...INTRODUCTION Why is forecasting used? Forecasting can be conducted for many purposes, so it is important that the reason for performing the calculation is clearly defined and understood. Some common reasons for forecasting include: • Planning and Budgeting – Using forecast data can help network planners decide how much equipment to purchase and where to place it to ensure optimum management of traffic loads. • Evaluation – Forecasting can help management decide if decisions that have been made will be to the advantage or detriment of the company. • Verification – As new forecast data becomes available it is necessary to check whether new forecasts confirm the outcomes predicted by the old forecasts. Knowing the purpose of the forecast will help to answer additional questions such as the following: 1. What is being forecast? – events, trends, variables, technology 2. Level of focus – focus on a single product or a whole line, focus on a single company or the entire industry 3. How often is forecasting conducted? – daily, weekly, monthly, annually 4. Do the methods used reflect the decisions needed to be taken by management? 5. What are the resources available to make decisions? – Lead-time, staff, relevant data, budget, etc. 6. What are the types of errors that could occur and what will they cost the company? DECISION TO BE TAKEN FACTORS INFLUENCING FORECASTING: • Technology DESCRIPTION OF THE SOFTWARE Vanguard introduced its first product...
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...include; to determine future transport network needs and to be able to forecast the effects of certain policies, for example, and increase in road pricing. Forecasting is useful, however the data is an estimate and can be collected in a number of ways, therefore there can be problems associated with forecasting future trends in Transport Market. One way in which future trends are forecasted in the transport market is through estimating transport elasticities, this can be used to show the responsiveness of demand to a change in price, income or price of another good. There can be problems associated with both the collection of the data, and the problems that may arise due to data being deceiving. Problems with the collection of data could be that the data is just an estimate; for example, secondary data can be used, which involves using past records and data to predict future behaviour, if the data used is wrong, or from a different economic climates, the overall forecast could be wrong. If this data was wrong and stated that PED was less than one, this may cause transport companies to think that transport was now inelastic and therefore raise the prices. If this was untrue or deceiving then transport markets would see a decrease in the demand for public transport, therefore causing problems. Another method used in forecasting is the Delphi Method, this involves consulting experts and using their specialist knowledge to assess the impact of changes on the market. Although this...
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...Case Study: Forecasting at Hard Rock Café 1. Describe three different forecasting applications at Hard Rock. Name three other areas in which you think Hard Rock could use forecasting models. Hard Rock uses long-range forecasting in sitting capacity plan, intermediate-term forecasting for locking in contracts for leather goods (used in jackets) and for such food items as beef, chicken and pork, and short-term sales forecasts are conducted each month, by cafe, and then aggregated for a headquarters view. Hard Rock could use forecasting for menu items according to season (types of food people generally eat depending on time of year), forecast developing areas where new cafes could be build, and forecast changes in retail as fashion changes. 2. What is the role of the POS system in forecasting at Hard Rock? Point of Sale (POS) system is the heart of the sales forecasting system. POS system captures transaction data on nearly every person who walks through a café’s door. Sale of each entrée represents a customer and everyday those sales are transmitted to the headquarters in Orlando where the financial team begins to forecast monthly guest counts, retail sales, banquet sales, and concert sales in each café. General Managers of each café can also tap into that same information in order to prepare for the daily forecast of their individual cafe. 3. Justify the use of the weighting system used for evaluating managers for annual bonuses. Hard Rock doesn't limit its use of forecasting...
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...would be a huge operational cost. Bottleneck: limited availability domestically is putting a real strain on our operating potential 5 step process 1.) Identifying the bottleneck: There has been a real problem with our distribution channels lately. We receive cars from overseas (Europe) where all our vehicles are made. The time it takes for the cars to get from Europe to our US ports can sometimes be up to a month or more! Lately we have seen a shortage in specific car types and this shortage have hurt our dealers sales due to the fact that we do not have the vehicles they want, so they go elsewhere. We need a better process around getting vehicles early whether it is a new forecasting method or opening a building warehouse domestically. 2.) Exploit Bottleneck: Our Company could create a forecasting tool which is used in other industries and companies alike that predicts sales volume month in advance hence making the distribution of cars from overseas more efficient. We can predict the number of vehicles we will need in advance, which would allow us not having to turn customers away because we do not have the inventory at the time. The other and easier solution would be to open a factory domestically to cut down on time. 3.) Subordinate everything: If the bottleneck is lack of vehicles for sale we can try and convince our factories overseas to...
