Lecture 3 Forecasting

Question 1

ERP Definition and process

Answer 1

Enterprise resource planning

1 order/ add inventory
2 locate inventory
3 remove/ sell inventory
4 invoicing + remove stock from inventory

Question 2

Forecast what and used for:

Answer 2

An estimate of the future level of some variable

used for:

• Long term capacity needs
• Yearly business plan
• Shorter term operations and supply chain activities

Question 3

Forecast types

Answer 3

• Demand: market demand and firm level demand
• Supply
• Price

Question 4

Laws of forecasting

Answer 4

1. forecasts are almost always wrong
2. forecasts for the near term are more accurate
3. forecasts for groups of products are more accurate
4. forecasts are no substitute for calculated values

Question 5

Selecting forecasting method

Answer 5

• qualititative, when data is scarce –> intuition or informed oppinion.
• quantitative, measurable historic data to generate forecasts –> time series and causal model

Question 6

Qualitative methods (5)

Answer 6

Market surveys
Panel consensus 
delphi method 
Life cycle anology
Build up forecast

Question 7

Quantitative methods

Answer 7

Time series models uses a series of obeservations to generate forecasts
Causal models a forecast is model as a function something other than time.

Question 8

Time series forecasting methods

Answer 8

• Last period model: forecast for next period is demand of this period
• Moving average: taking an average of recent demand values
• Weighted moving average: some periods wheigh more than others
• Linear regression: Predict scores on one variable based on the score of a second variable

Question 9

CPFR

Answer 9

Collaborative Planning Forecasting and Replanishment

A set of business backed up by information technology, in which supply chain partners agree to mutual business objectives and measures, develop joint sales and operational plans and collaborate to
generate and update sales forecasts
and replenishment plans