Swimming Pool Shortage Stymies Aggregate Planners

August 19, 2020
Swimming Pool Shortage Stymies Aggregate Planners

Those looking for an above ground pool to keep the family swimming during the pandemic may be left high and dry till at least March of 2021.

Companies like Doughboy, whose above ground pools retail for between $5,000 to $19,000, faced production stoppages and materials shortages during the early months of the COVID-19 lockdown.  Now they are racing to keep up as more Americans than ever want the convenience of a backyard pool to stay cool and entertain the kids, and retailers have waitlists that stretch till spring of 2020.

Outdoor patio furniture companies have faced similar challenges.

Video Spotlight: Pool Shortage  (June 16, 2020, WCIA News)

This post is based on the Fox Business article, Swimming pool buyers beached by back orders through 2021, by Jeanette Settembre, August 1, 2020, and the YouTube video in the Spotlight. Image source: Ingram Publishing/SuperStock

Discussion Questions:

1.   In forecasting terms, what type of variation does the COVID-19 pandemic represent?

Guidance: No one could have envisioned the COVID-19 pandemic that hit in early 2020 or the lockdown that would follow.  As such, these are called “irregular variations” in time series analysis forecasting, Irregular variations have a particular, identifiable cause and do not normally occur.  When forecasting for the future, the data points associated with the irregular variation should be removed from the historical data when planning for the future if the forecaster does not expect them to occur again.

2. Why is it difficult for pool manufacturers and retail pool stores to forecast demand?

Guidance: Manufacturers and retailers must prepare forecasts months or even a year or more in advance in order to secure needed supplies of materials or finished products.  They had no idea that the pandemic would hit, and now, similarly, they are not sure how long it or the residual impacts will last.  One retailer, Berry Family Pools, reports having a wait list of 150 orders, which is double last summer’s numbers.  In addition, whereas it usually makes a million dollars in a year, it brought in that amount during just four months early on in the pandemic.

Will the fact that many people wanted pools this year mean that others will join the trend and try to buy them as well?  Conversely, might it mean that demand will be lower next year because so many people have already bought them?  Similarly, if people are able to travel next year, will pent up demand for travel mean less desire for at home recreation such as backyard pools?  Questions like this demonstrate the challenges forecasters have in these unusual times.

3. How do these issues relate to aggregate planning?

Guidance: Aggregate planning is intermediate range capacity planning, looking two to 18 months out into the future with the goal of roughly matching supply with demand on a month-by-month basis.  During this process, companies seek to find the best strategies and usage of workers, outsourcing, backorders, and other approaches to meet demand.

It will take many months for manufacturers to fill all the backorders currently in the system, and they will likely be trying to maximize their capacity in order to do that.  However, even if they can hire more workers, work additional hours, and/or acquire extra tools and equipment, their ability to make more pools can still be constrained by limited supplies.  In this case, pool manufacturers are awaiting supplies from companies in China and Canada who were also affected by the pandemic.


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