A Woven Future Sanjana Karigar is a master weaver. She buys yarns and, using her manual wooden loom, weaves them into beautiful pieces of fabric. A few years ago, Sanjana discovered a new market for her woven creations: baby wraps. Woven baby wraps Parents carry their newborn and toddler children in baby wraps to keep their hands free for other tasks and activities. These parents cite the benefits of baby wearing (as it is sometimes called) with a woven wrap as: o it allows the wearer to create the perfect fit for both themselves and the child. o it provides the flexibility required as the child grows, meaning there is no need to purchase a different wrap or carrier. o it can be used as a blanket, pillow, or as a back support wrap for expectant mothers. o being beneficial for both the child and the caregiver, as studies have shown a reduction in post-partum depression amongst mothers who wear their babies. o can be made to order, allowing the customer to completely customize the look, fabric, feel, etc. of their wrap. Baby wraps can range wildly in prices, from under $100 to over $1,000 Canadian, and are bought by parents and caregivers around the world. Sanjana's business Sanjana had viewed many of the wraps for sale by other weavers and had even gotten her hands on a few that her friends used for their children. She was confident her patterns and aesthetic tastes would stand out in the market. She figured she could easily sell her wraps for anywhere between $500 to $1,200 Canadian - and she did. Sanjana's business has grown to be so successful that she is thinking of outsourcing some of the easier and less lucrative jobs to other weavers, to ensure she can work on the most expensive orders. The outsourced weavers would be friends of hers from the weaving community. They are not master weavers but she has inspected their work and knows they will be able to make the patterns to a sufficient quality, given the price point she will sell them for. She would sell these wraps under her brand, through her website. She would take the orders and provide the weavers with the yarn and pay them by the meter. A typical wrap consists of five woven meters of fabric. She knows that in order to be profitable on these outsourced wraps, she has to keep the cost of yarn to a minimum. She also knows that she can't start purchasing poor quality yarn as that would diminish her brand. She has spoken to her suppliers and they are willing to offer substantial discounts if she orders in bulk, in advance. She usually buys the yarn in cones, which get their name from their appearance. They are just a cardboard roll that wound with yarn of a specific colour. They are sold by weight of the yarn on the cone. Her suppliers usually offer the colours she is interested in by either kg or kg cone. Sanjana usually buys the smaller cones but looks over the numbers and sees she can save a bit more if she buys the larger cones instead. She thinks one cone she usually buys completes about 1/8th of a standard size wrap. Sanjana has to be careful. She knows the baby wrap market well and her customers tend to be a fashion-trendy bunch. They want colours that are in season for the year and are unlikely to pay for colours and designs of the past, because "that would be so last year." This customer preference means it is hard for Sanjana to swallow buying more yarn than she needs, because it is unlikely she will get an order that utilizes it. She would essentially have a bunch of yarn sitting in her garage unused. She doubts she would have the time to resell the unused yarn and it probably wouldn't fetch much on the open market. She also doesn't want to wait until the customers (for the lower priced wraps) place their orders because she may have to pay more in shipping and for the cones themselves if she is buying them last minute. To make things a bit more complicated, Sanjana hasn't kept track of the yarn she's purchased in the past, she just gives the invoices to her tax accountant after she's paid them and never thinks about them again. She has kept very detailed records of her sales over the past three years: Month 20XX 20XY 20XZ January 10 12 16 February 11 13 17 March 13 16 21 April 4 4 5 May 5 6 7 June 6 7 8 July 6 7 9 August 6 7 9 September 7 8 10 October 15 20 28 November 16 21 29 December 17 22 31 Sanjana is wondering if there is a way to estimate how much yarn she should purchase in total for the year? She knows if she buys now (January) she can safely predict the colours that will sell for the entire year. She just doesn't know how to forecast the yarn she will need. She believes outsourcing will allow her to increase her sales volume by 20%.