After reading the material in this chapter, you should be able to: Distinguish dependent from independent demand inventories, Describe the four basic types of inventories & their functions, understand the costs of inventory & inventory turnovers, understand ABC classification, ABC inventory matrix & cycle counting, know RFID & how it can be used in inventory management, | Manufacturing Planning and Control MPC 6th Edition Chapter 3 Forecasting The forecasting process involves much more than just the estimation of future demand. The forecast also needs to take into consideration the intended use of the forecast, the methodology for aggregating and disaggregating the forecast, and assumptions about future conditions. Agenda Forecast Information The forecast information and technique must match the intended application For strategic decisions such as capacity or market expansion highly aggregated estimates of general trends are necessary Sales and operations planning activities require more detailed forecasts in terms of product families and time periods Master production scheduling and control demand highly detailed forecasts, which only need to cover a short period of time Forecasting for Strategic Business Planning Forecast is presented in general terms (sales dollars, tons, hours) Aggregation level may be related to broad indicators (gross national . | Manufacturing Planning and Control MPC 6th Edition Chapter 3 Forecasting The forecasting process involves much more than just the estimation of future demand. The forecast also needs to take into consideration the intended use of the forecast, the methodology for aggregating and disaggregating the forecast, and assumptions about future conditions. Agenda Forecast Information The forecast information and technique must match the intended application For strategic decisions such as capacity or market expansion highly aggregated estimates of general trends are necessary Sales and operations planning activities require more detailed forecasts in terms of product families and time periods Master production scheduling and control demand highly detailed forecasts, which only need to cover a short period of time Forecasting for Strategic Business Planning Forecast is presented in general terms (sales dollars, tons, hours) Aggregation level may be related to broad indicators (gross national product, income) Causal models and regression/correlation analysis are typical tools Managerial insight is critical and top management involvement is intense Forecast is generally prepared annually and covers a period of years Forecasting for Sales and Operations Planning Forecast is presented in aggregate measures (dollars, units) Aggregation level is related to product families (common family measurement) Forecast is typically generated by summing forecasts for individual products Managerial involvement is moderate and limited to adjustment of aggregate values Forecast is generally prepared several times each year and covers a period of several months to a year Forecasting for Master Production Scheduling and Control Forecast is presented in terms of individual products (units) Forecast is typically generated by mathematical procedures, often using software Projection techniques are common Assumption is that the past is a valid predictor of the future Managerial involvement is minimal
