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Chapter 12 - Forecasting. This chapter includes contents: Strategic role of forecasting in supply chain management, components of forecasting demand, time series methods, forecast accuracy, time series forecasting using excel, regression methods. | 1 Robert S. Russell, Bernard W. Taylor III, Ignacio Castillo, Navneet Vidyarthi CHAPTER 12 Forecasting OPERATIONS MANAGEMENT: Creating Value Along the Supply Chain, Canadian Edition 1 Learning Objectives Strategic Role of Forecasting in Supply Chain Management Components of Forecasting Demand Time Series Methods Forecast Accuracy Time Series Forecasting Using Excel Regression Methods 12-2 2 Forecasting Predicting the future Qualitative forecast methods subjective Quantitative forecast methods based on mathematical formulas 12-3 3 Supply Chain Management Accurate forecasting determines inventory levels in the supply chain Continuous replenishment supplier & customer share continuously updated data typically managed by the supplier reduces inventory for the company speeds customer delivery Variations of continuous replenishment quick response JIT (just-in-time) VMI (vendor-managed inventory) stockless inventory 12-4 4 The Effect of Inaccurate Forecasting 12-5 5 Forecasting Quality . | 1 Robert S. Russell, Bernard W. Taylor III, Ignacio Castillo, Navneet Vidyarthi CHAPTER 12 Forecasting OPERATIONS MANAGEMENT: Creating Value Along the Supply Chain, Canadian Edition 1 Learning Objectives Strategic Role of Forecasting in Supply Chain Management Components of Forecasting Demand Time Series Methods Forecast Accuracy Time Series Forecasting Using Excel Regression Methods 12-2 2 Forecasting Predicting the future Qualitative forecast methods subjective Quantitative forecast methods based on mathematical formulas 12-3 3 Supply Chain Management Accurate forecasting determines inventory levels in the supply chain Continuous replenishment supplier & customer share continuously updated data typically managed by the supplier reduces inventory for the company speeds customer delivery Variations of continuous replenishment quick response JIT (just-in-time) VMI (vendor-managed inventory) stockless inventory 12-4 4 The Effect of Inaccurate Forecasting 12-5 5 Forecasting Quality Management Accurately forecasting customer demand is a key to providing good quality service Strategic Planning Successful strategic planning requires accurate forecasts of future products and markets 12-6 6 Types of Forecasting Methods Depend on time frame demand behavior causes of behavior 12-7 7 Time Frame Indicates how far into the future is forecast Short- to mid-range forecast typically encompasses the immediate future daily up to two years Long-range forecast usually encompasses a period of time longer than two years 12-8 8 Demand Behavior Trend a gradual, long-term up or down movement of demand Random variations movements in demand that do not follow a pattern Cycle an up-and-down repetitive movement in demand Seasonal pattern an up-and-down repetitive movement in demand occurring periodically 12-9 9 Forms of Forecast Movement 12-10 Time (a) Trend Time (d) Trend with seasonal pattern Time (c) Seasonal pattern Time (b) Cycle Demand Demand Demand Demand Random movement 10 Forecasting
