Strategic Supply Chain – Demand Forecasting, EOQ & Sourcing Analysis

Task 1: Demand Forecasting And Procurement Planning For Harvey Norman (20 Marks)

Monthly demand for the TP-Link Tapo 2K Wi-Fi Home Security Camera across the 12 Harvey Norman stores in Singapore:

Questions To Be Done In Excel

• (a) Estimate demand for July, August and September 2026 using a 3-month moving average. (1 mark)
• (b) Estimate demand for July, August and September 2026 using the static method. (3 marks)
• (c) Evaluate MAD, MAPE and the tracking signal (minimum and maximum) for each method and compare them in a table. (2 marks)
• (d) Based on the findings, which of the two methods do you prefer and why? (1 mark)

Question To Be Done In Word

(e) Average monthly demand has been 640 units, the fixed ordering cost is $2,500 per order, the holding cost is 15% of unit cost and the standard wholesale price is $70. TP-Link offers an all-unit quantity discount: 1 to 2,500 units at $70, 2,501 to 5,000 units at $69, and over 5,000 units at $68.

1. What is the EOQ per lot with no volume discount? (1 mark)
2. What is the total annual cost with no discount at $70 per unit? (1 mark)
3. What is the optimal order quantity if the discount is taken? Show EOQs and total costs at all three prices. (3 marks)
4. What is the new total annual cost upon taking the discount? (1 mark)
5. What is the annual saving compared with no volume discount? (1 mark)

(f) Research how consumer electronics retailers such as Harvey Norman forecast demand, and present the approaches as a diagram or infographic (not an essay) with referenced text boxes, analysing forecasting by product value, volume and flow with product examples (3 marks). Add a reflective report or journal on how you developed the diagram, your research process and what you learned (3 marks).

Task 2: Sourcing Decision For Harvey Norman (20 Marks)

Harvey Norman (Pertama Merchandising, 12 stores in Singapore and 34 in Malaysia) sources the camera from China at CNY 385 per unit (about SGD 70 at 5.5 CNY per SGD) with a long lead time, or could buy a comparable model from a local supplier at SGD 80 with fast delivery. Expected annual demand is 7,500 units; in each of the next two periods demand may rise or fall by 10% (probability 0.5 each) and the CNY may strengthen or weaken by 5% (probability 0.5 each). The selling price is SGD 120 (margin SGD 50). The offshore option orders 8,500 units per period, with unsold units donated at no revenue; the local option matches demand exactly. A hybrid option orders a base of 6,500 units from China each period, with any shortfall supplied locally at SGD 90 per unit.

Questions To Be Done In Excel

• (a) Draw a decision tree for each option over the next two periods, identifying each node by demand and variable cost and showing transition probabilities. (6 marks)
• (b) If only one supplier is chosen, which would you recommend? Calculate the NPV of expected profit over two periods for each, with k = 0.1 per period. (4 marks)
• (c) Evaluate the hybrid approach and its NPV of expected profit (k = 0.1). Is it worth paying the local supplier extra? (2 marks)
• (d) Create a comparison sheet of the three options and recommend one, with reasons. (2 marks)

Question To Be Done In Word

(e) Research how decision tree methodology and other tools are used for risk analysis across the upstream, midstream and downstream consumer electronics supply chain, and present them as a diagram or infographic with referenced text boxes and product examples (3 marks). Add a reflective report on your research approach, sources, challenges in applying the decision tree and insights gained (3 marks).

Note: Period 0 profit is excluded from the NPV comparison because it is the same across all three options. AI-generated images and reflections are not accepted.

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Experts Answer on Above Questions on Strategic Supply Chain

Demand forecasting and procurement

3 months moving average – by utilising the three available months, the forecast is calculated as follows:
Forecast = previous 3 months demand/3
For July 2026, 663.33, for August 2026, 642.78 and for September 2026, 652.04.
Static method – utilising the static method, it is assumed that the same month in 2025 is used for the 2026 forecast which amounts to 585 in July, 625 in August and 530 in September.
MAD, MAPE and Tracking Signal – the common historical test period selected to compare the methods fairly are April-June 2026. The three month moving average of MAD is 59.44, MAPE is 8.71 and tracking is 0.70. For Static, MAD is 143.33, MAPE is 21.55% and Tracking Signal is 3.00
The three month moving average is the preferred method because it has lower MAD and MAPE and tracking signal is also close to zero which implies better forecast accuracy and less bias.

EOQ and Quantity Discounts

The annual demand is 7680 units (640*12), and holding cost at 70$ is 10.50$ (15% of 70).
The economic order quantity with no discount is 1912 units per order and annual cost at $70 is $557679.84 per year.
Discount evaluation – at the price of $70, the economic order quantity is 1912 and feasible quantity is 1912. At $69, the economic order quantity is 1926 and feasible quantity is 2501. At $68, the economic order quantity is 1940 and feasible quantity is 5001. This indicates that the economic order quantity at $69 and $68 are below their respective discount thresholds which implies that the minimum qualifying quantities of 2501 and 5001 should be tested.
New annual cost and saving – the total new annual cost is $550539.60 and annual saving is $7140 per year.

Demand forecasting research diagram

The infographic on consumer electronics retail forecasting is included in the appendix section highlights the flow as product value – product volume – product flow. The product value includes ABC analysis, prioritising high value SKU for inventory control. The product volume includes analysis of unit demand, sales history and demand variability. It applies moving average and data demand forecasting. The product flow includes tracking supplier lead time, warehouse, stores and customer demand. The analysis indicates that forecasting is particularly important in the electronic supply chain because of short product life cycles, demand fluctuations, technology changes and long lead times.

Sourcing decision

The demand outcomes indicate low demand of 6750 units and high demand of 8250 units with the probability of 0.5.
China cost CNY strengthens at $73.50 and weakens at $66.67.
For the China option, the expected profit per period is $304291.67 and for the local option, the expected profit is $300000. The hybrid option indicates the expected profit at $354458.33.
That calculation of two period NPV for China shows $528109.50 and for the local option, it is $520661.16.
On the basis of findings, it is recommended to utilise China if only one supplier must be selected because the npv is $7448 higher as compared to the local option.

Risk analysis – consumer electronics supply chain risk

For the upstream there are currency risk, geo-political risk and component/ supplier disruption. For the mid-stream, it is the customs, warehouse and inventory management risk. For downstream, it is customer demand, sales and markdown/donation risk.

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Analysis of Harvey Norman demand forecasting, EOQ, quantity discounts, sourcing decisions, decision trees and supply chain risk for consumer electronics above revealed significant findings on how forecasting and sourcing decisions can be improved. With professional strategic management experts in Singapore, get detailed analysis on any point in the above assignment. Also get support with assignments from any subject by visiting the assignment help homepage today. You can also view the expert solved answers for questions from RMIT across different disciplines to know more about our experts.

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