1
The main problem faced by Harmon Foods was a huge variation in the forecasting of
sales for the Treat product, a ready-to-eat breakfast cereal with an important market share. The
actual sales had varied from 50% to 200% from the forecast made by the general sales manager
John MacIntyre. Because the forecasts were so vast and problem causing, Treat’s inaccurate
forecasting caused major manufacturing and advertising problems. The plant managers accepted
a schedule and made arrangements for crew, machines, materials and storage spaces based on the
sales forecast, and staying within the budget allowed. Sudden changes in schedules would lead to
loss for the company.
Management did identify key factors affecting the demand/shipment of Treat. The
factors they identified in the Case Study included, but not limited to, Market Share, Seasonal
Factors, and Advertising. Another factor mentioned involves the promotional strategies of its
competition. It is necessary to be aware of any and all competitor pricing/promotions of
products that compete with Treat. This will allow the company to ensure they price and promote
Treat competitively, which in turn will impact sales and help strategize and forecast the
demand/shipments more effectively. Management must always go after the opportunity costs
and opportunity advantages against its competitors to ensure they keep and possibly grow their
market share. A factor that is not mentioned in the case that can affect demand/shipment of treat
is the pricing of the complementary products (i.e. milk, honey, fruit) that are used with Treat.
What about the economy and the consumer spending? This can also have an impact on Treat
demand/shipments. When the economy is doing well and consumer spending is up, the target
market may be less price-sensitive, which is a factor that management will need to consider
when determining to run more or less promotions on Treat.
Forecasting and budgeting is the main problem that the managers of Treat are facing.
Instead of independently measuring each factor and how it affect sales, Hammons would be
more successful at making accurate predictions if it measured them all together. Therefore, we