class 10 - Operations Management Class 1: Class 2: Class 3:...

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1 Operations Management Class 1: Introduction to OM and Process Analysis Class 2: Process Design Class 3: Process Analysis Process Analysis Class 6: Process Analysis Class 7: Project Management Variability in processes Class 10: Forecasting
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Content Why do we forecast? How do we forecast? What is a good forecast? 2
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What is forecasting? A statistical estimate of future demand, that can be used to plan current activities Often based on past sales, while considering issues like seasonality, trends in demand, etc 3
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Operations and Information @Wal-Mart Wal-Mart manages one of the world’s largest data warehouses Wal-Mart tracks sales, inventory, shipment for each product at each store Wal-Mart’s demand forecasting system tracks 100,000 products, and predicts which products will be needed in each store The data warehouse is made available to store managers and suppliers 4
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Forecasting is Vital 5 Finance and Accounting: Forecasts provide the basis for budgetary planning and cost control Marketing Relies on sales forecasting to plan new products and promotions Production and Operations Use forecasts to make decisions involving capacity planning, process selection and inventory control Strategic Planning: Forecasting is one of the basis for corporate long-run planning
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Forecasting is Hard Some Famous Forecasts 6 This “telephone” has too many shortcomings to be seriously considered as a means of communication. The device is inherently no value to us. (Western Union internal memo, 1876) The wireless music box has no imaginable commercial value. Who would pay for a message sent to nobody in particular? (David Sarnoff’s associates in response to his urgings for investment in the radio in the 1920s) I think there is a world market for maybe five computers. (Thomas Watson, chairman of IBM, 1943)
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This note was uploaded on 05/06/2010 for the course COMM Comm 399 taught by Professor Krishnan during the Spring '09 term at UBC.

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class 10 - Operations Management Class 1: Class 2: Class 3:...

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