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...economic decisions, including research and development, airplane design such as size and specification, and production planning. “Boeing’s air travel demand forecast is developed by constructing and matching top-down and bottom-up analyses. Bottom-up analysis involves forecasts of traffic between and within individual countries, based on economic predictions, growth momentum, historical trends, travel attractiveness, and projections of the relative openness of air services and domestic airline regulation. Additionally, government statistics on inbound and outbound visitors and tourism receipts are included to identify and cross- check trends. Countries are grouped into geographical regions that generate air traffic flows between and within the regions. In the top-down approach, global and regional markets are similarly projected on aggregated variables. The bottom-up and top-down projections are then reconciled, allowing for the effects of industry and airline business model developments. Further, positive or negative region-specific developments, including population dynamics, shifts toward or away from other modes of transport, and emergence of new air services, are factored in. The resulting regional traffic forecasts are used in developing the airplane demand forecast” (Boeing, 2012). “Airbus Global Market Forecast follows a process which has been continuously improved upon for more than 20 years. Each major change in the industry (such as the appearance of low cost business models...
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...DEMAND FORECASTING: EVIDENCE-BASED METHODS Forthcoming in the Oxford Handbook in Managerial Economics Christopher R. Thomas and William F. Shughart II (Eds.) Subject to further revisions File: Demandforecasting-17-August-2011-clean.docx 17 August 2011 J. Scott Armstrong The Wharton School, University of Pennsylvania 747 Huntsman, Philadelphia, PA 19104, U.S.A. T: +1 610 622 6480 F: +1 215 898 2534 armstrong@wharton.upenn.edu Kesten C. Green International Graduate School of Business, University of South Australia City West Campus, North Terrace, Adelaide, SA 5000, Australia T: +61 8 8302 9097 F: +61 8 8302 0709 kesten.green@unisa.edu.au # words in body 10,053 (requested range was 6,000 to 9,000) ABSTRACT We reviewed the evidence-based literature related to the relative accuracy of alternative methods for forecasting demand. The findings yield conclusions that differ substantially from current practice. For problems where there are insufficient data, where one must rely on judgment. The key with judgment is to impose structure with methods such as surveys of intentions or expectations, judgmental bootstrapping, structured analogies, and simulated interaction. Avoid methods that lack evidence on efficacy such as intuition, unstructured meetings, and focus groups. Given ample data, use quantitative methods including extrapolation, quantitative analogies, rule-based forecasting, and causal methods. Among causal methods, econometric methods are useful given good theory, and few key...
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...Forecasting Methods for Managers Multi-Variate Modelling including Lagged variables and Dummy Variables 2 Topics for Today • Multi-variate relationships • Correlation matrices • Doing a multiple regression in Excel • Multi-collinearity • Lagged variables • Dummy variables ▫ For modelling qualitative data ▫ For modelling seasonality 3 Multi-Variate Relationships • So far we have only looked at Time Series. These are where: . . . . one dependent variable, eg: sales, temperature . . . . varies with time • We have identified no underlying drivers of the relationship • We just made forecasts one or more periods ahead • These are commonly used business models . . . . but the business world is not that simple: ▫ The variables we need to forecast do not just depend on time ▫ Multi-variate models are required ▫ We can then identify the ‘levers’ to pull to ‘drive’ our variable 4 An Example In previous years this was a double module • Attendance at tutorials varied as the year progressed • Time is one factor but other factors could be: ▫ ▫ ▫ ▫ ▫ ▫ Students’ perception that the tutorial will help them pass Weather conditions: eg temperature on morning of tutorial Time of day for the tutorial (9am tutorials are not popular) Students dropping out of the module or the university Volume of background reading in the recommended texts Assignment marks achieved – low marks produce attendance 5 An Example How suitable are these...
