Session17

Session17 - Operations Management Session 17: Forecasting...

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Session 17 Operations Management 1 Operations Management Session 17:  Forecasting
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Session 17 Operations Management 2 Forecasting Objectives Introduce the basic concepts of forecasting and its  importance within an organization. Present several of the more common forecasting  methods. Measure and assess the errors that exist in  forecasts.
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Session 17 Operations Management 3 Managerial Issues Recognizing the increased importance of  forecasting in both manufacturing and services. How to go about implementing forecasting at all  levels in the organization.
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Session 17 Operations Management 4 Types of Forecasting Qualitative Techniques Non-quantitative forecasting techniques based on expert opinions  and intuition. Typically used when there is no data available. Time Series Analysis Analyzing data by time periods to determine if trends or patterns  occur. Causal Relationship Forecasting Relating demand to an underlying factor other than time.  (Regression)
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Session 17 Operations Management 5 Qualitative Techniques Subjective, judgmental Based on intuition, estimates, and opinions Expert Opinions Market Research Historical Analogies
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Session 17 Operations Management 6 Time Series Methods Moving average Exponential smoothing More sophisticated techniques available
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Session 17 Operations Management 7 Causal Relationship Multiple Regression Models It is assumed that you’ve learned about them in your statistics  class, i.e., we will not discuss them.
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Session 17 Operations Management 8 Characteristics of Forecasts They are usually wrong. The longer the forecast horizon, the less accurate  the forecast will be. Group forecasts are more accurate than individual  forecasts. A good forecast says something about its likely  error size.
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Session 17 Operations Management 9 Time Series Models Models for short-term decisions Inventory decisions Stock levels of Gameboys Production planning decisions Staffing decisions Call center scheduling Fast food chain
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Session 17 Operations Management 10 Components of Demand Average Demand for the Period Trends Seasonal/Cyclical Influence Random Variation
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Session 17 Operations Management 11 Moving Average Appropriate when demand for a product is neither  growing nor declining rapidly and there are no  seasonal characteristics. Forecast for period t:  the average of the previous  n periods n A A A F n t t t - - + + + = ...
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This note was uploaded on 05/08/2008 for the course BUAD 311 taught by Professor Vaitsos during the Spring '07 term at USC.

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Session17 - Operations Management Session 17: Forecasting...

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