4. Forecasting Flashcards
What is forecasting?
- Forecasting is the prpocess of estimating future deamnd of goods and services of and the resources necessary for producing these outputs.
- Sales forecast is the starting point of ntire planning and producution and operations management.
- It is the art and science of predictiong gfuture events. It may involve taking historica data and projecting them into the future.
Types of forecast?
- technological forecast
- economic forecast
- demand forecast
What is technological forecast?
it is concerned with the rate of technological progress. technological changes provide organsation with new material and prucut to offer for sale. even if the product remains unchanged, new production process can nbe developed through technological impprovements by using new machinery and equipment.
What is economic forecast?
Economic forecasts are statements of expected business conditions published by governmental agencies. They address business cycles by predicting inflation rates, money supplies, housing starts and other economic factors such as tax revenues, employment rate, gross national product. They provide information about long range and intermediate range business growth to companies.
What is demand forecast?
Deamd forecast is rojection of demand for producuts and services. These forecasts also known as sales forecast, predict expectrd level of demand for goods and services of a company and usually provide basis for company’s controlling and planning decisions. These forecast drive the capacity lanning and scheduuling system of a company anad serve as inputs for financial, marketing and hr planning.
What are the quantitative forecasting methods?
- simple moving average
- weighte moving average
What are the qualitative forecasting methods?
- Market Research (customer survey)
- Grassroots (saesforce composite)
- Delphi
What is Market Research?
- it is a systemetic approach to determine customer interests in a product or service by conducting customer surveys and consumer sampling.
- it is naturual to involve customer in forecasting process as the consumer determines demand. since all potential customers cannot be contacted, sampling is resorted to.
- care has to be taken while forming the customemr survey questionnaire to ensure the true response of customers are solicited.
- implementation and analysis stages should be handled carefully to ensure conclusion drawn from the survey yis an exact reflection of pulse of consumer
Advantage & disadvantage
What is Grassroot method?
- Salesforce composite demand method askes those closest to the end consumer to determine the trends in their own region, then sum all the values to obtain an overall forecast
- it is also called pooled sallesforce estimate. each sallesperson is required to estimae deamnd of their territory. the estimates are revied to enure they are realistic. then summed up at district and national level to arrive at overall forcast.
- salesforce which is inn direct conatct with the customer is required to give pessimistic estimate, most likely estimate, optimistic estimate
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What is Delphi Method?
- a questionnaire is sent to expeprts from various diversified fields, seeking their opinion on forcast of a product. the experts may be technology forecastors etc
- opinions expressed by experts as response are kept anonymous to encourage honest opinions
- responses are compiled an summarized
- each new questionnaire is based on information extracted from the previous one, thus enlarging the scope of information on which the participants canbase thier judgements.
- the goal is to achieve consensus forecast
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What is scheduling?
- scheduling determines the utlisation of equipment and manpower hence the efficiency of the plant
- scheduling determines the start and completion time of each and every operation of each and evr part to be manufactured and sub units to be assembeld so that the finished produt is ready to be shipped to the customer as per the predetermined delivery schedule
What is operation scheduling?
Involves fixing priorities of each job and determiniing start time anad finish time of each operation, start date and end date of each part , sub assembly and final assembly.
scheduuling lays down a final time tbale for production indicating the total time required for the manufacture of a product and also the time required for carrying out the operation for each part on each machine or equipment
Goals of short term scheduling?
- maximise utilisation of resources
- minimise order competion time
- miimise wip inventory
- minimise customer wait time
What is sequecing/ prioritization?
Sequencing is deciding the order of jobs to be performed on given machines or work centrs on the basis of some priority rule
What is sequecing/ prioritization?
Sequencing is deciding the order of jobs to be performed on given machines or work centrs on the basis of some priority rule
