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FORCASTING AND DEMAND PLANNING (Forecasting (the process of projecting…
FORCASTING AND DEMAND PLANNING
Forecasting
the process of projecting the values of one or more variables into the future.
Long-range forecasts in total sales dollars (top management level)
Aggregate forecasts of sales volume (middle management level)
Forecasts of individual units (operational level)
Time Bucket
the unit of measure for the time period used in a forecast
Time Series
measured at successive points in time or over successive periods of time.
Trend
Seasonal patterns
Cyclical patterns
Random variation
Irregular variation
Planning Horizon
length of time on which a forecast is based.
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Forecast error
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Mean Absolute Deviation Error (MAD)
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Mean Absolute Percentage Error (MAPE)
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Mean Square Error (MSE)
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Single Moving Average
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Moving Average (MA) Forecast
F t +1 = ∑(most recent “ k ” observations)/ k = ( A t + A t –1 + A t –2 + ... + A t – k +1)/ k
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Single Exponential Smoothing (SES)
Statistical forecasting
based on the assumption that the future will be an extrapolation of the past
Judgmental forecasting
relies upon opinions and expertise of people in developing forecasts.
Grass Roots forecasting
asking who are close to the end consumer
Delphi method
consists of forecasting by expert opinion