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...problems of forecasting future trends in transport markets 15 marks Transport is a derived demand. People and businesses demand transport not for its own sake, but because of the services that it provides. For example, air travel is demanded as people travel abroad for vacation or for business. However, forecasting the demand for transport comes with several difficulties. The nature of the demand for transport makes such forecasting a difficult undertaking. This is partly because the provision of infrastructure may itself influence demand. For example, there has been considerable debate about the effect of road building and improvement schemes. It has been argued that road improvements have the effect of increasing the amount of traffic on the roads, rather than reducing congestion. The fact that much of the transport infrastructure is publicly provided means that such forecasting is an integral part of the process – and it also means that the authorities need a way of taking externalities into account when formulating a transport strategy. There also needs to be careful coordination of transport planning, given the interactions between the demands for different modes of transport. For example, decisions taken now about improvements to the rail network may have implications for the future demand for road transport, and hence for the present need to invest in the road system. Another reason why forecasting is difficult...
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...PRODUCTION AND OPERATION MANAGEMENT PART ONE 1. Inputs in to outputs 2. The first operation to the finished product 3. Demand that is controlled by the company 4. Complete Enterprise wide business solution 5. Computer aided design 6.Technological forecast 7. All of the above 8. Production planning and scheduling & control system 9. Functional layout 10. Work measurement PART TWO 1. Define job shop production? Job Shop Production: In this system, products are manufactured to meet the requirements of a specific order. Quality is not given too much importance and the manufacturing of a product takes place as per the specifications given by the customer. This system may be further classified into the following categories: The Job produced only once: Here, a customer visits a firm and places their order. When the product is ready, the customer takes it and leaves. The customer may not visit the firm again to place an order for the same product. Such a firm will have little scope for pre-planning the production of a product. The norm will be that it will plan for the materials, manpower and the process to be followed only after it has received an order from a customer. The job produced at irregular intervals: Here, a customer visits a firm to place orders for the same type of the product at irregular intervals. The firm will not have any idea of the customer's visits. Here as well, the planning for materials, manpower and the process to be followed will start...
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...56 959 and 56 522 Supply Chain Operations Demand Management Demand Management INTRODUCTION .......................................................................................................... 3 1. DEMAND MANAGEMENT ......................................................................................... 4 2. FORECASTING ...................................................................................................... 7 Approaches to Business Forecasting .................................................................. 8 Methods of Producing a Forecast........................................................................ 9 3. THE PLANNING PROCESS .................................................................................... 13 4. SALES AND OPERATIONS PLANNING ..................................................................... 14 5. MASTER PLANNING ............................................................................................. 15 Master Production Schedule Report.................................................................. 16 6. DEALING WITH FORECASTING PROBLEMS .............................................................. 22 7. CUSTOMER NEEDS ............................................................................................. 23 CONCLUSION .......................................................................................................... 34 56 959 and 56 522 Supply Chain Operations – Demand Management 2 ...
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...For comments: ehabmes@yahoo.com Chapter 2: Competitiveness, Strategy, and Productivity Definitions: Competitiveness: How effectively the organization meets the needs of the customers relative to others that offer similar goods or services. Strategy: Plans to achieve organization goals. Productivity: Measure of effective use of resources, usually expressed as the ratio of outputs to inputs. Productivity =Output / Input Competitiveness: Organizations compete with each other in various ways including: 1. Price: amount customer must pay for the product or service. If all other factors are equal customers will choose lowest price. 2. Quality: Material, workmanship and design. Quality is related to buyer’s perception. 3. Service: like after-sale such as delivery, setup, warranty, technical support etc. 4. Differentiation: any special feature (design, cost, quality, ease of use, etc) that cause a product or service to be perceived by the buyer as more suitable than competitor’s. 5. Flexibility: the ability to respond to changes. 6. Time: like, how quickly product is delivered, how quickly product is developed, and rate of product improvement. 7. Managers and workers: people are the heart and soul of an organization. Their skills can be a competitive edge. Skills example is answering the phone: persons handling calls should be helpful, cheerful, prompt. Global 1. 2. 3. 4. 5. 6. competition criteria: Changing in nature. Quality, service and prices competition. Continued growth...
