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Slides prepared by John Loucks

2002 South-Western/Thomson Learning TM

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Chapter 3

Demand Forecasting

Overview

Introduction Qualitative Forecasting Methods Quantitative Forecasting Models How to Have a Successful Forecasting System Computer Software for Forecasting Forecasting in Small Businesses and Start-Up Ventures Wrap-Up: What World-Class Producers Do

Demand Management

Independent demand items are the only items demand for which needs to be forecast These items include:

Finished goods and Spare parts

Demand Management

Independent Demand
(finished goods and spare parts)

Dependent Demand
(components)

B(4)

C(2)

D(2)

E(1)

D(3)

F(2)

Demand Management

The importance of forecasting in OM

Introduction

Demand estimates for products and services are the starting point for all the other planning in operations management. Management teams develop sales forecasts based in part on demand estimates. The sales forecasts become inputs to both business strategy and production resource forecasts.

Forecasting is an Integral Part of Business Planning


Inputs: Market, Economic, Other Forecast Method(s) Demand Estimates

Sales Forecast

Management Team

Business Strategy

Production Resource Forecasts


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Some Reasons Why Forecasting is Essential in OM

New Facility Planning It can take 5 years to design and build a new factory or design and implement a new production process. Production Planning Demand for products vary from month to month and it can take several months to change the capacities of production processes. Workforce Scheduling Demand for services (and the necessary staffing) can vary from hour to hour and employees weekly work schedules must be developed in advance.
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Examples of Production Resource Forecasts


Forecast Horizon
Long-Range

Time Span

Item Being Forecast


Product lines Factory capacities Planning for new products Capital expenditures Facility location or expansion R&D Product groups Department capacities Sales planning Production planning and budgeting

Units of Measure
Dollars, tons, etc.

Years

MediumRange

Months

Dollars, tons, etc.

Short-Range

Weeks

Specific product quantities Machine capacities Planning Purchasing Scheduling Workforce levels Production levels Job assignments

Physical units of products

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Forecasting Methods

Qualitative Approaches Quantitative Approaches

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Qualitative Approaches

Usually based on judgments about causal factors that underlie the demand of particular products or services Do not require a demand history for the product or service, therefore are useful for new products/services Approaches vary in sophistication from scientifically conducted surveys to intuitive hunches about future events The approach/method that is appropriate depends on a products life cycle stage
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Qualitative Methods

Educated guess intuitive hunches Executive committee consensus Delphi method Survey of sales force Survey of customers Historical analogy Market research scientifically conducted surveys

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Qualitative Forecasting Applications


Small and Large Firms

Technique
Managers Opinion Executives Opinion Sales Force Composite Number of Firms

Low Sales
(less than $100M)

High Sales
(more than $500M)

40.7% 40.7% 29.6% 27

39.6% 41.6% 35.4% 48

Source: Nada Sanders and Karl Mandrodt (1994) Practitioners Continue to Rely on Judgmental Forecasting Methods Instead of Quantitative Methods, Interfaces, vol. 24, no. 2, pp. 92-100. Note: More than one response was permitted.

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Quantitative Forecasting Approaches

Based on the assumption that the forces that generated the past demand will generate the future demand, i.e., history will tend to repeat itself Analysis of the past demand pattern provides a good basis for forecasting future demand Majority of quantitative approaches fall in the category of time series analysis

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Quantitative Forecasting Applications


Small and Large Firms

Technique
Moving Average Simple Linear Regression

Low Sales
(less than $100M) 29.6% 14.8%

High Sales
(more than $500M) 29.2 14.6

Naive
Single Exponential Smoothing Multiple Regression Simulation Classical Decomposition Box-Jenkins Number of Firms

18.5%
14.8% 22.2% 3.7% 3.7% 3.7% 27

14.6
20.8 27.1 10.4 8.3 6.3 48

Source: Nada Sanders and Karl Mandrodt (1994) Practitioners Continue to Rely on Judgmental Forecasting Methods Instead of Quantitative Methods, Interfaces, vol. 24, no. 2, pp. 92-100. Note: More than one response was permitted.

