Supply Chain Management

1453 WordsFeb 21, 20186 Pages
Answer 1: 1.1 Forecasting is the basic and initial step in supply chain planning. Matching supply and demand is at the heart of operational planning. As most of the production systems fail to give an instantaneous response to customer demand, forecast of future demand is very necessary to make efficient and effective operational plans. Plant, process, and labour capacity are all set based on the forecasts of future demand. The facility decisions and the capacity planning are mainly based on long-term aggregate forecasts. Proper inventory levels are planned based on the short-term forecasts at a disaggregated level since specific components and end items are stocked for immediate customer demand. Forecast is an important step in the supply chain planning because most of the functional areas of the firm are affected by forecasts. For example, production planning should be done by manufacturing on a day to day basis to meet the customer needs. Forecasts are supposed to be understood by the finance to make a proper level of investment in the plant, equipment, and inventory so that the budgets are constructed for a better management of business. Proper allocation of resources for different product groups and marketing function campaigns are to be known by the marketing function. Forecasts helps the human resources function in hiring and training decisions when the demand is expected to grow, by determining the labour requirements of the firm. To CREATE
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