The main contents of the chapter consist of the following: What is forecasting? the forecasting process, types of forecasting methods, time series forecasting models, causal models, measuring forecast accuracy, collaborative forecasting and demand planning. | Chapter 8 Forecasting & Demand Planning 8-1 Lecture Outline 8-2 What is Forecasting? The Forecasting Process Types of Forecasting Methods Time Series Forecasting Models Causal Models Measuring Forecast Accuracy Collaborative Forecasting and Demand Planning Copyright 2011 John Wiley & Sons, Inc. Forecasting vs. Planning 8-3 Copyright 2011 John Wiley & Sons, Inc. Forecasting drives all other business decisions Planning requires organizing resources in anticipation of the forecast Forecasting vs. Planning Continued 8-4 Copyright 2011 John Wiley & Sons, Inc. Planning involves the following decisions: Scheduling existing resource Determining future resource needs Acquiring new resources Demand Management Demand management is the process of influencing demand promotional campaigns, advertisements, etc. 8-5 Copyright 2011 John Wiley & Sons, Inc. Impact on the Organization Every organizational function relies on forecasting for numerous things Marketing estimates of demand, future trends . | Chapter 8 Forecasting & Demand Planning 8-1 Lecture Outline 8-2 What is Forecasting? The Forecasting Process Types of Forecasting Methods Time Series Forecasting Models Causal Models Measuring Forecast Accuracy Collaborative Forecasting and Demand Planning Copyright 2011 John Wiley & Sons, Inc. Forecasting vs. Planning 8-3 Copyright 2011 John Wiley & Sons, Inc. Forecasting drives all other business decisions Planning requires organizing resources in anticipation of the forecast Forecasting vs. Planning Continued 8-4 Copyright 2011 John Wiley & Sons, Inc. Planning involves the following decisions: Scheduling existing resource Determining future resource needs Acquiring new resources Demand Management Demand management is the process of influencing demand promotional campaigns, advertisements, etc. 8-5 Copyright 2011 John Wiley & Sons, Inc. Impact on the Organization Every organizational function relies on forecasting for numerous things Marketing estimates of demand, future trends Finance set budgets, predict stock prices Operations capacity planning, scheduling, inventory levels Sourcing make purchasing decisions, select suppliers 8-6 Copyright 2011 John Wiley & Sons, Inc. Impact on SCM Demand forecast affects the plans made by each member of the supply chain Independent forecasting among supply chain members causes a mismatch between supply and demand gives rise to the bullwhip effect 8-7 Copyright 2011 John Wiley & Sons, Inc. Principles of Forecasting Forecasts are rarely perfect Forecasts are more accurate for groups than for individual items Forecasts are more accurate for shorter than longer time horizons 8-8 Copyright 2011 John Wiley & Sons, Inc. Steps in the Forecasting Process Decide what to forecast Analyze appropriate data common patterns include: Level or horizontal Trend Seasonality Cycles in addition to patterns, data contain random variation 8-9 Copyright 2011 John Wiley & Sons, Inc. Steps in the Forecasting Process Continued Select the forecasting .
