Chapter 7

# Chapter 7 - Chapter 7 Demand Forecasting in a Supply Chain...

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Exercise Solutions : Problem 7-1: We utilize a static model with level, trend, and seasonality components to evaluate the forecasts for year 6. Initially, we deseasonalize the demand and utilize regression in estimating the trend and level components. We then estimate the seasonal factors for each period and evaluate forecasts. EXCEL Worksheet 7-1 provides the solution to this problem. The model utilized for forecasting is: l t l t S T l t L F + + + + = ] ) ( [ The deseasonalized regression model is: t D _ = 5997.261 + 70.245 t The seasonal indices for each of the twelve months are: Month S.I JAN 0.427 FEB 0.475 MAR 0.463 APR 0.398 MAY 0.621 JUN 0.834 JUL 0.853 AUG 1.151 SEP 1.733 OCT 1.778 NOV 2.124 DEC 1.095 For example, the forecast for January of Year 6 is obtained by the following calculation: F 61 = [5997.261 + (61) * 70.245] * 0.4266 = 4386 The quality of the forecasting method is quite good given that the forecast errors are not too high. Problem 7-2:

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Chapter 7 - Chapter 7 Demand Forecasting in a Supply Chain...

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