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# dt bt 1 st m bt tt 1 smooth trend forecasts

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Unformatted text preview: ffects • Smooth seasonality forecasts using γ by assuming m periods per season Forecast Ft+1 = (Bt + Tt )St+1 Ft+k = (Bt + kTt )St+k m m Algorithm 4: Exponential Smoothing with Trend & Seasonality • How to construct seasonality: • Smooth base forecast Bt ! ! • Dt Bt = ↵ + (1 St m ↵)(Bt + Tt 1) Smooth trend forecasts Tt ! Tt = (Bt Bt 1) + (1 ! • 1 Smooth seasonality forecasts St Dt St = + (1 Bt )St m )Tt 1 Measuring forecast accuracy • Mean Forecast Error (MFE or Bias): Measures average deviation of forecast from actuals. • Mean Absolute Deviation (MAD): Measures average absolute deviation of forecast from actuals. • Mean Absolute Percentage Error (MAPE): Measures absolute error as a percentage of the forecast. • Mean Squared Error (MSE): Measures variance of forecast error. Part 10: Pooling Strategies Some pooling we have seen • Capacity Pooling (economy of scale) ! ! ! ! • Process Pooling (ﬂow design) Economy of Scale in Queueing Wq vs. n with load being constant 1.80 Waiting time in queue 1.35 Beneﬁts of pooling or economies of scale in queueing! is huge 0.90 0.45 0.00 0.000 12.500 25.000 n 37.500 50.000 Inventory Pooling • Current operations: • • • Each sales representative has her own inventory to serve demand in her own territory. Inventory Territory 1 Inventory Territory 2 e.g., 3 territories, 3 stockpiles of inventory Inventory Territory 3 The pooling strategy: • • • A single inventory is used by several sales reps. (How to implement?) Inventory is automatically replenished at the pooled location as depleted by demand. e.g., 3 pooled territories, 1 stockpile of inventory Territory 1 Inventory Territory 2 Territory 3 Capacity Pooling class 1 class 2 class 3 For ﬂexibility Lead Time Pooling Store Supplier Store Store Supplier Retail DC Store Probabilistic view • Joint distribution two random variables X and Y • coefﬁcients of variation for X+Y 75 50 25 0 0 25 50 When to use pooling • Almost always better • But comes with some cost Pooling No Pooling...
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## This document was uploaded on 01/28/2014.

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