Running Head: PRODUCTION AND OPERATIONS MANAGEMENT Production and operations management Name: Institutional Affiliation: Date: 1 PRODUCTION AND OPERATIONS MANAGEMENT 2 Production and operations management Introduction The world of business today is characterized by the existence of numerous industries that all in their respective ways address their respective issues as far as the provision of services and products is concerned. As the technology grows in the field of business, the need to come up with strategic ways of making critical decisions as fast as possible arises. The first steps in ensuring that the decision-making process has been affected well are by first undertaking a thorough study on the targeted or the existing market for the given industries. Considering this project, the industry that is going to be addressed is the banking industry. the banking industry has been known to be one of the most crucial industries that contribute largely to the growth of the economy of the country. Selecting three different banks that operate across the globe in different markets but in the same industry would be a good basis for this paper. The operations of such firms involve the managers and require that the managers in these firms make vital decisions on the various issues of concern as far as the banking sector is concerned. Among the decisions that the banks make on the daily basis is the decision on how the customers are saving, making withdrawals and/or the customer needs to avoid a scenario where customers shift from one bank to the other. The more a bank is performing, the more it is attracting more customers as well as investors. Additionally, these decisions help the banks to predict the future customer trends as far as meeting their needs and requirements is concerned. The ability to predict such information is vital for the growth of each and every firm. This paper, therefore, is going to address the various underlying issues within the selected companies within the banking industry where the set analysis will be conducted. PRODUCTION AND OPERATIONS MANAGEMENT 3 There exist various methods that are used in forecasting the various aspects of operations and production within a given organization. These prediction methods go a long way in facilitating and enhancing the overall decision-making processes as far as the different companies are concerned. The need to place each and every company ahead of the other as far as improved services and annual returns is concerned can be seen as the overall driving force that makes these companies employ the associated forecasting methods and strategies within their operations. The background data of the selected companies is retrieved from Yahoo Finance where the historical data on the stock prices of the companies are outlined. Additionally, following the historic data obtained from the source mentioned, it, therefore, becomes possible and easy to predict the future behavior of the stock associated with the selected companies. Before embarking on the methods of forecasting that are subjected to the selected companies, it would be a good practice to first understand the background information on the given companies as described. The selected companies within the banking industry include the Industrial and Commercial Bank of China. The bank has been marked and termed as the biggest bank across the globe by the virtue of the total assets that are associated with the bank. It was established in the year 1984 and by mid-2015, the bank had acquired total assets amounting to about $3.6 trillion. The other bank is HSBC Holdings. The bank can be described as a British based banking company that has been ranked as the seventh largest bank across the globe. The bank was established in Hong Kong and by the year 2016, the bank had recorded a total of about $2.37 trillion worth of assets thus becoming the seventh top banks across the globe. Mitsubishi UFJ Financial Group is the other baking company that is going to be considered in this paper. The bank has its headquarters in Tokyo, Japan and boasts to be among the top banking companies across the globe. The bank by the end of the year 2016 had recorded PRODUCTION AND OPERATIONS MANAGEMENT 4 a total of about $2.45 trillion worth of assets. This figure made the bank rise to the top five lists of the top banks across the globe. The bank was ranked as the fifth bank across the world. looking at the outlined banking companies above, it can be seen that all these banks have been ranked as the top banks across the globe. They operate in different markets while maintaining their respective categories in the banking industry. the following section is going to address the data collection as well as the simple interpretation of the collected data. Data collected As has been mentioned above, the primary source of the required data as far as the banks are concerned is the Yahoo Finance website. The most focused on data was the historical data as far as the prices of the respective stock are concerned. Following the historical data obtained from the website, the most appropriate conclusions were drawn which played a