Preview

Forecasting Method

Good Essays
Open Document
Open Document
5877 Words
Grammar
Grammar
Plagiarism
Plagiarism
Writing
Writing
Score
Score
Forecasting Method
DEMAND FORECASTING: REALITY vs. THEORY or WHAT WOULD I REALLY DO DIFFERENTLY , IF I COULD FORECAST DEMAND ?

NATIONAL MANAGEMENT SCIENCE ROUNDTABLE NASHVILLE, TENNESSEE MAY 13, 1991

Steven Robeano Senior Logistics Engineer Ross Laboratories 6480 Busch Boulevard Columbus, Ohio 43229 (614) 624-6124

You know, I must be one of those people the airline has in mind when the pilot gets on the PA system just before take -off and says, "Good morning, you are on Delta Airlines flight 1424 to Nashville." First: I've never gotten on a wrong plane. Second: Don't they look at your ticket when you check-in? It doesn't matter, I still worry about it until I hear the pilot's confirmation. Before we get down to business here, I'll describe the flight we are on for people like me. SUMMARY Formally or informally, the forecast drives the firm. Techniques range from seemingly none at all, or at most "forecasting by desire", to complex and "sophisticated" algorithms and models that require tremendous processing power. Usually, it's a mixture of dozens of methods and options. "What works and what doesn't, rarely depends directly on time, money, or other forms of business horsepower. It is an organizational problem, subject to a visible formal structure and also to an often hidden informal one. This session will look at forecasting as a form of applied common sense. In a commercial business setting, simple doesn't necessarily mean weak and advanced mathematics doesn't necessarily mean accurate or timely. Sales and Marketing functions in a firm often use several forecasting methods in an effort to improve accuracy. The Logistics and Operations functions also often use several methods, with each area complaining that the other's forecasts are not compatible with their area's needs. There is a lot of resistance to reconciliation. Often the cause is simply organizational inertia. Other times each area has good reason for being so parochial. We are going to look at organizational

You May Also Find These Documents Helpful

  • Satisfactory Essays

    Economic Forecasting

    • 323 Words
    • 2 Pages

    The study of macroeconomics demonstrates how individuals purchase, sell, and use raw materials to drive the economy around the globe. A useful source of data could be attained from the International Monetary Fund (IMF) where a person could gather current or historic data. After the collection of the data a researcher could utilize the International Monetary Funds website to see a forecast of any certain country. On the IMF website there are several choices for data such as International Financial Statics, Principal Global Indicators, and World Economic Outlook Databases. This informational data is useful for the inflation of good and services, tracking the market value of goods and services (gross domestic product), and other macroeconomic indicators for more than 200 countries.…

    • 323 Words
    • 2 Pages
    Satisfactory Essays
  • Better Essays

    Forecasting Best Practices

    • 2091 Words
    • 9 Pages

    To find the "best practices" for forecasting, our team researched many cases of forecasting success, and found five companies with a common theme. Rayovac, the Coca-Cola Bottling Company, AAi. FosterGrant, the Sara Lee Corporation, and the Scotts Company all had major problems with forecasting, some of them very similar. To address and solve these problems each of these companies made major improvements to their forecasting systems. Although some used similar methods and others very different, these companies found that the right people, process and information technology was the key to efficient and accurate forecasting.…

    • 2091 Words
    • 9 Pages
    Better Essays
  • Good Essays

    Case Study: Nordstrom

    • 612 Words
    • 3 Pages

    According to Schermerhorn (2013), “forecasting is the ability to predict the future” (pg.123) which means that the process of forecasting can become an important tool to quantify the proper balance between supply and demand. Likewise, in order to maximize sales and its effectiveness, businesses have to work in predict the future customer demand and use this information to lead the business operations to distribution effectively. However, inaccurate forecasts happen and along with them there is a cost.…

    • 612 Words
    • 3 Pages
    Good Essays
  • Better Essays

    Piedmont Airlines Case Study

    • 5526 Words
    • 23 Pages

    Piedmont Airlines recently invested over $1 million in state of the art equipment and employee development in order to forecast and analyze the appropriate amount of discounted fares to offer per flight. The company discovered that by offering several discounted flights to consumers willing to book their travel well in advance of their departure date left many options available for the business traveler who needed to book much closer to the actual departure date. The analysis was the task of the Revenue Enhancement Department (RED) managed by Marilyn Hoppe. While this state of the art equipment was a step in the right direction, Marilyn believed that there were still a lot of subjective decisions being made and automation was not as prevalent as she would have liked. She wanted the process to be more scientific in nature and leave less up to chance or human interpretation.…

    • 5526 Words
    • 23 Pages
    Better Essays
  • Good Essays

    Walgreen's Billing Error

    • 681 Words
    • 3 Pages

    Forecasting is a preparation tool that helps a company figure out what might happen in the future; and to do so, the company will primarily rely on data from both the past and present to figure out possible trends. Forecasts can be made in short term, medium term or long term. When it comes to forecasting it is important for a company to look at all possible factors including fluctuation of prices and the market, possible declines in the economy, technological errors and so much more. In 2014 the well known pharmaceutical company Walgreens prepared to forecast the companies earning up to the year 2016. However, somewhere during their process an error occurred resulting in the company suffering from a billion dollar cut.…

