I am including the background info on Module 2 and the Case assignment as well.  I am also including an attachment you may need for this assignment Extended Enterprise Supply Chain.ppt : Module 2 – BackgroundForecasting/EESCVirtual WorldEBBD EMAIL – for Internal Use OnlyTo: YouFrom: Danny Wilco Subject: Re: Forecasting at EBBDI want to give you a little more information about how we do forecasting and what we would like to know, to help guide you in this project.Once a month, the Management Team meets to review our monthly financial report and the quarterly results once every three months. After we look at the financial picture in terms of costs and budgets, we look at sales, mostly in terms of volume. We compare the monthly volumes to our latest forecast that we generated in the previous monthly meeting. Then we try to generate the next month’s sales forecast and update the quarterly forecast and the annual forecast. Of course this gets easier each month as we approach the end of the year. As you know, we have about 1500 individual products in inventory, which we have aggregated into 11 product lines. We are looking at the numbers based on product lines, not individual products. We consider adding new products that our current suppliers are discussing with us and want us to distribute.In November, when we have two months in the year left, we begin to forecast the annual sales for the next year, again based on product lines. We discuss our strategy for each product line, expanding or contracting each one. We discuss other potential product lines from suppliers we don’t currently carry. We look at new products that are coming on the market from both current suppliers and other suppliers. We generate a trial forecast for next year.In December, we revisit the trial annual forecast that we created in November. We finalize any new information, make final decisions on existing and new products, and finalize the annual forecast. Then we create the quarterly forecasts for each quarter. And finally we create the monthly forecasts for each of the first three months of the year. All this is done using spreadsheet technology.One area which we want to add to the forecasting process is determining inflation factors on a quarterly basis. Most of our suppliers will pass along inflation of their costs on a quarterly basis. If we could forecast this inflation with some degree of accuracy, we could better utilize our inventory capacity and optimize profits. At the moment, we simply guess at inflation factors. We would like to know if there is a way to forecast these.Be sure to mull this over. In the next few days I will give you a specific assignment on just what we want you to do.~DW, VP LogOps.Learning WizardCase 2 ResourcesRead the following resources to gain requisite knowledge about forecasting for this task.Specific Information you need to identify to use in your report:Why is forecasting important in a distribution company? What is it you are specifically forecasting and what is this used for?Why is forecasting accuracy important? How accurate does a forecast need to be?What is the difference between forecasting for existing product lines and for new products?Why should companies spend time and money to improve forecasting accuracy?How should a company use different methods but yet integrate these methods?How does strategic planning fit in with forecasting (at least for long term forecasting/planning)?What is Forecasting and why is it necessary for Logistics?Shamim, M. (2009). Encyclopaedia of logistics management: Volume I. Mumbai, IND, Global Media.NOTE: The above resource provides good information about Logistics in general. Read Ch. 5 for info on planning and long term forecasting. Ch.6 is about forecasting. It is a bit long-winded, but you should find sections of it useful.Various methods of Forecasting***THIS IS A MUST READ!!Armstrong, J.S. (2001). Principles of forecasting: A handbook for researchers and practitioners. Hingham, MA, USA: Kluwer Academic Publishers.This is a great article on forecasting inflation:Meyer, B.H., & Pasaogullari, M. (2010). Simple ways to forecast inflation: What works best. Federal Reserve Bank of Cleveland.Retrieved from https://www.clevelandfed.org/Newsroom%20and%20Events/Publications/Economic%20Commentary/2010/ec%20201017%20simple%20ways%20to%20forecast%20inflation%20what%20works%20bestNOTE: keep in mind that EBBD is a distributor, it buys and sells, it does not produce. What is the focus of forecasting for this type of business?You may want to do independent research to find additional resources on forecasting in the field of logistics and distribution. But be sure to read the ones here, too.SLP 2 ResourcesThe Extended Enterprise Supply ChainWhile the case in this module focuses on the micro-level fundamental of logistics, forecasting, this SLP will focus on the fundamental at the macro-level, the Extended Enterprise Supply Chain. All products and services are part of some supply chain. In fact there really is one big network in the world that is the complete global supply chain. But let’s keep our focus somewhat narrow as we introduce this concept. You will develop the EESC for the target product, company, and industry you chose in SLP1.Download and review this PowerPoint on the Extended Enterprise Supply Chain using Beer as an example. (Extended Enterprise Supply Chain)ReadingsHow are businesses and industries classified and coded? The North American Industry Classification System (NAICS) has been in use since 