huge part in predicting the future occurrences as far as the behavior of the prices of the stock is concerned. Considering the ICBC stock prices for the period from 1st October 2016 to October 2017, an interesting trend is observed. On the open aspect, the company has experienced a continuous improvement. The initial values as of 2016 were 0 while as time moves on the value as recorded as at October 2017 is 6.18. This is it is a steady growth and improvement as far as the company is concerned (Yahoo Finance, 2017). Looking at the BSBC Holdings, the prices as per the start of June 2017 was recorded to be 44.26 on the open aspect. With time and towards the end of October 2017, the prices have been recorded to have increased to a value of 49.23 as far as the open aspect is concerned. Moving ahead to Mitsubishi UFJ Financial Group, it can be observed that a similar trend is experienced. Considering data for the period from October 28th, 2016 to date, the starting figure was 5.15 which has increased rather not steadily. The figure reported to date as far as the open PRODUCTION AND OPERATIONS MANAGEMENT 5 aspect is concerned is 6.77 (Yahoo Finance, 2017). looking at the data presented from the source as far as a period of one year is concerned, it can be concluded that the prices of stock for the given companies have been increasing at a steady pace considering the majority. What is the implication of such an increase in numbers of the given prices of stock? The most obvious explanation that could offer the best reason is the possibility of the demand for the respective stock has been high. Following the simple rule of demand, it then follows that when the demand for the stock rises, it is followed by a rise in the prices for the given stock. The following section is going to look at the various prediction strategies that were used to forecast the behavior of the stock in the future (Yahoo Finance, 2017). Prediction strategies There are numerous methods that could be used in the forecasting of the behavior of the stock of the selected companies in the future. In this analysis, the used methods are Naïve and exponential smoothing. Considering the data for the three companies, the data follows almost a similar trend of increasing prices in stock. The first method of prediction that was used on the data being Naïve follows a simple working concept. The strategy works with the assumption that the demand that has been witnessed in the most recent past period of time is most likely to be the same as the demand that is going to be experienced in the future. Following this assumption and considering the demand that the companies have reported, it can, therefore, be concluded that the demand as far as the future of the companies is concerned is going to be similar in a way. This means that the same trend in demand and prices of stock as far as the companies are concerned is going to be maintained. The other method of prediction employed is the exponential smoothing method. This method uses the previously arrived at forecasts and the current demand which are then used to PRODUCTION AND OPERATIONS MANAGEMENT 6 derive the expected forecasts. The data used is derived from the Yahoo Finance website. In concluding the most effective method that could be used in the prediction of the future trends as far as the prices and demand of stock for the given companies is concerned, the methods are analyzed further in order to come up with the strategy that presents the least amount of error. Following the existing error measurement methods, the most appropriate and effective method to supplement the prediction methods described above include the Mean Absolute Percentage Error (MAPE). This method stands out to be the best method to use since it offers the absolute percentage error (Hyndman & Koehler, 2006). Software utilized There are numerous pieces of software that could be used to analyze the given data on the companies. However, the most appropriate software to use is excel. The choice of excel follows the fact that excel is easy to use and has its respective predefined formulas that are used to facilitate the necessary calculations and analysis. Analysis In the final analysis of the entire processes, it is concluded the following. The data collected on ICBC shows that the most appropriate method of predicting the behavior of the stock prices as well as the overall demand for the associated stock is the Naïve method. The primary reason for the selection of this method follows the fact that this method leads to the least amount of errors as far as the various errors that may be realized are concerned. Moving ahead to the other company, the HSBC Holdings, it is also concluded that the best method to use is Naïve due to the same reasons as mentioned from the previous case of ICBC company (Conejo, Plazas, Espinola & Molina, 2005). PRODUCTION AND OPERATIONS MANAGEMENT 7 The same case is realized considering the data for Mitsubishi UFJ Financial Group. However, the data presents a slight change in trend for Mitsubishi UFJ Financial Group. The probable reason for this difference is brought about by the unsteadiness of