National Components Corporation (NCC) is a recently established manufacturing company that had been growing rapidly. Recently their product development department has found a way to make a composite bearing consisting of two materials which greatly increases the durability of the component and at a lower cost. They continue to sell the original product (“Classic”) to a number of equipment manufacturers and hardware supply chains but in smaller quantities. They have seen a dramatic growth in demand for the new product (“DuraBear”).

Two factors have led to the company not employing any formal forecasting techniques. One of these is the sudden change in product mix, the other is the rapid growth has focused their attention on building capacity. The President of the company, Mr. Ralph Wada, has recognized the need for a more formal forecasting process as the company matures. He has expressed an opinion that forecasting should be as simple as possible and yet still meet the needs of the business.

Mr. Wada wants to use the start of the new fiscal year (May 1) to initiate a more formal forecasting system. He has decided to focus on the two main bearing products which comprise 90% of their revenue. With no existing expertise in demand forecasting he has turned to a small consulting firm to recommend appropriate forecasting techniques, prepare a forecast for the next four months, and provide advice and training to an identified NCC employee in the Operations organization. Ms Ronnie Havens has exhibited an interest in statistical applications and has taken some courses in college which will serve as a foundation for taking on this new responsibility. Mr. Wada has also asked other staff members to assist in developing the forecasts.

Mr. Jonathan Nguyen, Vice President of Marketing, has been able to provide external sales demand for the two products for the