Forecasting - Delivering the number

Forecasting - Delivering the number - LogisticsManagement...

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Logistics Management Heads or Tails! by Dr. Mark Barratt Forecasting: Delivering the Number
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Logistics Management Motivation for Forecasting Everybody always needs a number. - Planning – resources – buying - Raising finance/capital Even for companies at capacity, there is a product mix issue Apart from always being inaccurate there are several other issues to consider:- - Who makes the forecast? Each functional area ends up with their own forecast - When is the forecast updated? Daily, weekly, bi-weekly, monthly, quarterly? - What is the value of the data that we use for forecasting?
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Logistics Management The Forecasting Process Forecasting requirements - Understand the market - Understand the product life cycle
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Logistics Management Product Life Cycle Extending the life of the product: e.g. bundling or new uses.
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Logistics Management The Forecasting Process Forecasting requirements - Understand the market - Understand the product life cycle Resource management - production capacity - storage capacity - transportation capacity Requirements planning (S&OP) - inventory projections - production requirements Traditionally: Independently Progressive: Collaborative Planning
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Logistics Management The Components of a Forecast The forecast is generally a monthly or weekly figure for each SKU and location . It includes: - B ase level of demand - S easonal demand - T rend - accounts for changes in population or consumption patterns - C yclic – 3-5 year business cycle – (recession and growth periods) - P romotion - it is controlled largely internally by the firm. It can account for 50 to 80 percent of volume variations. Promotions can also make demand more lumpy - I rregular Ft = ( B t x S t x T x C t x P t ) + I
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Logistics Management Seasonal Demand
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Logistics Management Cyclical Demand Trend: Overall output continues to grow!
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Logistics Management Promotional Demand 0 10000 20000 30000 40000 50000 60000 70000 80000 37 42 47 52 5 10 15 20 25 30 35 40 45 50 3 8 13 18 23 28 33 38 43 48 1 6 11 16 21 26 31 36 Median Mean Cleaned Actuals 14256 13939 17973 13695 Nescafe Original 200gx12 8340 Points (shelf - with 300g) Buy 1 get 2nd half price (end) Buy 1 get 2nd half price (end) Buy 1 get 2nd half price (end) Buy 1 get 2nd half price (shelf) Buy 2 get 3rd free (end)
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Logistics Management Time Series Forecasting Using historical sales data, time series analysis is used to identify seasonality, cyclical patterns, and trends. Once these individual forecast components are identified, time series techniques assume the future will reflect the past assume the future will reflect the past Most appropriate for short-range forecasting Several time series techniques - Simple Trends – Exercise 1 . -
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This note was uploaded on 03/06/2011 for the course SCM 345 taught by Professor Maltz during the Spring '08 term at ASU.

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Forecasting - Delivering the number - LogisticsManagement...

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