BUAD 332 Exam 4 - Forecasting and S&OP Questions with complete Solutions!!

Forecast - an educated guess or prediction of what might happen in the future you can count on it being wrong! S&OP - Sales and Operations Planning - goal is to balance supply and demand Capacity Forecast - What are we capable of producing? A GUESS - RISK! Demand Forecast - A projection into the future of expected demand, given a stated set of assumptions RISK! Demand - what customers would buy if they could - UNCONSTRAINED DEMAND AKA Not constrained by our ability to supply Plans - managerial actions that result from the demand/supply integration process supply plans, inventory plans, demand plans, financial plans Assumptions we make when making a demand forecast are... - pricing and promotional activities The forecasting level - At what level of granularity is your forecast expressed?Product forecast - beer Brand forecast - bud lite SKU forecast - bud light 6 pack long neck The forecasting time horizon - How far out into the future are you forecasting demand? Next month, quarter, two years (farther you go the more inaccurate) Forecasting time interval - How frequently do you update your forecast? Which forecasting level is the LEAST accurate? - The SKU forecast because it has the most variance in purchasing behavior/likelihood Nature of the business determines the nature of the process. - Nature of customer base Nature of data Nature of products Nature of people Nature of customer base - narrow? - could go talk to them! broad? - might have to look at past data regional differences? Nature of data - age? detail? quality? Nature of products - -New Products? - really hard to forecast -Seasonal Demand? -Shelf-life? -Project-based Business?