    • 681 Words
    • 3 Pages
    Good Essays
  • Better Essays

    Forecasting

    • 1319 Words
    • 6 Pages

    Forecasting is the art and science of predicting future events. Forecasting is a statement about the future. “Operations management is designed to support forecasted performances and events. Specifically, operations managers allocate personnel, time, and resources in order to meet the demands of forecasts. The most successful companies achieve their results by assuming just such a proactive vice reactive posture.” (Forecasting) While forecasting is widely used, it does not fit into one model; multiple methods and models exist.…

    • 1319 Words
    • 6 Pages
    Better Essays
  • Satisfactory Essays

    Forecasting

    • 250 Words
    • 1 Page

    Forecasting is the process by which companies think over and prepare for the future. It involves predicting the future outcome of various business decisions. This includes the future of the business as a whole, the future of an existing or proposed product. Forecasting is used to answer important questions such as how much profit will our business make; how much demand will be there for the business product or service?…

    • 250 Words
    • 1 Page
    Satisfactory Essays
  • Satisfactory Essays

    The Thoughtful Forecaster

    • 416 Words
    • 2 Pages

    Forecasting is an important aspect in today's business world. Every day businesses strive or lose, depending on the successfulness and accurateness of their forecasting. For successful forecasting, the forecaster needs to have a clear understanding of the current business activities, past trends, and the company’s business strategy. Case 5 exhibits key principles on the way financial forecasting is done.…

    • 416 Words
    • 2 Pages
    Satisfactory Essays
  • Better Essays

    Forecasting Paper

    • 1444 Words
    • 6 Pages

    While forecasting is widely used, it does not fit into a standard one size fits all model. Multiple proven methods and models exist. In this paper we will examine, compare, and contrast the two most commonly used methods, qualitative and quantitative forecasting. Lastly, as a case study, we will examine how the United States Marine Corps forecasts its fiscal year ammunition requirements.…

    • 1444 Words
    • 6 Pages
    Better Essays
  • Powerful Essays

    Paul Saffo is the author of the article of six rules for effective forecasting. He points out that effective forecasting is very different from accurate forecasting as it is possible that a forecast is effective but it may or may not be accurate. Accurate forecasting entails being unsure of the situation and one should not race to answers. Effective forecasting on the other hand means looking at the full range of forecast, understanding the un-surety that lies ahead and not rushing to a conclusion. He also adds that a wise consumer is not a bystander but a participant and a critic. The six rules of forecasting given by him are given below:…

    • 906 Words
    • 4 Pages
    Powerful Essays
  • Powerful Essays

    Optimization Modeling for Inventory Logistics Engineering & Technology Management ETM 540 – Operations Research in Engineering and Technology Management Fall 2013 Portland State University Dr. Tim Anderson Team: Logistics Noppadon Vannaprapa Philip Bottjen Rodney Danskin Srujana Penmetsa Joseph Lethlean Optimization Modeling for Inventory Logistics Contents Abstract ......................................................................................................................................................... 2 Literature review........................................................................................................................................... 2 Review of Optimization Modeling ............................................................................................................…

    • 6468 Words
    • 41 Pages
    Powerful Essays
  • Satisfactory Essays

    Forecasting Questions

    • 451 Words
    • 2 Pages

    Matthew and Sarah Weisner recently leased space in the Plaza Shopping Center and opened a new business, Weisner’s Ice Cream Shop. Business has been good but the Weisners frequently run out of cash. This has necessitated late payment on certain ice cream orders, which in turn is beginning to cause a problem with suppliers. The Weisners plan to borrow from a bank to have cash ready as needed, but first they must forecast how much cash will be needed. Therefore, they have decided to prepare a cash budget for June, July, and August to determine their cash needs. Ice cream sales are made on a cash basis only. The Weisners must pay for their ice cream orders 1 month after the purchase. Rent is $1,000 per month, and they pay them­selves a combined salary of $2,400 per month. In addition, they must make a tax payment of $6,000 in June. The current cash on hand (June 1) is $200, but the Weisners have decided to maintain a target…

    • 451 Words
    • 2 Pages
    Satisfactory Essays
  • Powerful Essays

    Boeing CaseNote

    • 3171 Words
    • 13 Pages

    Each company monitors market signs to determine its next competitive moves. Forecasts are based on uncertain variables that make accurate projections difficult, and the competitors have adopted views of future trends in domestic and international air travel that are in great contrast. As a result, Boeing…

    • 3171 Words
    • 13 Pages
    Powerful Essays
  • Better Essays

    Forecasting Indice

    • 1263 Words
    • 6 Pages

    Another step in the evaluation process of a topic becoming a policy is also within the bounds of Healthcare and in particular the Affordable Healthcare Act that has recently been passed. The Affordable Healthcare Act began as a topic for politicians to stand on simply…

    • 1263 Words
    • 6 Pages
    Better Essays
  • Powerful Essays

    The objective of this assignment is to investigate different business forecasting methods, and demonstrate the benefits of their use for a specific organization. We have learned that demand forecasting invokes the processes of determining exactly what service/products are needed, in what quantity, and in what amount of time. Organizations that are able to implement effective forecasting will be better equipped to find the balance between managing demand for a product/service and the capacity to meet this demand. The ability of optimizing this unique balance enables an organization to use this as a competitive advantage over their competitors…

    • 1347 Words
    • 5 Pages
    Powerful Essays

Related Topics