SCM 303

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Exam 3 Outline SCM 303
Chapter 12
Demand Planning: Forecasting and demand management

Demand Planning- the combined process of forecasting and managing customer demands to create a planned pattern of demand that meets the firm’s operational and financial goals. Fluctuating customer demand cause operational inefficiencies, such as: Need for extra capacity resources, backlog, customer dissatisfaction, system buffering (safety stock, safety lead time, capacity cushions, etc.)

3 basics tactics to influence demand- influence the timing or quantity of demand through pricing changes or promotions. Managing the timing of order fulfillment. Encourage customers to shift their orders from one product to another, or from one service
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Moving average- a forecasting model that computes a forecast as the average of demands over a number of immediate past periods.

Figure 12-1 pg. 344 - Know the role that demand planning plays in operations management

Components of demand - patterns of demand over time.

Types of forecasting techniques- qualitative (judgment based) Quantitative (model-Based)

Factors affecting forecast error and accuracy- Time horizon, Level of detail – product, geography, time.
Exponential smoothing- a moving average approach that applies exponentially decreasing weights to each demand that occurred farther back in time.

Smoothing coefficient - a parameter indicating the weight given to the most recent demand.

Regressing analysis - a mathematical approach for fitting an equation to a set of data

Mean absolute deviation (MAD) – the average size of forecast errors, irrespective of their directions. Also called mean absolute error. Calculates forecast accuracy

Mean forecast error (MFE) - Calculates forecast bias

Postponable product- a product designed so that it can be configured to its final form quickly and inexpensively once actual customer demand is known.

Collaborative Planning, Forecasting and replenishment - a method by which supply chain partners periodically share forecasts, demand plans, and resource plans in order to reduce uncertainty and risk in meeting customer demand. Involves- Market planning-
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