Demand Forecast - ANSWER an estimate of demand expected over a future time
period
3 Uses for Forecasts - ANSWER next
1. Design the system - ANSWER - Long term (annual)
- Types of products and services to offer
2. Use of the system - ANSWER - Medium term (monthly)
- Inventory, workforce levels.
3. Schedule the system - ANSWER - short term (daily, weekly)
-production, purchasing, staff scheduling
Features common to all forecasts - ANSWER - assumes past->future (casual system)
-Forecasts rarely perfect
- Forecasts more accurate for groups vs individuals
- Forecast accuracy decreases as time horizon increases
Elements of a good forecast - ANSWER 1. timely
1
, 2. accurate (accuracy should be stated)
3. meaningful units (either in $ or units)
4. in writing (everyone has the same information)
5. simple to understand and use
6. cost effective (benefits should out weigh the costs)
Steps in the Forecasting Process - ANSWER 1. Determine the purpose of the forecast
2. Establish a time horizon
3. Obtain, clean, and analyze appropriate data
4. Select a forecasting technique
5. Make the forecast
6. Monitor the forecast errors
Approaches to Forecasting - ANSWER 1. Judgmental: -non-quantitative analysis of
subjective inputs
-considers information such as human factors
2. Quantitative: analyze hard data
a) time series models: historical patterns
b) Associative models: create equations to predict future
Judgmental Methods - ANSWER next
Executive Opinion - ANSWER a forecasting method in which the opinions, experience,
and technical knowledge of one or more managers are summarized to arrive at a single
forecast
Sales force opinions - ANSWER direct contact with customers
2
period
3 Uses for Forecasts - ANSWER next
1. Design the system - ANSWER - Long term (annual)
- Types of products and services to offer
2. Use of the system - ANSWER - Medium term (monthly)
- Inventory, workforce levels.
3. Schedule the system - ANSWER - short term (daily, weekly)
-production, purchasing, staff scheduling
Features common to all forecasts - ANSWER - assumes past->future (casual system)
-Forecasts rarely perfect
- Forecasts more accurate for groups vs individuals
- Forecast accuracy decreases as time horizon increases
Elements of a good forecast - ANSWER 1. timely
1
, 2. accurate (accuracy should be stated)
3. meaningful units (either in $ or units)
4. in writing (everyone has the same information)
5. simple to understand and use
6. cost effective (benefits should out weigh the costs)
Steps in the Forecasting Process - ANSWER 1. Determine the purpose of the forecast
2. Establish a time horizon
3. Obtain, clean, and analyze appropriate data
4. Select a forecasting technique
5. Make the forecast
6. Monitor the forecast errors
Approaches to Forecasting - ANSWER 1. Judgmental: -non-quantitative analysis of
subjective inputs
-considers information such as human factors
2. Quantitative: analyze hard data
a) time series models: historical patterns
b) Associative models: create equations to predict future
Judgmental Methods - ANSWER next
Executive Opinion - ANSWER a forecasting method in which the opinions, experience,
and technical knowledge of one or more managers are summarized to arrive at a single
forecast
Sales force opinions - ANSWER direct contact with customers
2
