flashcards-ch12 - Demand Planning Combined process of...

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Demand Planning. 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! Forecasting Activities take info from the mkt, internal ops, & environment. INCLUDEDS PAST DEMAND VALUES, PAST FORECASTS, ERRORS, BS & ECON METRICS & JUDGEMENT OF EXPERTS. Long term/strategic planning: 1-5 yrs. What are they used for & types of decisions involved? 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 Intermediate/tactical: 6-18 mos. What are they used for & types of decisions involved? 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. Demand Forecasting decision process in which managers predict demand and make plans accordingly. Demand Management
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proactive approach in which managers attempt to influence product demand patterns to achieve sales objectives, accommodate supply chain resources and capacity or consistency of demand. Uses 3 variants: 1. to influence timing of qty of demand w price changes, and sales incentives; 2. manage timing of order fulfillment-inform of lead times; 3. substitute by encouraging customers to shift their orders from one product to another Fluctuations in Demand Management 1. extra resources to expand & contract capacity 2. backlogging orders to smooth out fluctuations 3. customer dissatisfaction in ability to meet demands. 4. buffering the system w safety stocks, lead time or capacity.
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