In this chapter, the following content will be discussed: What is forecasting? forecasting time horizons, the strategic importance of forecasting, forecasting approaches, associative forecasting methods: regression and correlation analysis, monitoring and controlling forecasts, focus forecasting, forecasting in the service sector. | LSM733-PRODUCTION OPERATIONS MANAGEMENT By: OSMAN BIN SAIF LECTURE 5 1 Summary of last Session Case Study– Hard Rock Cafe Projects Why? Characteristics and Activities Work Break down structure Project Scheduling techniques Cost time trade offs Project Control reports 2 Agenda for this Session What Is Forecasting? Forecasting Time Horizons The Strategic Importance of Forecasting Forecasting Approaches Qualitative Methods Quantitative Methods Associative Forecasting Methods: Regression and Correlation Analysis Monitoring and Controlling Forecasts Focus Forecasting Forecasting in the Service Sector 3 3 What is Forecasting? Process of predicting a future event Underlying basis of all business decisions Production Inventory Personnel Facilities ?? 4 4 The Realities! Forecasts are seldom perfect Most techniques assume an underlying stability in the system Product family and aggregated forecasts are more accurate than individual product forecasts 5 Short-range forecast Up to 1 year, . | LSM733-PRODUCTION OPERATIONS MANAGEMENT By: OSMAN BIN SAIF LECTURE 5 1 Summary of last Session Case Study– Hard Rock Cafe Projects Why? Characteristics and Activities Work Break down structure Project Scheduling techniques Cost time trade offs Project Control reports 2 Agenda for this Session What Is Forecasting? Forecasting Time Horizons The Strategic Importance of Forecasting Forecasting Approaches Qualitative Methods Quantitative Methods Associative Forecasting Methods: Regression and Correlation Analysis Monitoring and Controlling Forecasts Focus Forecasting Forecasting in the Service Sector 3 3 What is Forecasting? Process of predicting a future event Underlying basis of all business decisions Production Inventory Personnel Facilities ?? 4 4 The Realities! Forecasts are seldom perfect Most techniques assume an underlying stability in the system Product family and aggregated forecasts are more accurate than individual product forecasts 5 Short-range forecast Up to 1 year, generally less than 3 months Purchasing, job scheduling, workforce levels, job assignments, production levels Medium-range forecast 3 months to 3 years Sales and production planning, budgeting Long-range forecast 3+ years New product planning, facility location, research and development Forecasting Time Horizons 6 6 Influence of Product Life Cycle Introduction and growth require longer forecasts than maturity and decline As product passes through life cycle, forecasts are useful in projecting Staffing levels Inventory levels Factory capacity Introduction – Growth – Maturity – Decline 7 7 Product Life Cycle Product design and development critical Frequent product and process design changes Short production runs High production costs Limited models Attention to quality Introduction Growth Maturity Decline OM Strategy/Issues Forecasting critical Product and process reliability Competitive product improvements and options Increase capacity Shift toward product focus Enhance distribution .
