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Transcript of 3-1Forecasting McGraw-Hill/Irwin FORECAST: A statement about the future value of a variable of...
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3-1 Forecasting
McGraw-Hill/Irwin
FORECAST:
FORECAST: A statement about the future value of a variable of
interest such as resource requirements, capacity planning, Supply Chain Management (SCM) and product or service demand.
Forecasts affect decisions and activities throughout an organization Accounting, finance Human resources Marketing MIS Operations Product / service design
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3-2 Forecasting
IntroductionIntroduction
1. Forecasting in business forms the basis for budgeting and planning for capacity, sales, inventory, manpower, purchasing and more.
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3-3 Forecasting
Applications of forecastingApplications of forecasting
Plan or design the system. Planning to make use of the system.
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3-4 Forecasting
IntroductionIntroduction
Planning the use of the system relates to short range and intermediate range planning which means planning inventory workforce resources, planning of purchasing and production activities, budgeting and scheduling etc.
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3-5 Forecasting
IntroductionIntroduction
Business Forecasting is more than Predicting demand. Forecasting is also used to predict profits, revenues, costs, productivity changes.
Movements of key economic indicators ( GNP, inflation and government loans) and prices of stocks and bonds.
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3-6 Forecasting
FORECAST: A statement about the future value of a variable of
interest such as resource requirements, capacity planning, SCM and product or service demand.
Forecasts affect decisions and activities throughout an organization Accounting, finance Human resources Marketing MIS Operations Product / service design
FORECAST:
![Page 7: 3-1Forecasting McGraw-Hill/Irwin FORECAST: A statement about the future value of a variable of interest such as resource requirements, capacity planning,](https://reader035.fdocuments.us/reader035/viewer/2022071718/56649eef5503460f94bff6e7/html5/thumbnails/7.jpg)
3-7 Forecasting
Accounting Cost/profit estimates
Finance Cash flow and funding
Human Resources Hiring/recruiting/training
Marketing Pricing, promotion, strategy
MIS IT/IS systems, services
Operations Schedules, MRP, workloads
Product/service design New products and services
Applications of ForecastsApplications of Forecasts
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3-8 ForecastingWeb-Based Forecasting: CPFR Web-Based Forecasting: CPFR DeDefinedfined
Collaborative Planning, Forecasting, and Replenishment (CPFR) a Web-based tool used to coordinate demand forecasting, production and purchase planning, and inventory replenishment between supply chain trading partners.
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3-9 Forecasting
Web-Based Forecasting: Web-Based Forecasting: Steps in CPFRSteps in CPFR
1. Creation of a front-end partnership agreement
2. Joint business planning
3. Development of demand forecasts
4. Sharing forecasts
5. Inventory replenishment
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3-10 Forecasting
1. Assumes causal system( That same system that existed in the past will exist in future.
2. Forecasts rarely perfect because of RANDOMNESS (having no specific pattern). Allowances should be made for inaccuracies.
4 Each Common characteristics of all forecasts
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3-11 Forecasting
3. Forecasts more accurate forgroups vs. individuals naturally because forecasting errors in a group tend to cancel out forecasting errors for individuals.
4. Forecast accuracy decreases as time horizon increases indicating it is safe to make short range forecasts instead of long term forecasts. If you can recall we had talked about Flexible and Agile Corporations in the past.
4 Each Common characteristics of all forecasts