Demand Paper

If you order your custom term paper from our custom writing service you will receive a perfectly written assignment on Demand Paper. What we need from you is to provide us with your detailed paper instructions for our experienced writers to follow all of your specific writing requirements. Specify your order details, state the exact number of pages required and our custom writing professionals will deliver the best quality Demand Paper paper right on time.

Our staff of freelance writers includes over 120 experts proficient in Demand Paper, therefore you can rest assured that your assignment will be handled by only top rated specialists. Order your Demand Paper paper at affordable prices!

Demand Paper

Paula Dandridge

MGT 554

Operations Management

Ken Romano, Instructor

July , 00

Demand Paper for Contract Services

Introduction

The contract services department at Caterpillar Financial provides temporary financial relief to customers who have financed Caterpillar equipment through Caterpillar Financial Services Corporation. This paper explains the demand for such services and how the needed personnel are forecasted.

Patterns of Demand

In the text Krajewski states (00 p. 175), at the root of most business decisions is the challenge of forecasting customer demand. This is the one of the most important pieces of the operating plan. In the contract services department, we are forecasting the demand for modifications to existing contracts. The modifications consist of skip payments, interest only payments, extensions to term, due date changes, transfers and assumptions, and refinances (consolidation of two or more contracts). To predict the demand for these services, patterns must be identified. According to Krajewski and Ritzman (00), there are five basic patterns for demand. These are listed below

1. Horizontal the fluctuation of data around a mean.

. Trend the systematic increase or decrease in the mean of the series over time.

. Seasonal a repeatable pattern of increases and decreases in the demand depending on the time of day, week, month or season.

4. Cyclical less predictable gradual increases or decreases in demand over longer periods of time (years or decades).

5. Random unforecastable, variation in demand.

Of these patterns, contract services can measure a demand pattern that is based on trend and seasonal projections. With the construction business, the busy season is usually in the summer and fall months of the year. For example, forestry equipment is used more when the weather is dry, usually in the summer months and in the fall. The equipment cannot be used when the ground is wet and muddy. During the summer and fall, owners of the construction equipment can start and finish jobs without interruption. This means that their accounts receivables are coming in steadily and therefore the customer can make his payments. On the other hand, the winter and spring cause delays in completing jobs causing the customer's cash flow to become stagnated or sometimes nonexistent. These are seasonal patterns of demand and also suggest a trend for measuring the number of modification and the type of modification. Factors affecting the demand for contract services can be divided into external forces and internal forces.

As stated in the previous paragraph, depending on the particular season, external factors can determine the demand for modifications. Some external factors are the weather, equipment breakdowns, slow economy, and many others. The main external factor is usually the weather. The rain and snow are two weather anomalies that can cause major havoc with construction jobs. When rain causes flooding, the machines can't be moved. The same with ice storms and snow storms. The ground is frozen; therefore the machines cannot dig. The economy can also cause demand for modifications to contracts. Customers can't get the jobs at the price they need so they underbid for the contracts. This causes negative cash flow. The customer still has to pay his employees, overhead, and material expenses. Underbidding or not having enough jobs creates a strain and the solution is usually to try and get deferments on installment loans.

Internal factors can also play a part in the demand for contract services. The department also corrects the errors of the documentation department. Contract errors create just as much demand for modifications as external factors. The errors are caught after the contract has been booked (input) into the system. Therefore, the adjustments have to be made by contract service employees. The number of employees needed to perform the services can be forecasted by the demand patterns caused by the external and internal factors.

Forecasting for the number of employees

The number of employees needed to perform the services provided by contract modifications can be measured by recording the number of requests for modification in any given month. The unit of measurement is the number of requests. This can be broken down into the various types of requests such as skip payments and transfers and assumptions. In the contract services department all requests are entered into a program that keeps track of the number and types of modifications and when they are requested. The request is entered when it the representative is assigned and receives the request. The type of request is chosen, and the date and time is entered. The number of requests for any given period can then be summarized in a report prepared by the system. The report can pull the number of requests for the month, week, or day. The report can also categorize the data by type and whether or not the request has been completed. These reports are used to track the seasonal trends in demand for modifications. This method uses the statistical methods to calculating the personnel resources needed to provide quality service in a timely manner.

According to the text, this method of forecasting is called a time series analysis. Time series analysis is a statistical approach that relies heavily on historical demand data to project the future size of demand and recognizes trends and seasonal patterns(00, p.178). Another method that uses historical data is the casual method. This method uses historical data that based on independent variables, in this case economic conditions and the weather. Using these forecasting techniques, the manager can determine the number of employees needed to process the amount of requests at any given time.

The contract services department is divided into two sections- refinances and transfer and assumption and modifications. Modifications include all the other types of requests stated previously. Each section has its own demand pattern. The reports generated each month showing the number and type of request and compared and averaged for the quarter. The results then help management determine the number of employees needed to complete the modification requests. The workload can also be equally allocated depending on the number of employees. For example, when modifications is in its busy season, an employee can be pulled from refinances to help with the workload. The demand for refinances has a pattern that is opposite of modifications. The busy season for the refinance/ transfer and assumption section is the spring and summer. Therefore the employee pulled can go back when his/her busy season starts and management can determine if another employee is needed also. Forecasting for demand and the number of employees is necessary for budgeting purposes also. The department has to budget for salaries and departmental expenses and forecasting demand can provide for needed extra expense without going over the budget.

Planning for Improvement in Forecasting Demand

As with any forecasting method, errors can occur. To improve on the reduction of errors in the reporting method, the representative must be through and accurate when inputting data into the program used to track the number and type of requests. The data must be entered in a timely manner and include all the necessary information from the request. Errors in data input can occur at any time but especially at the end of the month when deadlines for completion of requests are required. The input of the request can often be forgotten or input after the report is generated. By having a set workflow process, this type of error can be minimized. The representative is provided with a checklist to be sure that each task involved with the request is completed. If there are any missing checkmarks, the representative can go back to make sure it has been completed or complete the task if it was not. Training is another way to improve upon eliminating errors. Each representative is provided the proper training in entering data into the system and on how the requests are processed. By utilizing these improvement plans, the data used for forecasting will be accurate and reliable.

Summary

The definition of a forecast, according to Krajewski and Ritzman (00, p.174) is a prediction of future events used for planning purposes. Forecasting is an important aspect to any business. There must be a demand for services and the pattern of that demand predicts the necessary elements needed to meet that demand. In this paper, it is the number of employees needed to process the requests for modifications. Every department in a corporation or manufacturing firm uses forecasting for its services and products. Supply and demand goes hand in hand. The demand for a product or service has to be known to keep the necessary supply on hand.

Reference

Krajewski, L.J., & Ritzman, L.P. (00). Operations management strategy and

analysis (5th ed.). Boston Pearson Custom Publishing.

Please note that this sample paper on Demand Paper is for your review only. In order to eliminate any of the plagiarism issues, it is highly recommended that you do not use it for you own writing purposes. In case you experience difficulties with writing a well structured and accurately composed paper on Demand Paper, we are here to assist you. Your cheap custom college paper on Demand Paper will be written from scratch, so you do not have to worry about its originality.

Order your authentic assignment and you will be amazed at how easy it is to complete a quality custom paper within the shortest time possible!