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.
OPERATIONS MANAGEMENT: Creating Value Along the Supply Chain, Canadian Edition Robert S Russell, Bernard W Taylor III, Ignacio Castillo, Navneet Vidyarthi § CHAPTER 12 Forecasting § 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 § Forecasting Predicting the future Qualitative forecast methods subjective Quantitative forecast methods based on mathematical formulas 12-3 § 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 § The Effect of Inaccurate Forecasting 12-5 § 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 § Types of Forecasting Methods Depend on time frame demand behavior causes of behavior 12-7 § 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 § Demand Behavior Trend a gradual, long-term up or down movement of demand Random variations movements in demand that 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 § Demand Demand Forms of Forecast Movement Random movement Time (b) Cycle Demand Demand Time (a) Trend Time (c) Seasonal pattern Time (d) Trend with seasonal pattern 12-10 § Forecasting With OM Tools 12-56 § Regression Methods Linear regression mathematical technique that relates a dependent variable to an independent variable in the form of a linear equation Correlation a measure of the strength of the relationship between independent and dependent variables 12-57 § Linear Regression 12-58 § Linear Regression Example x (WINS) y (ATTENDANCE) xy x2 6 7 49 36.3 40.1 41.2 53.0 44.0 45.6 39.0 47.5 346.7 145.2 240.6 247.2 424.0 264.0 319.2 195.0 332.5 2167.7 16 36 36 64 36 49 25 49 311 12-59 § Linear Regression Example 12-60 § Linear Regression Example 12-61 § Correlation and Coefficient of Determination Correlation, r Measure of strength of relationship Varies between -1.00 and +1.00 Coefficient of determination, r2 Percentage of variation in dependent variable resulting from changes in the independent variable 12-62 § Computing Correlation 12-63 § Regression Analysis With Excel 12-64 § Regression Analysis with Excel 12-65 § Regression Analysis With Excel 12-66 § Multiple Regression 12-67 § Multiple Regression With Excel r2, the coefficient of determination Regression equation coefficients for x1 and x2 12-68 § Multiple Regression Example 12-69 Đ COPYRIGHT Copyright â 2014 John Wiley & Sons Canada, Ltd All rights reserved Reproduction or translation of this work beyond that permitted by Access Copyright (The Canadian Copyright Licensing Agency) is unlawful Requests for further information should be addressed to the Permissions Department, John Wiley & Sons Canada, Ltd The purchaser may make back-up copies for his or her own use only and not for distribution or resale The author and the publisher assume no responsibility for errors, omissions, or damages caused by the use of these programs or from the use of the information contained herein ... recent data 1 2-1 5 § Moving Average: Nạve Approach 1 2-1 6 § Simple Moving Average 1 2-1 7 § 3-month Simple Moving Average 1 2-1 8 § 5-month Simple Moving Average 1 2-1 9 § Smoothing Effects 1 2-2 0 § Weighted... accurate method 1 2-2 3 § Exponential Smoothing 1 2-2 4 § Effect of Smoothing Constant 1 2-2 5 § Exponential Smoothing (α=0.30) 1 2-2 6 § Exponential Smoothing 1 2-2 7 § Exponential Smoothing 1 2-2 8 § Adjusted... continuous replenishment quick response JIT (just-in-time) VMI (vendor-managed inventory) stockless inventory 1 2-4 § The Effect of Inaccurate Forecasting 1 2-5 § Forecasting Quality Management Accurately