the data. However, interestingly, after the data was subjected to a different alpha figure, the changes were not significant which applied to the other data for the other companies. After the overall analysis of the data as has been obtained from Yahoo Finance, it is important to note that the results as they have been observed could be further explained following various strategies. The following section does not only offer the most probable reasons that may have contributed to the realization of the results but also will offer the best concluding statements that could be used to explain the entire project. Conclusion Looking at the data obtained from the given source, Yahoo Finance, it is surprising how all the three companies have been recording growth and development as far as the continuous increase in the prices of stock is concerned. Other than the case of Mitsubishi UFJ Financial Group where although the company has experienced and recorded growth, the prices have not been rising steadily as is seen from the other companies, the overall behavior of the prices of stock, as well as the demand for the given stock, has been increasing for the last 12 months as has been outlined. The choice of the most recent data from the source has been driven by the need to come up with the most realistic observations. These observations could then be used to draw the most relevant as well as realistic conclusions as far as the behavior of the stock prices due to the possibility of changes in demand has been arrived at. Mitsubishi UFJ Financial Group has had its own ups and downs which have been associated with the results as they have been obtained from the source. Having differences in the PRODUCTION AND OPERATIONS MANAGEMENT 8 prices signify that the demand for the stock for the company has been faced with challenges where at one point the demand may have gone low while at the other times the demand goes up again. However, on the average analysis, it can be concluded that the performance of Mitsubishi UFJ Financial Group has been positive even though the company may have had differences in the overall demand for their respective stock. Looking at the other companies, a trend of a steady rise in the prices of the stock as far as the open category is concerned within the specified period of time (the last 12 months) is concerned. The most probable reason that could be used to explain the changes could be mostly because of the rising demand for the stock. Being among the top banks in the banking industry across the globe may present an opportunity that attracts many investors from the various regions who may have been interested in being associated with the companies. On the overall conclusion, the behavior of each and every company as far as the future of the company is determined by the ultimate customers. having the best strategies to lure and maintain customers goes a long way in ensuring that the companies survive and perform well in terms of the stock market. Following the presented analysis, it can be concluded that the best strategy to predict the future prices and demand for the companies as outlined is Naïve being used together with MAPE. PRODUCTION AND OPERATIONS MANAGEMENT 9 References Conejo, A. J., Plazas, M. A., Espinola, R., & Molina, A. B. (2005). Day-ahead electricity price forecasting using the wavelet transform and ARIMA models. IEEE transactions on power systems, 20(2), 1035-1042. Hyndman, R. J., & Koehler, A. B. (2006). Another look at measures of forecast accuracy. International journal of forecasting, 22(4), 679-688. Yahoo Finance (2017). HSBC Holdings plc (HSBC). NYSE - Nasdaq Real Time Price. Currency in USD. Retrieved 2017. From https://finance.yahoo.com/quote/HSBC/chart?p=HSBC Yahoo Finance (2017). Mitsubishi UFJ Financial Group, Inc. (MTU) NYSE - NYSE Delayed Price. Currency in USD. Retrieved 2017. From https://finance.yahoo.com/quote/MTU/chart?p=MTU#eyJpbnRlcnZhbCI6ImRheSIsInBlc mlvZGljaXR5IjoxLCJ0aW1lVW5pdCI6bnVsbCwiY2FuZGxlV2lkdGgiOjMuODk2MzI xMDcwMjM0MTEzNiwidm9sdW1lVW5kZXJsYXkiOnRydWUsImFkaiI6dHJ1ZSwiY3 Jvc3NoYWlyIjp0cnVlLCJjaGFydFR5cGUiOiJsaW5lIiwiZXh0ZW5kZWQiOmZhbHNl LCJtYXJrZXRTZXNzaW9ucyI6e30sImFnZ3JlZ2F0aW9uVHlwZSI6Im9obGMiLCJjaG FydFNjYWxlIjoibGluZWFyIiwic3R1ZGllcyI6eyJ2b2wgdW5kciI6eyJ0eXBlIjoidm9sIH VuZHIiLCJpbnB1dHMiOnsiaWQiOiJ2b2wgdW5kciIsImRpc3BsYXkiOiJ2b2wgdW5kci J9LCJvdXRwdXRzIjp7IlVwIFZvbHVtZSI6IiMwMGIwNjEiLCJEb3duIFZvbHVtZSI6Ii NGRjMwMzEifSwicGFuZWwiOiJjaGFydCIsInBhcmFtZXRlcnMiOnsiaGVpZ2h0UGV yY2VudGFnZSI6MC4yNSwid2lkdGhGYWN0b3IiOjAuNDUsImNoYXJ0TmFtZSI6Im NoYXJ0In19fSwicGFuZWxzIjp7ImNoYXJ0Ijp7InBlcmNlbnQiOjEsImRpc3BsYXkiOiJ NVFUiLCJjaGFydE5hbWUiOiJjaGFydCIsInRvcCI6MH19LCJsaW5lV2lkdGgiOjIsInN PRODUCTION AND OPERATIONS MANAGEMENT 10 0cmlwZWRCYWNrZ3JvdWQiOnRydWUsImV2ZW50cyI6dHJ1ZSwiY29sb3IiOiIjMD A4MWYyIiwic2V0U3BhbiI6bnVsbCwic3ltYm9scyI6W3sic3ltYm9sIjoiTVRVIiwic3ltY m9sT2JqZWN0Ijp7InN5bWJvbCI6Ik1UVSJ9LCJwZXJpb2RpY2l0eSI6MSwiaW50ZXJ 2YWwiOiJkYXkiLCJ0aW1lVW5pdCI6bnVsbCwic2V0U3BhbiI6bnVsbH1dfQ%3D%3 D Yahoo Finance (2017). ICBC (1398.HK) HKSE - HKSE Delayed Price. Currency in HKD. Retrieved 2017. From https://finance.yahoo.com/quote/1398.HK/chart?p=1398.HK