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CH. 6 - Forecasting - DEMAND FORECASTING Why Forecast long...

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DEMAND FORECASTING Why Forecast? - long range planning - budgetary planning and control - plan new products - planning of capacity, production, scheduling and inventory Sources of Information - free info. - financial newspapers - StatsCan, Ag Can -consumer opinion - questionnaires - distribution surveys - retail outlets - sales force - executive opinion - marketing trials and market research - historical data Types of Forecasting - qualitative - time-series - causal - simulation Components of Demand Observed demand has 6 components - average - trend - seasonal - cyclic - difficult because of unknown time-span and cause - random - residual variation - autocorrelation - related to past TIME SERIES ANALYSIS - predict future based on past - thus, need data - each technique has pros and cons
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SIMPLE MOVING AVERAGE (MA) - Centred or Forward End - choice of period for averaging - longer - more smoothing, lags trend - shorter - closer to trend, more oscillations - choose odd no. of periods - allows centring of average on a period (ie 3, 5, 7, 9 .... )
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