TEAM 5

GUERRA, MARIA D.
OLIVAREZ, ESMERALDA
ORTIZ, YESENIA
TORRES, CHRISTINA
Drug Store Location Information

Managers concerns

Operations Management Problem

Forecasting

Demographic Level

Seasonal Variations

Recommendations

Quarterly Report

Cycle Count


Address located at:
2008 W. Palma Vista Dr.
Palmview, Texas

There is an overstock on items
as well as out of stock of others

Emmanuel Mendoza, EXA:
Interviewed by Esmeralda Olivarez
on March 28, 2013 utilizing a series
of questions

Mr. Mendoza has several
concerns that pertain to the
merchandising

3. The demographical level at this
particular location is a lot lower
than what they are at other peer
stores
1. The system automatically orders
items based on peer stores
forecasting

2. There was a decrease in
seasonal customers

Walgreens located on 2008 W. Palma Vista Drive in
Palmview, Texas opened on September 28,2012
It has not been one year since its grand opening
Emmanuel Mendoza had to rely on obtaining
forecasting information from peer stores
Utilizing peer stores forecasting has not been
accurate, due to the fact that peer stores are located
in different Demographic Level areas
There was also a decline in seasonal customers
Forecasting allows predicting future values of a series based on past observations.
Trends, cycles, and seasonal variation may be present in past observations that
help predict future demand more closely which is something that this Walgreens
is unable to utilize due to the recent opening

A forecaster can nowadays consider a wide variety of time series models which
describe seasonal variation and regime-switching behavior, but in this case it
would have to be an in-store forecast pertaining only to this particular Walgreens
in order to be able to differentiate between the variety in seasons

There is also risk and uncertainty because in order to take advantage of this
method, it would have to be updated depending on the sales, which for Walgreens
would be on a weekly or bi-weekly bases

Qualitative Methods are subjective because they are based on
subjective judgment or opinion by utilizing customer surveys and
Delphi method, which is the opinion of managers and staff, to
obtain information

Quantitative Methods are objective because they are based on
analysis of data by utilizing time series forecasting models and
causal or associative models. The time series forecasting would
include various patterns of data like trend, seasonality, cycles, and
randomness. Even though trend and cycles are not very useful in
this case for Walgreens.
The store acquires lower
inventory

Decrease in items out of stock

Reduced production costs

Improved customer service
Step 1 determine purpose
Step 2 establish a time horizon
Step 3 select forecasting technique
Step 4 gather and analyze data
Step 5 prepare the forecast
Step 6 monitor the forecast
Finally FORECAST!
Is a study of a population based on several factors
such as;
Age
Sex
Economic status
Level of education
Income level
Employment

When it comes to Walgreens located in this particular
area the main factor affecting the store is the income
level. This particular Walgreens happens to be located in
a low level income area.
Time-series data are regularly repeating upward or
downward movements in series values that can be tied to
recurring events.

For Walgreens seasonal variations also include the yearly
Winter Texans.
o This new Walgreens location has greatly benefited Winter
Texans due to the fact that there is an RV Park located
extremely near the store.
Monthly Report of fragrances sold
Shania Twain Rihanna Vera Wang Dolce & Gabana
June 3 6 1 10
July 1 4 0 7
August 4 1 1 9
September 2 5 5 2
October 0 2 1 4
Total 10 18 8 32
This is an example of a seasonal relative which is
the percentage of average or trend.
Is the inventory auditing procedure, which falls under
inventory management, for a small set of inventory, in a
specific location is counted on a specified day.
POS System keeps record of every detail of the item, when
it was sold, received, price sold, etc.
In order to obtain the most out of forecasting the following elements are
required
o Timely
o Reliability
o Accuracy
o Meaningfulness
o Written
o And it must be easy to use
Controlling the forecast is also extremely necessary. In utilizing a Control
Chart there is a visual tool for monitoring errors and for detecting non-
randomness in errors. Forecasting would be in control if all errors are within
control limits and no patterns of trends or cycles are present.
A quantitative approach in forecasting should be followed based on
analysis of data by utilizing time series forecasting method in short term
either weekly or bi-weekly depending on the sales
Given the low income demographic level in this particular Walgreens,
forecasting peer stores should be completely out of the question
Even though there is risk and uncertainty, there is a wider opportunity of
obtaining a more accurate forecast from within the store than from peer
stores
In time series, seasonality in short term should be followed along with
random variation due to the short period of time Walgreens has been open