E2, Ch 18: Forecasting, Demand Planning

Question 1

customer demand →

Answer 1

forecasting → planning → scheduling

Question 2

forecasts are based on __________ data if we have it; if not, ___________ methods are used.

Answer 2

historical
qualitative

Question 3

DAWGS Steps (5)

Answer 3

1. data collection
2. analyze
3. work w/ stakeholders
4. generate and gauge
5. start again

Question 4

step 1: data collection
the key is…

Answer 4

key is QUALITY of data; how trustworthy is the data in MRP system?
source of data = within company as well as suppliers, clients, etc.
finally, validation of data critical

Question 5

step 2: analyze

Answer 5

conduct analysis, develop forecast

Question 6

step 3: work w/ stakeholders

Answer 6

moving across organization at this point to meet with marketing/other stakeholders for additional insight

Question 7

step 4: generate and gauge

Answer 7

putting info in a software system and modifying as we deem necessary; then, moving forward to schedule production

Question 8

forecasting

Answer 8

mathematical model used to examine past experiences to gain insights into future

Question 9

forecasting as a basis of business decisions, we look at… (4)

Answer 9

production
personnel
finance
marketing

Question 10

forecasting as a basis of business decisions, we look at: production

Answer 10

scheduling inventory, aggregate planning

Question 11

forecasting as a basis of business decisions, we look at: personnel

Answer 11

workforce planning, hiring, layoffs

Question 12

forecasting as a basis of business decisions, we look at: finance

Answer 12

PPE investment, budgeting

Question 13

forecasting as a basis of business decisions, we look at: marketing

Answer 13

sales force allocation, promotions, new product introduction

Question 14

stages of forecast development (5)

Answer 14

1. determine objectives
2. developing and testing a model
3. applying models
4. real-world constraints
5. revising and evaluating forecast

Question 15

forecast development stage 1: determine objectives

Answer 15

what is the purpose of the forecast? what variables should be considered?

Question 16

forecast development stage 2: developing and testing a model

Answer 16

considering qualitative vs quantitative models

Question 17

forecast development stage 3: applying model

after model is tested….

Answer 17

after model is tested, historical data collected and applied

Question 18

forecast development stage 4: real-world constraints

Answer 18

what real-world variables should be considered

Question 19

forecast development stage 5: revising, evaluating forecast

Answer 19

technical forecast should be tempered w/ human judgement

Question 20

qualitative methods

Answer 20

new products/technology; intuition, experience

Question 21

quantitative methods

Answer 21

used when situation is ‘stable’ and historical data exists; usually 3-6 mo. of sales; mathematical techniques

Question 22

forecasting

Answer 22

diff b/w forecast and actual sales units

Question 23

sources of error (2)

Answer 23

bias: consistent mistake is made
random: errors not explained by model being used

Question 24

measures of error (3)

Answer 24

mean absolute deviation
mean absolute percent error
tracking signal

Question 25

qualitative methods: buildup methods

Answer 25

smaller segments of demand are estimated first, and then aggregated to get the total forecast

ex. a baker adding up day-by-day estimates to get total demand for next week

Question 26

qualitative methods: bottom up***

Answer 26

start at bottom of org working way to top. ex. car and home sales

Question 27

qualitative methods: survey method

Answer 27

using questionnaires, phone interviews, or internet to solicit interview

Question 28

qualitative methods: test markets

Answer 28

conducting trial run w/ product in a market region

Question 29

qualitative methods: panel of experts

Answer 29

Delphi Technique; soliciting info from experts on subject
challenge: very subjective

Question 30

when it comes to things like housing a cars, there are variables that drastically impact………………

Answer 30

quantitative data (usually govt-related, like interest rates). Therefore, we use qualitative methods rather than solely relying on quantitative.

Question 31

quantitative methods: simple moving average

Answer 31

add up sum of X time and divide by whole

Question 32

quantitative methods: weighted moving average

Answer 32

average but while assigning diff weights to each period, usually driven by season trend/index