2.Demand forecasting tools Instructor:Xundi Diao Department of Automation,SEIEE Email:xund@sjtu.edu.cn Office:SEIEE Building,Room 2-528 SEIEE AU406 Supply Chain Management
2. Demand forecasting tools SEIEE AU406 Supply Chain Management 1 Instructor: Xundi Diao Department of Automation, SEIEE Email: xund@sjtu.edu.cn Office: SElEE Building, Room 2-528
Role of forecasting Demand forecasts form the basis of all planning decisions in a supply chain Push:produce to anticipated demand levels Pull:set capacity and component availability levels Forecast time horizons Short term(days,weeks):shift scheduling Medium Term(weeks,months):workforce planning, materials purchasing,promotions Long term (months,years):capacity expansion, capital/financial budget SEIEE AU406 Supply Chain Management 2
Role of forecasting Demand forecasts form the basis of all planning decisions in a supply chain ◦ Push: produce to anticipated demand levels ◦ Pull: set capacity and component availability levels Forecast time horizons ◦ Short term (days, weeks): shift scheduling ◦ Medium Term (weeks, months): workforce planning, materials purchasing, promotions ◦ Long term (months, years): capacity expansion, capital/financial budget SEIEE AU406 Supply Chain Management 2
Characteristics of Forecasts Forecasts are always wrong! o Expected value Error/variability from the expected value Long-term forecasts are usually less accurate than short-term forecasts Aggregate forecasts are usually more accurate than disaggregate forecasts Mature products with stable demand are easier to forecast than seasonal goods or "fashion"items with short product-life SEIEE AU406 Supply Chain Management 3
Characteristics of Forecasts Forecasts are always wrong! ◦ Expected value ◦ Error/variability from the expected value Long-term forecasts are usually less accurate than short-term forecasts Aggregate forecasts are usually more accurate than disaggregate forecasts Mature products with stable demand are easier to forecast than seasonal goods or “fashion” items with short product-life SEIEE AU406 Supply Chain Management 3
Influences on customer demand "Predictions are usually difficult,especially about the future"- Yogi Berra 。Historical patterns Past demand -future demand Seasonality?Trend? ●Externalities Weather State of the economy ●Internal factors o Planned promotional/discount campaigns Display position and advertising efforts Competitors'actions SEIEE AU406 Supply Chain Management 4
Influences on customer demand “Predictions are usually difficult, especially about the future” – Yogi Berra Historical patterns ◦ Past demand -> future demand ◦ Seasonality? Trend? Externalities ◦ Weather ◦ State of the economy Internal factors ◦ Planned promotional/discount campaigns ◦ Display position and advertising efforts Competitors’ actions SEIEE AU406 Supply Chain Management 4
2.I Qualitative forecasting methods o Primarily subjective Rely on human judgment E.g.Jury of executive opinion Appropriate when little historical data is available or when experts have market intelligence that may affect the forecast. SEIEE AU406 Supply Chain Management
2.1 Qualitative forecasting methods ◦ Primarily subjective ◦ Rely on human judgment ◦ E.g. Jury of executive opinion Appropriate when little historical data is available or when experts have market intelligence that may affect the forecast. SEIEE AU406 Supply Chain Management 5