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Time Series Analysis

A time series is a set of numbers where the order or sequence of the numbers is important, e.g., historical demand Analysis of the time series identifies patterns Once the patterns are identified, they can be used to develop a forecast

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Components of Time Series

Trends are noted by an upward or downward sloping line Seasonality is a data pattern that repeats itself over the period of one year or less Cycle is a data pattern that repeats itself... may take years Irregular variations are jumps in the level of the series due to extraordinary events Random fluctuation from random variation or unexplained causes
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Seasonal Patterns
Length of Time Before Pattern Is Repeated Year Year Year Month Week Number of Seasons in Pattern 4 12 52 28-31 7
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Length of Season Quarter Month Week Day Day

Quantitative Forecasting Approaches


Linear Regression Simple Moving Average Weighted Moving Average Exponential Smoothing (exponentially weighted moving average) Exponential Smoothing with Trend (double exponential smoothing)

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Long-Range Forecasts

Time spans usually greater than one year Necessary to support strategic decisions about planning products, processes, and facilities

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Simple Linear Regression

Linear regression analysis establishes a relationship between a dependent variable and one or more independent variables. In simple linear regression analysis there is only one independent variable. If the data is a time series, the independent variable is the time period. The dependent variable is whatever we wish to forecast.
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Simple Linear Regression

Regression Equation This model is of the form: Y = a + bX Y = dependent variable X = independent variable a = y-axis intercept b = slope of regression line

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Simple Linear Regression

Constants a and b The constants a and b are computed using the following equations:
a= x2 y- x xy n x2 -( x)2 n xy- x y n x2 -( x)2

b=

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Simple Linear Regression

Once the a and b values are computed, a future value of X can be entered into the regression equation and a corresponding value of Y (the forecast) can be calculated.

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Example: College Enrollment

Simple Linear Regression At a small regional college enrollments have grown steadily over the past six years, as evidenced below. Use time series regression to forecast the student enrollments for the next three years. Year 1 2 3

Students Enrolled (1000s) 2.5 2.8 2.9

Year 4 5 6

Students Enrolled (1000s) 3.2 3.3 3.4


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Example: College Enrollment

Simple Linear Regression x y x2 1 2.5 1 2 2.8 4 3 2.9 9 4 3.2 16 5 3.3 25 6 3.4 36 Sx=21 Sy=18.1 Sx2=91 xy 2.5 5.6 8.7 12.8 16.5 20.4 Sxy=66.5
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Example: College Enrollment

Simple Linear Regression


91(18.1) 21(66.5) a 2.387 2 6(91) (21)
6(66.5) 21(18.1) b 0.180 105

Y = 2.387 + 0.180X

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Example: College Enrollment

Simple Linear Regression Y7 = 2.387 + 0.180(7) = 3.65 or 3,650 students Y8 = 2.387 + 0.180(8) = 3.83 or 3,830 students Y9 = 2.387 + 0.180(9) = 4.01 or 4,010 students Note: Enrollment is expected to increase by 180 students per year.

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Simple Linear Regression

Simple linear regression can also be used when the independent variable X represents a variable other than time. In this case, linear regression is representative of a class of forecasting models called causal forecasting models.

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Example: Railroad Products Co.

Simple Linear Regression Causal Model The manager of RPC wants to project the firms sales for the next 3 years. He knows that RPCs longrange sales are tied very closely to national freight car loadings. On the next slide are 7 years of relevant historical data. Develop a simple linear regression model between RPC sales and national freight car loadings. Forecast RPC sales for the next 3 years, given that the rail industry estimates car loadings of 250, 270, and 300 million.
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Example: Railroad Products Co.

Simple Linear Regression Causal Model Year 1 2 3 4 5 6 7 RPC Sales ($millions) 9.5 11.0 12.0 12.5 14.0 16.0 18.0 Car Loadings (millions) 120 135 130 150 170 190 220
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Example: Railroad Products Co.

Simple Linear Regression Causal Model x 120 135 130 150 170 190 220 1,115 y 9.5 11.0 12.0 12.5 14.0 16.0 18.0 93.0 x2 14,400 18,225 16,900 22,500 28,900 36,100 48,400 185,425 xy 1,140 1,485 1,560 1,875 2,380 3,040 3,960 15,440
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Example: Railroad Products Co.

Simple Linear Regression Causal Model


185, 425(93) 1,115(15, 440) a 0.528 2 7(185, 425) (1,115)
7(15, 440) 1,115(93) b 0.0801 2 7(185, 425) (1,115)

Y = 0.528 + 0.0801X

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Example: Railroad Products Co.

