Combined process of forecasting and managing customer demands to create a planned
pattern of demand that meets the firm's operational and financial needs.
Things to improve the constraints of demand planning:
1 update info accuracy and timliness; 2. reduce lead time; 3. redesign the product with a
postponable product; 4. collaborate and share info.
from Notes: Forcasting is pervasive in the organization
Accountants use for tax planning, HR for hiring and changes in workplace, finance for
cash flows and solvency, op mgrs for raw materials and inventory, mktg for sales
forecat and promo budgets, PROCESS VS LINE LAYOUT. STANDARDIZED
PRODUCTS SHOULD USE PROCESS OR LINE?
Forecasting vs Predicting:
Predicting is making a statement about what'll happen in the future (general term) EX:
fortune teller, complicated math model, a guess, may or may not be based on past.
Forecasting is based on the premise that the past is prologue (what happened in the
past will happen in the future--heavily relies on past and mathematical models from past
sales) AKA EXTRAPOLATION. ALL FORECASTING IS A PREDICTION BUT NOT ALL
PREDICTIONS ARE FORECASTS!
take info from the mkt, internal ops, & environment. INCLUDEDS PAST DEMAND
VALUES, PAST FORECASTS, ERRORS, BS & ECON METRICS & JUDGEMENT OF
Long term/strategic planning: 1-5 yrs. What are they used for & types of decisions
supply chain network design, technology invenstments, capacity planning. Used to find
new sources of supply, build or sell a plant, contract transportation svcs or open and
close a new service location
Sales and OP planning and planning and portfolio planning. Used in aggregate
production plans, employee hiring/firing, overtime work, contracting, new prod launches
Short Term/Operational materials and resources: 1-12 wks. What are they used for &
types of decisions involved?
Inventory planning, purchasing plans and labor scheduling. Used for daily production &
work schedule, and purchase orders.
decision process in which managers predict demand and make plans accordingly.