In the XYZ manufacturing company, the forecasting department reports to the sales manager. The sales manager uses this information to set sales goals and inform the production manager of production goals for the upcoming period.

The forecasting department has just completed an analysis in which they determined that their forecasts only have an accuracy of about 60%. For example: One part in which they forecasted a demand of 10,000 units only had a demand of 6,000 units. Another part in which they forecasted a demand of 20,000 units actually had a demand of 33,300 units. This has caused the following issues:

• The purchasing department does not know how much raw material they need to purchase for the upcoming period's production. Last month, they wound up purchasing too much materials for some parts but not enough materials for other parts.
• The production department does not know which parts to build and in what quantities. Last month, they produced parts that were not needed, while actual purchase orders went unfilled due to lack of inventory.
• The inventory department is not always able to supply the production department with the raw materials they need. In addition, they have some parts and materials that have been in inventory for over a year..

how will your memo to the purchasing, production, and inventory departments on how demand management and synchronous manufacturing can fix these problems andaddress the following Questions:

• The potential cost that the lack of forecast accuracy has caused the company
• A brief description of why a difference between the forecast amount and the actual demand causes these errors
• Why just using an MRP system cannot solve these problems
• A discussion of how the demand management and synchronous manufacturing methodology can solve these issues