demand forcasting

Part 3 : Acquisition & Production Support.

Ch.3 Demand Forecasting.

Edited by Dr. Seung Hyun Lee (Ph.D., CPL)
IEMS Research Center,

E-mail : [e-mail]

Demand Forecasting.
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Definition.
․ An estimate of future demand.
․ A forecast can be determined by mathematical means using historical, it can be created subjectively by using estimates from informal sources, or it can represent a combination of both techniques. - 2 -

Demand Forecasting.
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Why Forecast ?
․ To plan for the future by reducing uncertainty.
․ To anticipate and manage change.
․ To increase communication and integration of planning teams.
․ To anticipate inventory and capacity demands and manage lead times.
․ To project costs of operations into budgeting processes.
․ To improve competitiveness and productivity through decreased costs and improved delivery and responsiveness to customer needs. - 3 -

Demand Forecasting.
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Demand Forecasting System.
￭ Constructing Demand Forecasting System.
1. Determine the information that needs to be forecasted.
․ This includes defining the source of the historical data to be provided and the periods over which the data will be collected.

2. Assign responsibility for the forecast to a person which performance will be measured on the accuracy of actual sales to the forecast.
3. Setup forecast system parameters :
․ Forecast horizon.
․ Forecast level : Business unit, Product family, Model and brand, or SKU.
․ Forecast period and frequency.
․ Forecast revision : The way in which changes to the forecast will be recorded, such

as

original

forecast,

revised

forecast,

subsequently

revised

forecast, current forecast.
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Demand Forecasting.
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Demand Forecasting System.
￭ Constructing Demand Forecasting System.
4. Select appropriate forecasting models and techniques.
5. Collect data for input to forecasting