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  • Operations & Supply Planning: Demand Forecasting

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    Sowmya Namburu
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    This document appears to be from a presentation on demand forecasting. It discusses key topics like the role of an operations manager in matching supply and demand. It also covers characteristics of demand and forecasting, including why forecasting is important. Different forecasting methods are described, like subjective forecasts using sales force composites or customer surveys. Objective methods like extrapolative time series models and causal models are also mentioned. Common biases in subjective forecasting are listed. The presentation emphasizes understanding demand and reducing uncertainty in forecasts.

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    this is the pdf for forecasting in operational management.

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    2 Forecasting

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    This document appears to be from a presentation on demand forecasting. It discusses key topics like the role of an operations manager in matching supply and demand. It also covers characteristics of demand and forecasting, including why forecasting is important. Different forecasting methods are described, like subjective forecasts using sales force composites or customer surveys. Objective methods like extrapolative time series models and causal models are also mentioned. Common biases in subjective forecasting are listed. The presentation emphasizes understanding demand and reducing uncertainty in forecasts.

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    © All Rights Reserved
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    21 views9 pages

    Operations & Supply Planning: Demand Forecasting

    Uploaded by

    Sowmya Namburu
    This document appears to be from a presentation on demand forecasting. It discusses key topics like the role of an operations manager in matching supply and demand. It also covers characteristics of demand and forecasting, including why forecasting is important. Different forecasting methods are described, like subjective forecasts using sales force composites or customer surveys. Objective methods like extrapolative time series models and causal models are also mentioned. Common biases in subjective forecasting are listed. The presentation emphasizes understanding demand and reducing uncertainty in forecasts.

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    of 9

    9/20/2017

    Operations & Supply Planning


    PGDM 2017-19

    Demand Forecasting

    Vinay Kumar Kalakbandi


    Assistant Professor
    Operations Management

    Opening question
    What is the key role of an operations
    manager?

    Making the right product/service


    available at the right place at the
    right time for the right customer at
    the right price
    9/20/2017 2

    1
    9/20/2017

    Matching Supply with Demand

    9/20/2017 3

    Understanding demand!

    9/20/2017 4

    2
    9/20/2017

    Lets talk about Demand


    What are the characteristics of demand?
    Demand is not the same as sales.
    Its random and uncertain
    Depends several factors
    Time of the year
    Economic environment
    Weather
    Price fluctuation upward or downward
    Sales Promotion
    Other product demand
    9/20/2017 5

    Uncertain Demand

    9/20/2017 6

    3
    9/20/2017

    What is forecasting?

    Predicting the future based on past data!!


    9/20/2017 7

    Questions to ponder
    Why forecast?
    Its expensive not to. Why?
    What to forecast?
    Level of aggregation.
    What use is a forecast to you?
    How to forecast?
    What methodology are you going to follow?
    What data do you need?
    9/20/2017 8

    4
    9/20/2017

    Characteristics of good forecasts


    Good forecasts
    Would have to suggest specific actions
    Would have to be better than a guess
    They are almost always wrong
    And should always be coupled by an error
    measure

    9/20/2017 9

    Characteristic of a good forecast

    9/20/2017 10

    5
    9/20/2017

    Ways to reduce uncertainty of


    forecasts
    Collect more data
    When possible, do aggregate forecasts
    Aggregate forecasts have lesser error than
    disaggregate forecasts
    Keep updating previous forecasts based on
    new information
    Forecasts made farther out into the future are less
    accurate

    9/20/2017 11

    Forecasts made farther out into the


    future are less accurate

    9/20/2017 12

    6
    9/20/2017

    Forecasting time horizon


    New Product Introduction
    Long Strategic Facilities location decisions
    Decisions
    Term 5-10 years New business development

    Medium Tactical
    12-18 months
    Annual Production Planning
    Capacity augmentation
    Term Seasonal and
    cyclical effects

    Short Operational
    1-3 months

    Revising quarterly production plans Term Mostly


    quantitative
    Rescheduling supply of raw materials
    9/20/2017 13

    Subjective Forecasts
    Sales force composites
    Salesforce provides optimistic, pessimistic and
    most likely forecasts
    Jury of executive opinions
    Top executives from different functional areas
    Customer surveys
    Select a sample population of customers
    The Delphi method
    9/20/2017 14

    7
    9/20/2017

    Subjective forecasts
    Form group of experts anonymous
    Send questionnaires
    Collect and tabulate findings
    Redistribute and seek justification of outer
    quartiles
    Re-collect and tabulate findings
    Repeat until consensus is reached

    9/20/2017 15

    Common biases in subjective


    forecasting
    Inconsistency
    Applying different decision criteria in similar
    situations
    Conservatism; Recency
    Anchoring; Confirmation bias
    Uncertainty underestimation
    Reputation effect

    9/20/2017 16

    8
    9/20/2017

    Objective forecasting methods


    Extrapolative methods or time series models
    Using past data of same metric to predict future
    Causal models
    Using cause effect relationship

    9/20/2017 17

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