De La Salle University

Ramon V. Del Rosario College of Business

Web Business Research on Extrapolation Forecast

In Partial Fulfillment

of the Course Requirement in

Quantitative Methods for Decision Making - MSC530M

Submitted by:

Divino, Gel Ann

Fulgueras, Jayson

Merlan, Maria Sofia

Santiano, Ma. Cheleen

Submitted to:

Dr. Dennis L. Berino

April 25, 2022

FreshDirect is an online grocery shop that has offered the best fresh food since 2002. They provide
grocery delivery to the greater New York City, Philadelphia, and Washington, DC metropolitan areas, with
seasonal service to eastern Long Island and the Jersey Shore. The best in-season picks, local goods, and
chef-prepared meals are delivered to their home or office from their state-of-the-art facility in Bronx, New York.
The process of shipping of FreshDirect is from farm to warehouse to home and cutting the grocery
supply chain in half. Customers can shop online through their website or app, orders are prepared in their
state-of-the-art facility, and their refrigerated trucks will deliver the orders during the time slot that works for
them.
FreshDirect is just like a regular grocery store. The company sells everything from toilet paper and
toothpaste to produce, fresh meats, and prepared meals. On their selection, they have 65% of their products
that they consider fresh, like meat, seafood, deli, and ready meals from their kitchen. They source from over 100
partner farms across the world. FreshDirect has skilled merchants searching for the best fresh foods delivered to
the footstep of New Yorkers.

Problem & Quantitative Methodology

FreshDirect offers wide variety of products through online grocery shopping and delivers over 100,000
grocery orders straight to customers’ homes. At the height of the pandemic, the company saw an increase of
demand which the company moves 3,000,000 grocery items every week. The following are the biggest
challenges that should be addressed by FreshDirect: logistics, manpower, technology, lead time, quality control,
product wastage, and keeping up the supply with demand. FreshDirect has to redesign the warehouse space
according to the customers’ buying behavior so that there will be less movements within the warehouse. The
company has to hire additional 1,000 employees to match the spike in online grocery demand. They have to
invest in advanced technologies such as implementation of AI systems, temperature controls, and nine miles of
conveyor belt to cut out unnecessary steps in the normal grocery store supply chain. Investing in technologies
and ramping up the fleet of delivery trucks helped to be more efficient and decrease lead time. Since online
grocery demand has greatly increased during the pandemic, they have to enforce stronger control checks to
ensure the quality and freshness of the products.
One way to address these challenges is to implement a forecasting technique. FreshDirect may use
Extrapolation forecasting to project sales and demand in the future. This forecasting technique involves
historical trend analysis as more data and information are available with three years since the pandemic started.
It is important to note that Extrapolation forecasting is effective to use when data are constant, reliable, and no
major changes are expected considering other causal factors. The company predicts that better sales and
demand will continue, and this opened up more opportunities for online grocery as the pandemic changed
shopping behavior. Using Extrapolation as a forecasting technique will help the company to be more effective
and efficient, thus improving the whole supply chain system. The management may come up with better
decisions in resolving these challenges.
Benefits to the Organization
It is vital for businesses to keep the appropriate amount of product in hand. If you don’t have enough
supply, you’ll run out at inopportune times, causing customers to shop elsewhere. When you have too much, you
end up paying unnecessarily high storage and inventory management costs.
Forecasting will contribute to the creation of improved plans based on these well-informed projections,
allowing possible failures and losses to be avoided before they occur. In extrapolative forecasting, we
extrapolate a historical tendency to forecast the future. What has happened in the past has an impact on what
will happen in the future.
For example, with exploratory forecasting, FreshDirect will be able to create a plan to meet the demand
that will address the follow issues:
- Logistics/Lead Time - Forecasting will help to optimize the logistic operation by reducing the
fleet sizes, leasing, maintenance and storage costs, parking, and driver costs.
- Manpower - Forecasting will help to address the issue in manpower by allocating enough
employees during critical operations that will increase efficiency. This will also help to avoid
overstaffing which is an extra cost for the company.
- Product wastage/Quality Control - Forecasting demand allows you to maintain enough
merchandise on hand while avoiding wasting precious storage space on obsolete items.
Forecasting tools and models, on the other hand, are only meant to assist planners and managers in making
decisions. Having sufficient experience and knowledge of the business, together with several forecasting
models, allows for a more accurate and reliable judgment.

Ethical Considerations
Consumers always want the best quality of products especially when it comes to food. When buying
fresh fruits and vegetables, consumers choose those that have a good shape, texture and color, and a fresh
smell (Scott, n.d.). Online grocery stores like FreshDirect should ensure that the products that would be
delivered to the doorsteps of their customers are what they would have picked themselves in the supermarket.
Customers trust that they will get the products of excellent quality and they will get their money’s worth.
Businesses must meet this expectation to keep consumer trust and loyalty.
Buying grocery items is usually in bulk and is composed of multiple products altogether. Companies
need to check the completeness of every transaction. Consumers should be well informed if one or more items
ordered are not available. It is also vital to get the buyer’s consent if a brand of the same item will be replaced.
Companies’ commitment to delivering on a timely basis is also critical since the items being ordered are
necessities. Consumers expect that the promised delivery schedule will be followed and they must be informed
of any possible delays.
Lastly, since not all food items are sold before they rot or expire, companies may consider partnering
with local food banks to help people in need. This may form part of their Corporate Social Responsibility
activities. Those that are left and no longer qualified for donation, should be disposed of properly. Waste
management should be in place to reduce if not eliminate, the adverse impacts of waste materials on human
health and the environment (Leblanc, 2020).
References
About FreshDirect | Who We Are & What We Do. (n.d.). FreshDirect. Retrieved April 24, 2022, from
https://www.freshdirect.com/browse.jsp?id=about_overview

Glantz, M & Mun, J. (2011). Projections and Risk Assessment. ScienceDirect. Retrieved April 24, 2022, from
https://www.sciencedirect.com/topics/social-sciences/extrapolation

Scott, A. (n.d.) Selecting fresh fruits and vegetables. Texas A&M Agrilife Extension.
https://agrilifeextension.tamu.edu/library/health-nutrition/selecting-fresh-fruits-and-vegetables

Leblanc, R. (2020). An introduction to solid waste management. The Balance Small Business.
https://www.thebalancesmb.com/an-introduction-to-solid-waste-management-2878102