Simple Linear Regression Causal Model Y8 = 0.528 + 0.0801(250) = $20.55 million Y9 = 0.528 + 0.0801(270) = $22.16 million Y10 = 0.528 + 0.0801(300) = $24.56 million Note: RPC sales are expected to increase by $80,100 for each additional million national freight car loadings.

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Multiple Regression Analysis

Multiple regression analysis is used when there are two or more independent variables. An example of a multiple regression equation is: Y = 50.0 + 0.05X1 + 0.10X2 0.03X3 where: Y = firms annual sales ($millions) X1 = industry sales ($millions) X2 = regional per capita income ($thousands) X3 = regional per capita debt ($thousands)
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Coefficient of Correlation (r)

The coefficient of correlation, r, explains the relative importance of the relationship between x and y. The sign of r shows the direction of the relationship. The absolute value of r shows the strength of the relationship. The sign of r is always the same as the sign of b. r can take on any value between 1 and +1.

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Coefficient of Correlation (r)

Meanings of several values of r: -1 a perfect negative relationship (as x goes up, y goes down by one unit, and vice versa) +1 a perfect positive relationship (as x goes up, y goes up by one unit, and vice versa) 0 no relationship exists between x and y +0.3 a weak positive relationship -0.8 a strong negative relationship

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Coefficient of Correlation (r)

r is computed by:
r n xy x y

n x 2 ( x )2 n y 2 ( y )2

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Coefficient of Determination (r2)

The coefficient of determination, r2, is the square of the coefficient of correlation. The modification of r to r2 allows us to shift from subjective measures of relationship to a more specific measure. r2 is determined by the ratio of explained variation to total variation:
r2 (Y y )2 ( y y )2

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Example: Railroad Products Co.

Coefficient of Correlation x 120 135 130 150 170 190 220 y 9.5 11.0 12.0 12.5 14.0 16.0 18.0 x2 14,400 18,225 16,900 22,500 28,900 36,100 48,400 xy 1,140 1,485 1,560 1,875 2,380 3,040 3,960 y2 90.25 121.00 144.00 156.25 196.00 256.00 324.00
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1,115 93.0 185,425 15,440 1,287.50

Example: Railroad Products Co.

Coefficient of Correlation

7(15, 440) 1,115(93) 7(185, 425) (1,115)2 7(1,287.5) (93)2


r = .9829

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Example: Railroad Products Co.

Coefficient of Determination r2 = (.9829)2 = .966 96.6% of the variation in RPC sales is explained by national freight car loadings.

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Ranging Forecasts

Forecasts for future periods are only estimates and are subject to error. One way to deal with uncertainty is to develop bestestimate forecasts and the ranges within which the actual data are likely to fall. The ranges of a forecast are defined by the upper and lower limits of a confidence interval.

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Ranging Forecasts

The ranges or limits of a forecast are estimated by: Upper limit = Y + t(syx) Lower limit = Y - t(syx) where: Y = best-estimate forecast t = number of standard deviations from the mean of the distribution to provide a given probability of exceeding the limits through chance syx = standard error of the forecast

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Ranging Forecasts

The standard error (deviation) of the forecast is computed as:

s yx =

y 2 - a y - b xy n-2

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Example: Railroad Products Co.

Ranging Forecasts Recall that linear regression analysis provided a forecast of annual sales for RPC in year 8 equal to $20.55 million. Set the limits (ranges) of the forecast so that there is only a 5 percent probability of exceeding the limits by chance.

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Example: Railroad Products Co.

Ranging Forecasts Step 1: Compute the standard error of the forecasts, syx.

1287.5 .528(93) .0801(15, 440) syx .5748 72 Step 2: Determine the appropriate value for t.
n = 7, so degrees of freedom = n 2 = 5. Area in upper tail = .05/2 = .025 Appendix B, Table 2 shows t = 2.571.
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Example: Railroad Products Co.

Ranging Forecasts Step 3: Compute upper and lower limits.

Upper limit = 20.55 + 2.571(.5748) = 20.55 + 1.478 = 22.028 Lower limit = 20.55 - 2.571(.5748) = 20.55 - 1.478 = 19.072 We are 95% confident the actual sales for year 8 will be between $19.072 and $22.028 million.
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Seasonalized Time Series Regression Analysis


Select a representative historical data set. Develop a seasonal index for each season. Use the seasonal indexes to deseasonalize the data. Perform linear regression analysis on the deseasonalized data. Use the regression equation to compute the forecasts. Use the seasonal indexes to reapply the seasonal patterns to the forecasts.