2002. This link takes you to the page on the website for the 2007 version.North American Industry Classification System(2007).US Census Bureau. Retrieved from http://www.census.gov/cgi-bin/sssd/naics/naicsrch?chart=2007Privacy Policy | ContactHere is the overview for Module 2 Case Assignment: Module 2 – CaseForecasting/EESCVirtual WorldEBBD EMAIL – for Internal Use OnlyTo: YouFrom: Danny Wilco Subject: Re: Forecasting at EBBDThe Management Team is all for your efforts to investigate EBBD’s forecasting situation. We want you to thoroughly analyze what we are doing, what other forecasting methods and techniques are available, and make a recommendation on how we should proceed. We are particularly interested in how to improve our short term forecasting on an annual, quarterly, and monthly basis. We also would like to know how we could do longer term forecasting, say over two or three years. And we want to know how we can generate quarterly inflation forecasts.The Management Team wants to knowWhat are the various methods that we should use?Who will do the forecasting?How will the forecasting methods be implemented?Why should EBBD spend any money on this new methodology? Why do we care about improving our forecasting and why is it worth the costs to improve it?The report should provide an initial section on the background of the situation, assumptions that we need to make, discussion of your analysis of various forecasting methods, and then a recommendation with a justification as to why you are making the recommendation.One more thing – the Management Team might want you to make an oral presentation. So you should also prepare a draft version of a PowerPoint presentation. This does not need to be a finished product, but a draft version.The written report should be comprehensive and articulate. Send me the report and the draft PowerPoint when you have them finished. Let me know if you have any questions along the way.~DW, VP LogOps.Learning WizardUse the readings in the Background to familiarize yourself with forecasting and forecasting methods. You should also search for additional information pertaining to forecasting in logistics and distribution.Specific Information you need to identify to use in your report:Why is forecasting important in a distribution company? What is it you are specifically forecasting and what is this used for?Why is forecasting accuracy important? How accurate does a forecast need to be?What is the difference between forecasting for existing product lines and for new products?Why should companies spend time and money to improve forecasting accuracy?How should a company use different methods but yet integrate these methods?How does strategic planning fit in with forecasting (at least for long term forecasting/planning)?You should know the answers to these questions and use this information in your Report to Danny Wilco.Using the background information about EBBD’s forecasting situation and the information you obtain from the background readings and your research, write a report to Danny Wilco, addressing the questions that he posed. Then develop a draft Powerpoint presentation.Upload the Report into Case 2. Upload the draft Powerpoint into Additional Files in Module 2.Assignment Expectations of the Written Report – Be sure to write this report to your boss, Wilco.The report should thoroughly address these aspects in depth and breadth:Problem situation: clearly elucidate the current situation at EBBDAssumptions: assumptions that need to be made and critical evaluationEvidence: identifying information about different forecasting methods relevant to the problemPossible solutions: combinations of different methods and techniques to meet the requirementsRecommendations: which methods and techniques are best for which specified needsJustification & Explanation: clear reasoning as to why the recommendations were madeWriting style & Organization: well-formed sentences and paragraphs, well organized with flow of reason, and good use of language that pertain to concepts and terminologyUse of references & Citations: at least four references. Appropriate use of APA Style is required in this paper.Expectations of the Draft PresentationThe draft PowerPoint should address these aspects:Organization: the deck has a cover slide and at least 4 content slides, and information is arranged in understandable orderContent: the deck uses bullet points that articulate and interpret key points of the report and shows relevant data, charts, graphs; notes are used in Note section of slides and possible themes of the presentation are suggested.Privacy Policy | ContactExtended Enterprise Supply
Where do things come from?
All products must come from somewhere unless you are
collecting rocks or bugs. In the man-made world,
products are produced, and services are provided. We
will focus mostly on products.
Consider a somewhat simple object, say a wooden table
or chair. You can buy a dining room table set in a retail
furniture store or perhaps some other outlet for
furniture. But this product was most likely
manufactured by a furniture manufacturing company.
And it probably went to some distributor or wholesaler
who deals in many different types of furniture. The
retailer in turn purchases different types of furniture
most likely from several different suppliers.
Where do things come from?
But the table did not just magically appear in the manufacturing company. They produced it
from raw materials: wood, glue, and perhaps nails, screws, and metal brackets.
