Está en la página 1de 22

Forecasting

[ref. Chopra & Meindl pages 68 to 75]


Forecasting is a scientific method of determining

demand in future
Starting point for all strategic planning

Importance of strategy in spite of uncertainty in


future
6/2/2013 1

Logistical areas of production scheduling,


inventory control, and aggregate planning need

demand forecast

6/2/2013

Some characteristics of forecasts


Forecasts are almost always wrong

Forecasts are more accurate for groups or


families of items

motor cars and models


Aggregate forecasts are more accurate annual rainfall and daily rainfall
6/2/2013 3

Forecasts are more accurate for short periods


(tomorrow, next year)

Forecast should include an estimate of error


Forecasts are no substitutes for facts

6/2/2013

Components of forecast Past demand Planned advertising or marketing efforts Planned price discounts State of economy Competitors actions forecasters knowledge and judgment
6/2/2013 5

Major categories of forecasts (forecasting methods) Qualitative & quantitative forecasts Qualitative forecasting

Forecast is based on personal judgment Subjective (opinion based) can be obtained in less time
6/2/2013 6

When facts are unavailable for other methods Made for specific items based on aggregate
forecast for markets)

6/2/2013

Some qualitative methods of forecasting


Market surveys potential customers opinions

Delphi method
Panel consensus

Life cycle analogy


Informed judgment sales force

6/2/2013

Quantitative forecasting Fact based, scientific models Causal-Correlating demand to specific causal factors in environment. Estimate these causal factors and forecast demand. Ambient temperature and coffee consumption! Monsoon and rice

production!

6/2/2013

Econometric models-statistical analysis of


various sectors of economy

Input-output models

Examine flow of products and services for


markets and market segments

Generally used for project needs

6/2/2013

10

Simulation using computer simulation to simulate sectors of economy Time series 1. Regression analysis Statistical method Developing analytical relationship between two variables
6/2/2013 11

Using statistical tools on past data to identify


trend, under stable environmental situations and demand 2. Moving average method Simple moving average estimator decides the period over which average is taken. 3 months or so
6/2/2013 12

MONTHS JANUARY FEBRUARY MARCH APRIL

ACTUAL 4200 4300 4350 -

FORECAST 4283

6/2/2013

13

Weighted moving average


MONTHS JANUARY FEBRUARY WEIGHTS 2 3 SALES 4200 4300 WEIGHTED SALES 8400 12,900

MARCH
TOTAL

5
10

4350

21,750
43050

Weighted forecast for April = 4305


6/2/2013 14

Major factors that influence demand forecast:

Demand and promotions


-one product stealing demand of another product

(tooth powder and tooth paste, motor car and


motorbikes)

6/2/2013

15

Lead times
-forecast methods need to be more accurate

(sophisticated) if lead times are longer, as


forecasts tend to become weak for a long span of

time. If supply sources are available with short


lead times, forecast methods need not be very

accurate (sophisticated)
6/2/2013 16

Influence of product variants on each other


is to be judged and if required joint forecast may

be made
Full shirts and half shirts, shirts and T-shirts,

different models of same product

6/2/2013

17

Appropriate technique for forecast

Take the dimensions of forecast into account to


determine forecasting method. These dimensions

are
geographical area

product groups
customer groups
6/2/2013 18

Take criteria into account


accuracy

time horizon
data availability experience of the forecaster

6/2/2013

19

Establish performance and error measures to


use forecast accurately:

Lead time as a performance measure. Forecast


accuracy is required to be highest at the end of this

lead-time.
Difference between forecast and actual should be measured for estimating error.
6/2/2013 20

Forecast Approaches Top-Down Approach (decomposition approach)

A national level forecast for SKU of company performance pattern of locations in the past forecast for various locations demand is assumed to be uniform across the
national market
6/2/2013 21

Bottom-Up Approach (decentralized approach)

Forecast for individual locations

Cumulative forecast for company at national


level

6/2/2013

22