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Example: Computer Products Corp.

Seasonalized Times Series Regression Analysis An analyst at CPC wants to develop next years quarterly forecasts of sales revenue for CPCs line of Epsilon Computers. She believes that the most recent 8 quarters of sales (shown on the next slide) are representative of next years sales.

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Example: Computer Products Corp.

Seasonalized Times Series Regression Analysis Representative Historical Data Set

Year Qtr. ($mil.) 1 1 1 1 1 2 3 4 7.4 6.5 4.9 16.1

Year Qtr. ($mil.) 2 2 2 2 1 2 3 4 8.3 7.4 5.4 18.0

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Example: Computer Products Corp.

Seasonalized Times Series Regression Analysis Compute the Seasonal Indexes

Year 1 2 Totals Qtr. Avg. Seas.Ind.

Quarterly Sales Q1 Q2 Q3 Q4 Total 7.4 6.5 4.9 16.1 34.9 8.3 7.4 5.4 18.0 39.1 15.7 13.9 10.3 34.1 74.0 7.85 6.95 5.15 17.05 9.25 .849 .751 .557 1.843 4.000
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Example: Computer Products Corp.

Seasonalized Times Series Regression Analysis Deseasonalize the Data

Year 1 2

Q1 8.72 9.78

Quarterly Sales Q2 Q3 8.66 8.80 9.85 9.69

Q4 8.74 9.77

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Example: Computer Products Corp.

Seasonalized Times Series Regression Analysis Perform Regression on Deseasonalized Data

Yr. 1 1 1 1 2 2 2 2

Qtr. 1 2 3 4 1 2 3 4 Totals

x 1 2 3 4 5 6 7 8 36

y 8.72 8.66 8.80 8.74 9.78 9.85 9.69 9.77 74.01

x2 1 4 9 16 25 36 49 64 204

xy 8.72 17.32 26.40 34.96 48.90 59.10 67.83 78.16 341.39


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Example: Computer Products Corp.

Seasonalized Times Series Regression Analysis Perform Regression on Deseasonalized Data

204(74.01) 36(341.39) a 8.357 2 8(204) (36)


8(341.39) 36(74.01) b 0.199 2 8(204) (36)

Y = 8.357 + 0.199X

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Example: Computer Products Corp.

Seasonalized Times Series Regression Analysis Compute the Deseasonalized Forecasts

Y9 Y10 Y11 Y12

= 8.357 + 0.199(9) = 10.148 = 8.357 + 0.199(10) = 10.347 = 8.357 + 0.199(11) = 10.546 = 8.357 + 0.199(12) = 10.745

Note: Average sales are expected to increase by .199 million (about $200,000) per quarter.
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Example: Computer Products Corp.

Seasonalized Times Series Regression Analysis Seasonalize the Forecasts

Seas. Yr. Qtr. Index

Deseas. Forecast

Seas. Forecast

3 3 3 3

1 2 3 4

.849 .751 .557 1.843

10.148 10.347 10.546 10.745

8.62 7.77 5.87 19.80


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Short-Range Forecasts

Time spans ranging from a few days to a few weeks Cycles, seasonality, and trend may have little effect Random fluctuation is main data component

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Evaluating Forecast-Model Performance


Short-range forecasting models are evaluated on the basis of three characteristics: Impulse response Noise-dampening ability Accuracy

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Evaluating Forecast-Model Performance

Impulse Response and Noise-Dampening Ability If forecasts have little period-to-period fluctuation, they are said to be noise dampening. Forecasts that respond quickly to changes in data are said to have a high impulse response. A forecast system that responds quickly to data changes necessarily picks up a great deal of random fluctuation (noise). Hence, there is a trade-off between high impulse response and high noise dampening.