If we trace these materials back to their origin we will find that the wood comes from
lumberjacking, the screws, nails, and brackets from metallic ores, and the glue from some
basic chemicals. Nearly all (I hesitate to say just all) products start from the some primary
industry such as mining, lumber, farming, fishing, drilling, etc. These industries provide the
rawest of the raw materials that then go through the supply chain to be processed in
industrial goods and consumer goods.
Some supply chain steps are shorter than others. Take fishing, for example. Some fishermen
bring in their catch at the end of the day and the fish go straight to a specific restaurant to
be prepared and eaten right away.
Other supply chains are much longer. Take metals for example. Ores must be processed by
mills, e.g., steel mills. Then this form of metal goes to the next stage to be worked into
sheets, coils, strips, rods, wire, etc. This form of metal can be used in manufacturing by
bending, stamping, forging, heading, etc. to produce specific metal shaped for use.
Machine tools, like drills, mills and lathes can be produced as industrial goods, which in
turn, can be used in the manufacturing part of the supply chain.
Or racks, carts, forklifts, trucks, locomotives and other railroad vehicles can be produced
which become part of the transportation aspect of the supply chain.
The chain of obtaining materials, transforming them, and moving them to and from different
companies in different industries until the product begins to be used, either by industry or
by the consumer, is called the Extended Enterprise supply chain.
Yes, but aren’t a lot of things made
from wood?
The supply chain is not a straight through process. There
are many branches from industry to industry. Usually
earlier in the chain, the products can move to several,
even many different industries.
Take sheet metal, coils, and coiled wire. These are used in
hardware, automobiles, airplanes, tools, furniture, and
many other industries. As you approach the finishing
end of the chain, the branching becomes less.
However, you might find some branching out at the end
depending on the specific kind of retail businesses that
sell to consumers. For example, you can buy dishes
from large retailers, small mom and pop shops (less
and less), online, some grocery stores and some drug
Example of an extended enterprise
supply chain
Where does beer come from?
(Now we’re talking!!)
• Let’s take beer as an example, since we are using this in the cases in this course.
This happens to be a consumer product.
• Starting at the finished goods, we can see there are several ways beer can be
packaged for consumption: bottles, cans, and kegs. And the bottles and cans are
usually packaged in some manner for convenience and shipping purposes. They
are sold in six packs, twelve packs and cases of 24. Kegs, on the other hand are
simply kegs.
• The end user, the beer drinker, buys this product either in some form of retail
store (grocery, liquor store, or convenience store) or in a social setting for drinking
– a bar, a nightclub, or a restaurant.
• The retail establishment obtains beer from a beer distributor. In the US there are
over 2850 beer distributors. See the additional reading links for more information.
Beer distributors obtain the beer from the beer producer, the brewery (or from an
importer if we want to consider the global supply chain.) But let’s stick with the
domestic situation.
• There over 1000 domestic brewing companies in the US. And the brewery
purchases the raw materials – grains, hops, malt, yeast, etc. from the agricultural
suppliers, who in turn purchase these from the farmers.
• And breweries also purchase the packaging materials, bottles, can, kegs, etc. from
the suppliers of these items, who purchase them from the manufacturer, who
purchases… – you get the idea.
• This extended enterprise supply chain is shown in figure 1.
Figure 1
Anhauser-Busch (Budweiser)
Miller/Coors (Miller)
Pabst (Blue Ribbon)
& many more
On-site consumption:
• Bars,
• nite-clubs,
• restaurants
Bottled Beer
Canned Beer
Kegs of Beer
off-site consumption:
• grocery stores
• convenience stores
• liquor stores
Trucking, etc.
sand, etc.
Keg mfg.
Sand mining
How many bottles are in keg?
Issues with packaging and transportation
• The logistician is concerned about the movement of these materials
and the related costs and quality. The production processes is the
purview of Operations, while the movement and handling of the
materials is the focus of the logistician, along with the people and
equipment needed to do the job efficiently and effectively. Capacity,
time of throughput, system processing and delays, inventory amount
and inventory handling, transportation methods, delivery times and
costs – all of these occur in the supply chain and are the
responsibility of logisticians along the various nodes the supply chain
• One metric or measurement that can be applied to the extended
enterprise supply chain is the total through put time. How long does
it take from the time the first activity to generate the primary raw
material until the final product is purchased by the end user? For
beer, the question would be, how long does it take from the time of
planting of the grain until Joe Six-pack buys his beer at the
convenience store?

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