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
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