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Slides in student pack may differ from slides used in class Forecasting and Demand Management POM 522 copyright 2004 by Frank Montabon.

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Presentation on theme: "Slides in student pack may differ from slides used in class Forecasting and Demand Management POM 522 copyright 2004 by Frank Montabon."— Presentation transcript:

1 Slides in student pack may differ from slides used in class Forecasting and Demand Management POM 522 copyright 2004 by Frank Montabon

2 Slides in student pack may differ from slides used in class © 2004 by Frank Montabon2 Opening Thoughts

3 Slides in student pack may differ from slides used in class © 2004 by Frank Montabon3 Before we begin, what are we after? i.e., what do we want out of our forecast?

4 Slides in student pack may differ from slides used in class © 2004 by Frank Montabon4 Basic Forecasting Methods –What happens when you change the number of periods used? Moving Average Exponential Smoothing (16.4) ESF t =  (Actual Demand t ) + (1-  )ESF t-1 (16.6) What happens when you change  ? Trend Seasonal Trend + Seasonal

5 Slides in student pack may differ from slides used in class © 2004 by Frank Montabon5 Aggregating and Disaggregating Forecasts What is it? Which “end” is more accurate?

6 Slides in student pack may differ from slides used in class © 2004 by Frank Montabon6 Some measures of error

7 Slides in student pack may differ from slides used in class © 2004 by Frank Montabon7 Focusing/Averaging

8 Slides in student pack may differ from slides used in class © 2004 by Frank Montabon8 10 Myths of Forecasting from Jain, C. L., “What’s the Forecast?” APICS-the Performance Advantage, Oct Forecasts should be 100 percent accurate 2.The more sophisticated the model, the better 3.There is a magic model – it’s just a matter of finding it 4.Once the best model is discovered, it will work all the time 5.A well-trained forecaster can prepare a forecast without anyone’s help

9 Slides in student pack may differ from slides used in class © 2004 by Frank Montabon9 10 Myths of Forecasting from Jain, C. L., “What’s the Forecast?” APICS-the Performance Advantage, Oct Forecasting is a science 7.Separate forecasts should be prepared for each stockkeeping unit (SKU) 8.Accurate forecasts are the be all and end all of forecasting 9.Shipment forecasts drive business plans 10.To be a good forecaster, one must be a high-powered mathematician or statistician

10 Slides in student pack may differ from slides used in class © 2004 by Frank Montabon10 Demand Management Why?

11 Slides in student pack may differ from slides used in class © 2004 by Frank Montabon11 Demand Management as a Pipe of Capacity Adapted from VBWJ 5e, p. 25 OrdersKnowledgeForecast Capacity Time

12 Slides in student pack may differ from slides used in class © 2004 by Frank Montabon12 Organizing for Demand Management VBWJ -> unified organizational home for DM less important than integrated data base

13 Slides in student pack may differ from slides used in class © 2004 by Frank Montabon13 Using the System


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