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Forecasting - Introduction to Forecasting FC-1 FORECAST A...

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FC-1 Introduction to Forecasting
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FC-2 FORECAST: A statement about the future Used to help managers Plan the system Plan the use of the system
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FC-3 Accounting Cost/profit estimates Finance Cash flow and funding Human Resources Hiring/recruiting/training Marketing Pricing, promotion, strategy MIS IT/IS systems, services Operations Schedules, MRP, workloads Product/service design New products and services Uses of Forecasts
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FC-4 Assumes causal system past ==> future Forecasts rarely perfect because of randomness Forecasts more accurate for groups vs. individuals Forecast accuracy decreases as time horizon increases I see that you will get an A this semester.
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FC-5 Elements of a Good Forecast Timely Accurate Reliable Meaningful Written Easy to use
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FC-6 Steps in the Forecasting Process Step 1 Determine purpose of forecast Step 2 Establish a time horizon Step 3 Select a forecasting technique Step 4 Gather and analyze data Step 5 Prepare the forecast Step 6 Monitor the forecast “The forecast”
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FC-7 Forecasting and Planning Time Horizon Type of Planning Volume of Forecasts Cost of Errors Long Range (one year and longer) Capacity Planning Location Planning Introduction of a new product Major Capital Purchases Low High Medium Range (three months to one year) Aggregate Production Planning Seasonal Inventory Policy Overtime Policy Workforce Levels Amount of Subcontracting Higher Lower Short Range (up to three months) Parts Inventory Management Scheduling of Operations Personnel Scheduling Maintenance Planning High Low
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FC-8 Types of Forecasts Judgmental - uses subjective inputs Time series Models - uses historical data assuming the future will be like the past Causal Models (Regression Models) - uses explanatory variables to predict the future
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FC-9 Forecasting Models Qualitative Human Judgment Expert Opinion Delphi Method Sales Force Composite
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