Franklin Fan Company Forecasting
Operations Management.
Case: Franklin Fan Company (Cont’d)
Based on the Yankee Fork & Hoe Case in Operations Management by Krajewski, Ritzman, & Malhotra (10th) 2013
Forecasting The only way for Franklin Fan to generate new sales and retain old customers is to provide
superior customer service and produce a product with high customer value. This approach puts
pressure on the manufacturing system, which has been having difficulties lately. Recently, Dan
Block has been receiving calls from long-time customers, such as Sears and Home Depot,
complaining about late shipments. These customers advertise promotions for fans and require
on-time delivery. Block knows that losing customers like Sears and Home Depot would be
disastrous. He decides to ask consultant Sharon Place to look into the matter and report to him
and Ed Spriggs in one week. Block suggests that she focus on the window fan as a case-in-point
because it is a high-volume product and has been a major source of customer complaints. In the
mean-time, Sue McCaskey is working on modifications to the inventory management system
that should also improve product availability. A window fan’s main components consist of molded fan blades (5 per fan), a molded motor
housing (1 per fan), an electric motor (1 per fan), and various hardware items. Place decides to
find out how Franklin Fan plans window fan production. She goes straight to Phil Stanton, the
Production Manager, and Joe Donnell, the Purchasing Manager, who give the following account: Planning is informal around here. To begin, marketing determines the forecast for
window fans by month for the next year. They then pass it along to us. Quite
frankly, the forecasts are usually inflated – must be their big egos over there. Joe
Donnell mentions that he has to be careful because Franklin Fan enters into long-
term purchasing agreements for plastic resins, and having it just sitting around is
expensive. So Phil and I usually reduce the forecast by 10% or so. We then use
the modified forecast to generate a monthly final-assembly schedule which
determines what materials we need from suppliers and what products we need
from the molding and assembly areas. The system works well if the forecasts are
good. But when marketing comes to us and says they are behind on customer
orders, as they often do near the end of the year, it wreaks havoc for the
schedules. Molding gets hits the hardest. For example, the molding machines that
mold the fan blades and motor housings from the plastic resin can only produce
about 7,000 housings and 30,000 blades per day, and the assembly department
can do only 5,000 fans per day. Both operations are also required for many other
products.
• Discuss the issues on the forecasting system being used by a company.
• Recommend how to improve the forecasting method.
• Develop a forecast for each month of the next year and justify the forecast and method used.
• Integrate established operation management principles into the discussion.
• Write a business report based on 5-step critical thinking decision making model.