OM CH3 Flashcards
Short range forecast
< 3 months
Long range forecast
> 3years
Qualitative forecasting methods
- Jury of executive opinion
- Delphi method
- Sales force composite
- Consumer market survey
Jury of executive opinion
A method of forecasting using a composite forecast prepared by a number of individual experts. The experts form their own opinions initially from the data given, and revise their opinions according to the others’ opinions. Finally, the individuals’ final opinions are combined.
Delphi method
The Delphi method is a forecasting process framework based on the results of several rounds of questionnaires sent to a panel of experts. Several rounds of questionnaires are sent out, and the anonymous responses are aggregated and shared with the group after each round. The experts are allowed to adjust their answers in subsequent rounds. Since multiple rounds of questions are asked and the panel is told what the group thinks as a whole, the Delphi method seeks to reach the correct response through consensus.
naive approach of forecasting
demand in current period is that of last period
Moving average method
average of 3 years for example
Weighted moving average method
like weighted average but recent years receive a higher weight
Exponential smoothing
uses the smoothing constant.
If it is 1 then the current period = demand of previous period
Linear regression
forecasting method with computer. Takes external factors into account., like managers of weather.
Error of forecast
Ft - At
MAD
Mean Absolute Deviation
MSE
Mean Squared Error
MAD^2
to enlarge the mistakes made
MAPE
Mean Absolute Percent Error
for comparing companies of different sizes
Tracking signal
when
- The forecast is too low because you are in a growing market
- If your seasonal index is wrong
Life cycle
introduction
growth
maturity
decline