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...TRANSPORTATION ENGINEERING Introduction · Desires of the people to move Need for goods: demand for Transportation. Transportation affects everyone on earth, on a daily basis. People, countries, governments, business, whole economy rely on effective, reliable transportation in one form or another. Major Transportation Systems Highways Car, Bus, Truck, non- motorized ..etc Railways Passenger and Goods Airways Aviation and freight carrier Waterways Ships, boats… Continuous Flow systems Pipelines,belts..etc Merits and Demerits: Based on accessibility, mobility, cost, tonnage.. Highways/ Road Transportation Oldest mode Foot paths- animal ways, cart path…….. As civilization evolved the need for transportation increased India (5,000 BC) Egypt (3,000 BC) Greece and Babylonia (2,000 BC) Romans (500 BC) ROMANS OCCUPIED BRITAIN IN 55BC 5000KM OF ROADS BUILT IN 150 YEARS RADIATED FROM CAPITAL LONDON AND EXTENDING TO WALES AND EXTENDING TO SCOTLAND LEGIONS WITHDRAWN IN AD407 BREAKDOWN OF ROADS FOLLOWED DURING MIDDLE AGES, RIVERS AND SEAS –A RELIABLE MAJOR TRADE ARTERIES WHEELS OF CARTS DAMAGED THE EARTH ROAD FAST LENGTH OF STONE PAVED STREETS BUILT FOR CONNECTING RURAL AREAS FOR PROVISION STAGECOACH SERVICE WAS INTRODUCED IN UK IN 1755? HORSES WERE CHANGED AT REGULARLY SPACED POST HOUSES COACH WITH IRON SPRING MADE THE RIDE COMFORTABLE Contribution towards road development TWO MAJOR TYPES OF PAVEMENT IN EARLY DAYS Thomas Telfold...
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...Generally regression analysis is used with the regression equation. Here a linear equation is created to predict the Body fat (%) using 3 predictors or also known as independent variables which are the chest circumference, abdomen circumference and weight. From the result a line equation is formed , that is in the in form of (Y) = a + bx Where : (Y) is the average predicted value that is the variable which need to be estimated for any value of x. X is the independent variable and at each time a different predictor (independent variable) is used that is chest circumference, abdomen circumference and weight. A is the Y intercept . This is the Y value (body fat %) when x = 0 B is the slope of the regression line . This slope measures the average change in Y (the body fat %) for each unit change in x ( chest circumference, abdomen circumference and weight) The following are the result of the regressing which were attach after the result. Result 1 : Predicting Body Fat % Using chest circumference (Y) = -51.72 +0.697 X The slope of the equation is 0.697. This means that for every one unit increase in the chest circumference the body fat % will increase 0.697 unit. Result 2 : Predicting Body Fat...
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...Staffing Forecasting and Planning (Book Review) ORGS 6200 MANAGING HUMAN RESOURCES Synopses: J Phillips and S Gully start this well researched and practical book by stressing the importance of workforce planning through recognizing the value of strategic staffing on the company’s ability to improve its capabilities and survive any economic environment while reducing its labor related costs as well as many other expenses indirectly associated with its employees. It is further stressed that talent and its acquisition are to be treated as investments not costs of doing business. It is argued that a single most important factor in order to ensure an organization’s strategic goals are met, is its ability to hire the right people at the right time in order to enhance the firm’s return on its investment. The authors then further expand on this theory by defining a set of common goals for staffing forecasting and planning activities that can benefit any company in any industry and economic life cycle. In addition, the book discusses the importance of understanding a company’s strategy, goals and competition in order to identify what type of talents will the firm need and when. “Ensuring that the right people are in the place at the right time, requires understanding and forecasting the firm’s labor demand and maintaining an awareness of relevant pipelines of labor supply and talent. Action plans can then be developed to address any gaps between labor supply...
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...Forecasting Methods Genius forecasting - This method is based on a combination of intuition, insight, and luck. Psychics and crystal ball readers are the most extreme case of genius forecasting. Their forecasts are based exclusively on intuition. Science fiction writers have sometimes described new technologies with uncanny accuracy. There are many examples where men and women have been remarkable successful at predicting the future. There are also many examples of wrong forecasts. The weakness in genius forecasting is that its impossible to recognize a good forecast until the forecast has come to pass. Some psychic individuals are capable of producing consistently accurate forecasts. Mainstream science generally ignores this fact because the implications are simply to difficult to accept. Our current understanding of reality is not adequate to explain this phenomena. Trend extrapolation - These methods examine trends and cycles in historical data, and then use mathematical techniques to extrapolate to the future. The assumption of all these techniques is that the forces responsible for creating the past, will continue to operate in the future. This is often a valid assumption when forecasting short term horizons, but it falls short when creating medium and long term forecasts. The further out we attempt to forecast, the less certain we become of the forecast. The stability of the environment is the key factor in determining whether trend extrapolation is an appropriate forecasting...
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