Demand Forecasting

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Abhishek Mishra

Empresariales Tecnología

Demand Forecasting ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Opinion based or Experimental Methods ,[object Object],[object Object],[object Object],[object Object],[object Object]

Time Series Analysis ,[object Object],[object Object]

Trend Projection Graphic Statistical Seasonal curve fitting curve fitting variation

Graphic curve fitting: the trend is projected graphically

Statistical Curve Fitting ,[object Object],[object Object],[object Object],[object Object],[object Object]

Seasonal Variation in Time Series ,[object Object],[object Object]

Exponential Smoothing ,[object Object],[object Object],[object Object],[object Object],[object Object]

Barometric Forecasting ,[object Object],[object Object],[object Object]

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Forecasting BUS255 Goals By the end of this chapter, you should know: Importance of Forecasting Various Forecasting Techniques Choosing a Forecasting Method 2 Forecasting Forecasts are done to predict future events for planning Finance, human resources, marketing, operations, and supply chain managers need forecasts to plan Forecasts are made on many different variables Forecasts are important to managing both processes and managing supply chains 3 Key Decisions in Forecasting Deciding what to forecast Level of aggregation Units of measurement Choosing a forecasting system Choosing a forecasting technique 4 5 Forecasting Techniques Qualitative (Judgment) Methods Sales force Estimates Time-series Methods Naïve Method Causal Methods Executive Opinion Market Research Delphi Method Moving Averages Exponential Smoothing Regression Analysis Qualitative (Judgment) methods Salesforce estimates Executive opinion Market Research The Delphi Method Salesforce estimates: Forecasts derived from estimates provided by salesforce. Executive opinion: Method in which opinions, experience, and technical knowledge of one or more managers are summarized to arrive at a single forecast. Market research: A scientific study and analysis of data gathered from consumer surveys intended to learn consumer interest in a product or service. Delphi method: A process of gaining consensus from a group of experts while maintaining their anonymity. 6 Case Study Reference: Krajewski, Ritzman, Malhotra. (2010). Operations Management: Processes and Supply Chains, Ninth Edition. Pearson Prentice Hall. P. 42-43. 7 Case study questions What information system is used by UNILEVER to manage forecasts? What does UNILEVER do when statistical information is not useful for forecasting? What types of qualitative methods are used by UNILEVER? What were some suggestions provided to improve forecasting? 8 Causal methods – Linear Regression A dependent variable is related to one or more independent variables by a linear equation The independent variables are assumed to “cause” the results observed in the past Simple linear regression model assumes a straight line relationship 9 Causal methods – Linear Regression Y = a + bX where Y = dependent variable X = independent variable a = Y-intercept of the line b = slope of the line 10 Causal methods – Linear Regression Fit of the regression model Coefficient of determination Standard error of the estimate Please go to in-class exercise sheet Coefficient of determination: Also called r-squared. Measures the amount of variation in the dependent variable about its mean that is explained by the regression line. Range between 0 and 1. In general, larger values are better. Standard error of the estimate: Measures how closely the data on the dependent variable cluster around the regression line. Smaller values are better. 11 Time Series A time seri.

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