Statistics – Final Project

Business CaseAIR 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.

Data Collection Methods1) 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.

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

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.

Winter’s and Decomposition Plots for Protruding Head Fasteners

MAD= 2.37213E+0 MAD= 1.85536E+06

Winter’s and Decomposition Plots for High Lock Fasteners

MAD= 6.77712E+0 MAD= 4.74445E+0

Holt and Linear Trend Plots for High Lite Fasteners

MAD= 1.26153E+06 MAD= 1.45526E+0

Top 3 Product Lines Forecast

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.