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Evaluating Forecast-Model Performance

Accuracy Accuracy is the typical criterion for judging the performance of a forecasting approach Accuracy is how well the forecasted values match the actual values

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Monitoring Accuracy

Accuracy of a forecasting approach needs to be monitored to assess the confidence you can have in its forecasts and changes in the market may require reevaluation of the approach Accuracy can be measured in several ways Standard error of the forecast (covered earlier) Mean absolute deviation (MAD) Mean squared error (MSE)

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Monitoring Accuracy

Mean Absolute Deviation (MAD)

Sum of absolute deviation for n periods MAD = n

MAD =

Actual demand -Forecast demand


i=1 i

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Monitoring Accuracy

Mean Squared Error (MSE) MSE = (Syx)2 A small value for Syx means data points are tightly grouped around the line and error range is small. When the forecast errors are normally distributed, the values of MAD and syx are related:

MSE = 1.25(MAD)
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Short-Range Forecasting Methods


(Simple) Moving Average Weighted Moving Average Exponential Smoothing Exponential Smoothing with Trend

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Simple Moving Average


An averaging period (AP) is given or selected The forecast for the next period is the arithmetic average of the AP most recent actual demands It is called a simple average because each period used to compute the average is equally weighted . . . more

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Simple Moving Average

It is called moving because as new demand data becomes available, the oldest data is not used By increasing the AP, the forecast is less responsive to fluctuations in demand (low impulse response and high noise dampening) By decreasing the AP, the forecast is more responsive to fluctuations in demand (high impulse response and low noise dampening)

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Weighted Moving Average

This is a variation on the simple moving average where the weights used to compute the average are not equal. This allows more recent demand data to have a greater effect on the moving average, therefore the forecast. . . . more

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Weighted Moving Average

The weights must add to 1.0 and generally decrease in value with the age of the data. The distribution of the weights determine the impulse response of the forecast.

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Exponential Smoothing

The weights used to compute the forecast (moving average) are exponentially distributed. The forecast is the sum of the old forecast and a portion (a) of the forecast error (A t-1 - Ft-1). Ft = Ft-1 + a(A t-1 - Ft-1)

. . . more

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Exponential Smoothing

The smoothing constant, a, must be between 0.0 and 1.0. A large a provides a high impulse response forecast. A small a provides a low impulse response forecast.

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Example: Central Call Center

Moving Average CCC wishes to forecast the number of incoming calls it receives in a day from the customers of one of its clients, BMI. CCC schedules the appropriate number of telephone operators based on projected call volumes. CCC believes that the most recent 12 days of call volumes (shown on the next slide) are representative of the near future call volumes.

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Example: Central Call Center

Moving Average Representative Historical Data

Day 1 2 3 4 5 6

Calls 159 217 186 161 173 157

Day 7 8 9 10 11 12

Calls 203 195 188 168 198 159


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Example: Central Call Center

Moving Average Use the moving average method with an AP = 3 days to develop a forecast of the call volume in Day 13. F13 = (168 + 198 + 159)/3 = 175.0 calls

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Example: Central Call Center

Weighted Moving Average Use the weighted moving average method with an AP = 3 days and weights of .1 (for oldest datum), .3, and .6 to develop a forecast of the call volume in Day 13.

F13 = .1(168) + .3(198) + .6(159) = 171.6 calls


Note: The WMA forecast is lower than the MA forecast because Day 13s relatively low call volume carries almost twice as much weight in the WMA (.60) as it does in the MA (.33).
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Example: Central Call Center

Exponential Smoothing If a smoothing constant value of .25 is used and the exponential smoothing forecast for Day 11 was 180.76 calls, what is the exponential smoothing forecast for Day 13?

F12 = 180.76 + .25(198 180.76) = 185.07 F13 = 185.07 + .25(159 185.07) = 178.55

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Example: Central Call Center

Forecast Accuracy - MAD Which forecasting method (the AP = 3 moving average or the a = .25 exponential smoothing) is preferred, based on the MAD over the most recent 9 days? (Assume that the exponential smoothing forecast for Day 3 is the same as the actual call volume.)

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Example: Central Call Center


Day Calls 4 161 5 173 6 157 7 203 8 195 9 188 10 168 11 198 12 159 MAD AP = 3 Forec. |Error| 187.3 26.3 188.0 15.0 173.3 16.3 163.7 39.3 177.7 17.3 185.0 3.0 195.3 27.3 183.7 14.3 184.7 25.7 20.5

a = .25
Forec. 186.0 179.8 178.1 172.8 180.4 184.0 185.0 180.8 185.1 |Error| 25.0 6.8 21.1 30.2 14.6 4.0 17.0 17.2 26.1 18.0
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Exponential Smoothing with Trend

As we move toward medium-range forecasts, trend becomes more important. Incorporating a trend component into exponentially smoothed forecasts is called double exponential smoothing. The estimate for the average and the estimate for the trend are both smoothed.

