determine production quantities for styles with low risk (CV <= 0.2), and ordering the minimum amounts for styles with higher risk (CV > 0.2). The summary provides an example calculation and production plan for one low-risk and one high-risk style.

1. FORECASTING : SPORT OBERMEYER
06
Style Laura Carolyn Greg Wendy Tom Wally Average Std. Dev
2X Std
Dev
Assault
Seduced
Entice
Electra
Gail
Daphne
Isis
Anita
Teri
Stephanie
Total
Employee’ names
Productname
X1 + X2 + ⋯ . +Xn
n
Standard Deviation
2 x Standard Deviation

2. FORECASTING : SPORT OBERMEYER
06
Style Laura Carolyn Greg Wendy Tom Wally Average Std. Dev
2X Std
Dev
Assault 2,500 1,900 2,700 2,450 2,800 2,800 2,525 340 680
Seduced
Entice
Electra
Gail
Daphne
Isis
Anita
Teri
Stephanie
Total

3. FORECASTING : SPORT OBERMEYER
06
Style Laura Carolyn Greg Wendy Tom Wally Average Std. Dev
2X Std
Dev
Assault 2,500 1,900 2,700 2,450 2,800 2,800 2,525 340 680
Seduced 4,600 4,300 3,900 4,000 4,300 3,000 4,017 556 1,113
Entice 1,200 1,600 1,500 1,550 950 1,350 1,358 248 496
Electra 2,500 1,900 1,900 2,800 1,800 2,000 2,150 404 807
Gail 900 1,000 900 1,300 800 1,200 1,017 194 388
Daphne 1,700 3,500 2,600 2,600 2,300 1,600 2,383 697 1,394
Isis 800 700 1,000 1,600 950 1,200 1,042 323 646
Anita 4,400 3,300 3,500 1,500 4,200 2,875 3,296 1047 2,094
Teri 800 900 1,000 1,100 950 1,850 1,100 381 762
Stephanie 600 900 1,000 1,100 950 2,125 1,113 524 1,048
Total 20,000 20,000 20,000 20,000 20,000 20,000 20,000

4. X1 + X2 + ⋯ . +Xn
n
AVERAGE FORECASTMETHOD
A normal random variable
with the mean equal to
average of member’s
forecast and 2 x standard
deviation
FORECASTING : SPORT OBERMEYER
06
2 X STANDARD DEVIATION

5. METHOD
Coefficient of variation (CV)
is popular index of statistic
to measure risk.
FORECASTING : OUR RECOMMENDATION
Standard deviation
Average (mean)
COEFFIECIENT OF VARIATION
06
0.2RULE OF THUMB:
Benchmark point is
CV <= 0.2: Low risk
0.2 < CV < 1: Higher risk

6. SOLUTIONS FOR QUESTION 1 &3
Style Laura Carolyn Greg Wendy Tom Wally Average Std. Dev Cova
Assault 2,500 1,900 2,700 2,450 2,800 2,800 2,525 340 0.13
Seduced 4,600 4,300 3,900 4,000 4,300 3,000 4,017 556 0.14
Entice 1,200 1,600 1,500 1,550 950 1,350 1,358 248 0.18
Electra 2,500 1,900 1,900 2,800 1,800 2,000 2,150 404 0.19
Gail 900 1,000 900 1,300 800 1,200 1,017 194 0.19
Daphne 1,700 3,500 2,600 2,600 2,300 1,600 2,383 697 0.29
Isis 800 700 1,000 1,600 950 1,200 1,042 323 0.31
Anita 4,400 3,300 3,500 1,500 4,200 2,875 3,296 1047 0.32
Teri 800 900 1,000 1,100 950 1,850 1,100 381 0.35
Stephanie 600 900 1,000 1,100 950 2,125 1,113 524 0.47
Total 20,000 20,000 20,000 20,000 20,000 20,000 20,000

7. FORECASTING : OUR RECOMMENDATION
• COEFFICIENT OF VARIATION IS RISK
• % TO BE ORDERED = 1 – RISK = 1 –CV
• QUANTITY ORDER = EXPECTED QUANTITY x (1- CV) = AVG x (1- CV)
Example:
For style Gail ~ Avg: 1017, Standard Deviation: 194
• CV = 194/1017 = 0.19 ~ 19 % (Low risk)
• 1- CV = 1- 0.19 = 0.81
• Quantity order = 1017 x 0.81 = 823 Units
FORMULA

8. SOLUTIONS FOR QUESTION 1 &3
• INITIAL PRODUCTION COMMITMENT
: 10.000 UNITS
• 10 STYLES REPRESENTED 10 %
DEMAND
• NOW IS NOVEMBER. TIME FOR LAS
VEGAS SHOW : MARCH
• MINIMUM ORDER:
• HONGKONG: 60 UNITS / MONTH
• CHINA: 120 UNITS / MONTH
ASSUMPTIONS
• MONTHS FOR PRODUCTION: 4
• MINIMUM ORDER:
• HONG KONG: 60 X 4 = 240 UNITS
• CHINA: 120 X 4 = 480 UNITS

9. SOLUTIONS FOR QUESTION 1 &3
• CALCULATE CV
• EVALUATE RISK FOR EACH STYLE
• CHOOSE TACTICS FOR PRODUCTION
STEPS

10. SOLUTIONS FOR QUESTION 1 &3
Style Laura Carolyn Greg Wendy Tom Wally Average Std. Dev Cova
Assault 2,500 1,900 2,700 2,450 2,800 2,800 2,525 340 0.13
Seduced 4,600 4,300 3,900 4,000 4,300 3,000 4,017 556 0.14
Entice 1,200 1,600 1,500 1,550 950 1,350 1,358 248 0.18
Electra 2,500 1,900 1,900 2,800 1,800 2,000 2,150 404 0.19
Gail 900 1,000 900 1,300 800 1,200 1,017 194 0.19
Daphne 1,700 3,500 2,600 2,600 2,300 1,600 2,383 697 0.29
Isis 800 700 1,000 1,600 950 1,200 1,042 323 0.31
Anita 4,400 3,300 3,500 1,500 4,200 2,875 3,296 1047 0.32
Teri 800 900 1,000 1,100 950 1,850 1,100 381 0.35
Stephanie 600 900 1,000 1,100 950 2,125 1,113 524 0.47
Total 20,000 20,000 20,000 20,000 20,000 20,000 20,000

11. SOLUTIONS FOR QUESTION 1 &3
EVALUATION
LOW RISK
(CV <= 0.2)
Assault,
Seduced,
Enticed,
Electra, Gail
Use CV
method
HIGHER RISK
(CV > 0.2)
Daphne, Isis,
Anita, Teri,
Stephanie
Minimum order
TACTIC

12. SOLUTIONS FOR QUESTION 1 &3
Style Average Std. Dev Cova HongKong China
Assault 2,525 340 0.13 2,185 2,185
Seduced 4,017 556 0.14 3,460 3,460
Entice 1,358 248 0.18 1,111 1,111
Electra 2,150 404 0.19 1,746 1,746
Gail 1,017 194 0.19 823 823
Daphne 2,383 697 0.29 240 480
Isis 1,042 323 0.31 240 480
Anita 3,296 1047 0.32 240 480
Teri 1,100 381 0.35 240 480
Stephanie 1,113 524 0.47 240 480
Total 20,000 10,524 11,724