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Strategic forecasts
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Medium and long term forecasts taht are used to make decisions related to design and plans for meeting demand
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Tactical forecasts
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Short term forecasts used as input for making day to day decisions related to meeting demand
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Dependent demand
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Requirements for a product or service caused by the demand for other products or services-internal demand does not need a forecast, can be calculated based on the demand for the other products or services
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Independent demand
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Demand that cannot be directly derived from the demand for other products
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Time series analysis
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Type of forecast in which data relating to past demands are sued to predict future demand
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Exponential smoothing
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Time series forecasting technique in which each increment of past demand data is decreased by (1- a)
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Smoothing constant alpha (a)
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The parameter in the exponential smoothing equation that controls the speed of reaction to differences between forecasts and actual demand
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Mean absolute deviation (MAD)
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The average forecast error using absolute values of the error of each past forecast
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Mean absolute percent error (MAPE)
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Mean absolute deviation divided by the average demand-avg error expressed as a percentage of demand
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Tracking signal
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Measure that indicates whether the forecast average is keeping pace with any genuine upward or downward changes in demand
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Forecasting is the basis of
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Corporate long run planning
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The closer the decoupling point is to the customer
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The quicker the customer can be served
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A perfect forecast is
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Impossible practically
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Demand management
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To coordinate and control all sources of demand so the supply chain can be run efficiently and the product delivered on time
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Forecasting can be classified as
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1. qualitative2. time series analysis3. casual relationships4. simulation
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