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Exponential Smoothing with Trend

Model Form FTt = St-1 + Tt-1 where: FTt = forecast with trend in period t St-1 = smoothed forecast (average) in period t-1 Tt-1 = smoothed trend estimate in period t-1

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Exponential Smoothing with Trend

Smoothing the Average St = FTt + a (At FTt)

Smoothing the Trend Tt = Tt-1 + b (FTt FTt-1 - Tt-1) where:

a = smoothing constant for the average b = smoothing constant for the trend

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Criteria for Selecting a Forecasting Method


Cost Accuracy Data available Time span Nature of products and services Impulse response and noise dampening

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Criteria for Selecting a Forecasting Method

Cost and Accuracy There is a trade-off between cost and accuracy; generally, more forecast accuracy can be obtained at a cost. High-accuracy approaches have disadvantages: Use more data Data are ordinarily more difficult to obtain The models are more costly to design, implement, and operate Take longer to use

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Criteria for Selecting a Forecasting Method

Cost and Accuracy Low/Moderate-Cost Approaches statistical models, historical analogies, executive-committee consensus High-Cost Approaches complex econometric models, Delphi, and market research

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Criteria for Selecting a Forecasting Method

Data Available Is the necessary data available or can it be economically obtained? If the need is to forecast sales of a new product, then a customer survey may not be practical; instead, historical analogy or market research may have to be used.

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Criteria for Selecting a Forecasting Method

Time Span What operations resource is being forecast and for what purpose? Short-term staffing needs might best be forecast with moving average or exponential smoothing models. Long-term factory capacity needs might best be predicted with regression or executive-committee consensus methods.

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Criteria for Selecting a Forecasting Method

Nature of Products and Services Is the product/service high cost or high volume? Where is the product/service in its life cycle? Does the product/service have seasonal demand fluctuations?

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Criteria for Selecting a Forecasting Method

Impulse Response and Noise Dampening An appropriate balance must be achieved between: How responsive we want the forecasting model to be to changes in the actual demand data Our desire to suppress undesirable chance variation or noise in the demand data

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Reasons for Ineffective Forecasting


Not involving a broad cross section of people Not recognizing that forecasting is integral to business planning Not recognizing that forecasts will always be wrong Not forecasting the right things Not selecting an appropriate forecasting method Not tracking the accuracy of the forecasting models

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Monitoring and Controlling a Forecasting Model

Tracking Signal (TS) The TS measures the cumulative forecast error over n periods in terms of MAD

MAD If the forecasting model is performing well, the TS should be around zero The TS indicates the direction of the forecasting error; if the TS is positive -- increase the forecasts, if the TS is negative -- decrease the forecasts.
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TS =

(Actual demand
i 1

- Forecast demandi )

Monitoring and Controlling a Forecasting Model

Tracking Signal The value of the TS can be used to automatically trigger new parameter values of a model, thereby correcting model performance. If the limits are set too narrow, the parameter values will be changed too often. If the limits are set too wide, the parameter values will not be changed often enough and accuracy will suffer.

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Tracking Signal: What do you notice?

40 35
Sales

30 25 20 0 1 2 3 4 5 6 7 8 9 10 11 Period

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Computer Software for Forecasting

Examples of computer software with forecasting capabilities Forecast Pro Primarily for Autobox forecasting SmartForecasts for Windows SAS Have SPSS Forecasting SAP modules POM Software Library

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Forecasting in Small Businesses and Start-Up Ventures

Forecasting for these businesses can be difficult for the following reasons: Not enough personnel with the time to forecast Personnel lack the necessary skills to develop good forecasts Such businesses are not data-rich environments Forecasting for new products/services is always difficult, even for the experienced forecaster

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Sources of Forecasting Data and Help

Government agencies at the local, regional, state, and federal levels Industry associations Consulting companies

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Some Specific Forecasting Data


Consumer Confidence Index Consumer Price Index (CPI) Gross Domestic Product (GDP) Housing Starts Index of Leading Economic Indicators Personal Income and Consumption Producer Price Index (PPI) Purchasing Managers Index Retail Sales
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Wrap-Up: World-Class Practice

Predisposed to have effective methods of forecasting because they have exceptional long-range business planning Formal forecasting effort Develop methods to monitor the performance of their forecasting models Do not overlook the short run.... excellent short range forecasts as well

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End of Chapter 3

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