2. Business Case
AIR Industries is an aerospace manufacturing company
specializing in airframe fasteners. For the past 2 fiscal quarters, the
company’s shipment volume has outpaced its Sale’s backlog and is
expected to continue this trend next quarter. The company is
considering a strategy to build stock inventory in order to meet
expected demands in the near future. In addition, corporate division
for AIR Industries has also been tasked with improving variable costs
by 2.5% per quarter for the next fiscal year.
In order to accomplish both tasks, the company must be able to
forecast its shipment needs for the top 10 highest volume
fasteners. This objective will enable the organization to manufacture
the expected shipments of these fasteners, optimize production runs
on machines and better estimate correct ordering levels for both raw
materials and tooling equipment before sales orders are generated.
3. Data Collection Methods
1) Collected shipment data for all 2013 to 2014 orders
2) Created 38 product families for over 500 part numbers
3) Created a pivot table for AIR’s shipment data
4) Product families sorted from highest to lowest piece
count and earliest to latest shipments
Example, Period 1 represents Q4 fiscal
year 2013 or calendar dates 1/1/14 to 3/30/14
5) Exported 10 highest volume fastener data into
Minitab to conduct analysis.
4. Statistical Methods Used
Time Series Plot for all product lines
Winter’s and Decomposition Methods for
Protruding Head Fasteners
Holt and Linear Trend Methods for
High Lite and High Lock Fasteners
5. Time Series Plot - Top 10
Highest Volume Fasteners
Top 3 highest volume
fasteners had a significant
amount of quarter-to-
quarter variation
Seven other product
families shipments were
relatively consistent
Final Analysis:
determination made that
no forecast was
necessary at this time.
10. AIR Industries - Conclusion
Statistical forecasting should provide the company with
a much more accurate shipment forecast then a judgment
one. Seasonal patterns, along with each of the plot’s MAD
values, will assist in determining the most accurate result.
However, before making the recommendation to
implement this method into AIR’s business practices, we
must compare the forecast with the actual shipment data
for the next 2-3 fiscal quarters.