Supply Chain Slides UNIT 3 Online - Dr Penina Orenstein...

Info icon This preview shows pages 1–9. Sign up to view the full content.

Dr Penina Orenstein Forecasting tools used in Supply Chain Management
Image of page 1

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

Objectives Understand the role of forecasting in a supply chain Identify the components of a demand forecast Forecast demand in a supply chain given historical demand data using time-series methodologies Analyze demand forecasts to estimate forecast error
Image of page 2
Basic Approach Integrate demand planning and forecasting throughout the Supply Chain Understand and identify customer segments Identify the major factors that influence demand Determine the appropriate forecasting technique Establish performance and error measures for the forecast
Image of page 3

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

Forecasting Methods Moving Averages Exponential Smoothing Linear Regression Trend and Seasonal
Image of page 4
Some measures of forecasting accuracy Mean Absolute Deviation (MAD) Mean absolute percentage error (MAPE) Aim: lowest error provides better forecast Also, look at R 2 value in trend methods
Image of page 5

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

Guide for selecting method of forecasting
Image of page 6
Moving Average Stable Demand Average tends to be more responsive if fewer data points are used Random events affect average adversely Simple, easy to use and understand Does not respond to trend changes quickly n j j n n Y MA 1 1 / n is the number of periods – eg 3-pt, 4-pt
Image of page 7

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

Simple Exponential Smoothing Weighted Moving average technique Requires less data Suited to data with little trend or variation Calculate Forecasts with various values of smoothing factor α is the weight factor with 0≤ α ≤ 1 1 2 1 ) 1 ( Y F F Y F t t t
Image of page 8
Image of page 9
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern