Reference no: EM132383673
Caselete 1
World is a worldwide refiners and distributor of fuel products for a automobiles, aircrafts, trucks, and marine operations, services stations, and bulk facilities as outlets. Keeping more than 1,000 such outlets supplied is a significant operating problem for the company. Maintaining adequate fuel levels at the auto service stations is its major concern, because fuel generates the most revenue for the firm and has the greatest demand for customer service. Being able to forecast usage rates by product at these service stations is one of the key elements of goods distribution operations. In particular, the tanker truck dispatchers need an accurate forecast of fuel usage in order to schedule fuel deliveries at service stations to avoid stock outs.
SERVICE STATION OPERATION
Service stations may carry three or four different grades of fuel including 87, 89, and 92 octane gasoline and diesel fuels. These are stored in underground tanks. Due to the variations in the usage rates among the stations and the limited capacities of these tanks, the frequency of replenishment may range from two or three times per day to only several times per week. Each tank is dedicated to one type of fuel. Fuel levels are measured periodically by placing a calibrated stick into a storage tank, although some of the more modern stations have electronic metering devices on their tanks. Tanker trucks, typically having four fuel compartments, are used for replenishment.
A FORECASTING SITUATION
Each service station?s fuel grade represents a specific forecasting situation. A case in point is one of the lower-volume stations selling 87- octane fuel. With replenishment occurring only a few times per week, forecast of usage rates on a daily basis is adequate. Because usage does depend on the day of the week, forecasting for a particular day of the week may be quite different from any other day of the week.
Questions:
1. Develop a forecasting procedure for this service station. Why did you select this method?
2. How should promotions, holidays, or other such periods where fuel usage rates deviate form normal patterns be handled in the forecast?