Exam 3 Outline SCM 303
Chapter 12
Demand Planning: Forecasting and demand management
Demand Planning- the combined process of forecasting and managing customer demands to create a planned pattern of demand that meets the firm’s operational and financial goals. Fluctuating customer demand cause operational inefficiencies, such as: Need for extra capacity resources, backlog, customer dissatisfaction, system buffering (safety stock, safety lead time, capacity cushions, etc.)
3 basics tactics to influence demand- influence the timing or quantity of demand through pricing changes or promotions. Managing the timing of order fulfillment. Encourage customers to shift their orders from one product to another, or from one service
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Moving average- a forecasting model that computes a forecast as the average of demands over a number of immediate past periods.
Figure 12-1 pg. 344 - Know the role that demand planning plays in operations management
Components of demand - patterns of demand over time.
Types of forecasting techniques- qualitative (judgment based) Quantitative (model-Based)
Factors affecting forecast error and accuracy- Time horizon, Level of detail – product, geography, time.
Exponential smoothing- a moving average approach that applies exponentially decreasing weights to each demand that occurred farther back in time.
Smoothing coefficient - a parameter indicating the weight given to the most recent demand.
Regressing analysis - a mathematical approach for fitting an equation to a set of data
Mean absolute deviation (MAD) – the average size of forecast errors, irrespective of their directions. Also called mean absolute error. Calculates forecast accuracy
Mean forecast error (MFE) - Calculates forecast bias
Postponable product- a product designed so that it can be configured to its final form quickly and inexpensively once actual customer demand is known.
Collaborative Planning, Forecasting and replenishment - a method by which supply chain partners periodically share forecasts, demand plans, and resource plans in order to reduce uncertainty and risk in meeting customer demand. Involves- Market planning-
It was unknown whether arrivals for customers both with and without bikes was stochastic or deterministic. Through a public database[3], the number of bikes and docks at all stations at present time of observation were available. The refresh rate of the database could not be determined. As such, all observations were made at a minimum of 10 minutes apart and saved for later comparison. The observational study was conducted over the course of February 2018. On weekdays only, the bike/dock data for each station in the city was collected every 10 minutes from 8am-11am, and 3pm-6pm. The goal of this observation scheduling was to observe the system state at the assumed peak usage
An organization will try to plan for vacancies and market fluctuations but derived demand can be difficult to plan for if you have a product or service that has very little discernible
* Customer demand: Rather than basing on history and forecast sale of its products, the company should pay more attention in analyzing some uncontrollable factors such as inflation, recession, and currency exchange rate which may affect customers’ buying behavior.
* Forecasting is an impartial strategic ingredient that will ensure apt base for reputable planning. Our forecast is always the first step in developing plans in running the business along with our future plans of growth strategies. With this tool, we are able to anticipate our sales within reason that then can allow for us to control our costs in conjunction with inventory which will then help us to enhance our customer service. Sales forecasting is a vital strategic tactic in our company’s methodology.
Linear regression is an approach for modeling the relationship between a scalar dependent variable Y and explanatory variables (or independent variables) denoted X. Function $f(X,W)=Y$ (shown below) can be learned to predict future values.
The first part of our analysis involved deriving an order policy from the forecasts provided in the sample problem. We solved this problem using simplifying assumptions and then relaxing some of
Forecasting is the methodology utilized in the translation of past experiences in an estimation of the future. The German market presents challenges for forecasting techniques especially for its retail segment. Commercially oriented organizations are used to help during forecasting as general works done by academic scientists are not easy to come across (Bonner, 2009).
I attended my second APICS Central Indiana Professional Development Meeting at Carmel on the 13th of March 2014. The keynote speaker was Bill Whiteside, who is a founder of Demand Solution Northeast, which markets and supports the Demand Solution suite of forecasting and supply chain management software in the Northeast US. He is a graduate of the University of Notre Dame and a professional member of APICS. At that dinner event, he presented twelve supply chain forecasting lesson from “The Signal and The Noise.”
To start with, the 1st model used is regression line method. According to this method, the technique fits a trend line to a series of historical data point and the projects the line into the future for medium to long range forecasts
But even this is not possible in case of a new product or innovation. A forecast of sales, demand, cash, requirements and several such business valuables are extremely essential for a business in order to be able to appropriately plan and conduct its operations in an effective and efficient manner. Yet, forecasts cannot be made accurately as there are several factors and changes in the current environment that leads to variations in forecasts and impacts or causes a manager to make changes in the forecasts.
Aggregate demand forecasting is used by the company because the business is centered around the custom printing of the
Predictions are an important component of determining the financial progress of a business. Business decisions rely on forecasting techniques to predict things such as price movements or overall success in markets. In the attempt to forecast market predictions, it must be assumed that future occurrences may be partly based on present and past data (Abu-Mostafa, Yaser S 1996). Further assumptions must be made to conclude that there is a predictable pattern in past data. There is evidence for both the idea that financial market forecasting is futile due to the unpredictable nature of finance, as well as for the idea that financial markets are predictable to an extent. The consequences of financial decision-making imply an inherent need for the use of forecasting tools in making predictions about future occurrences. The issue resides in the fact that there is an abundance of data and information that must be organized and interpreted. A number of techniques may be used to manage present and past data in order to create a forecast prediction, though with more research and trials, neural networks have been shown to be superior in performance.
Table of Contents Pillar #1: Go Beyond Simple Forecasting .....3 Pillar #2: Beat the “Devil in the Details” Using a Demand Aggregation Hierarchy........5 Pillar #3: Take Planner Productivity to the Next Level ............................................7 Pillar #4: Make Collaboration a Core Demand Planning Competency ......................8
This involves the knowledge and experience of the Demand Planners and people from Sales & Marketing. Their
Aggregate planning is the process of developing, analyzing, and maintaining a preliminary, approximate schedule of the overall operations of an organization. The aggregate plan generally contains targeted sales forecasts, production levels, inventory levels, and customer backlogs. This schedule is intended to satisfy the demand forecast at a minimum cost. Properly done,