DEMAND FORECASTING:
• Estimate of future
demands – planning and
business decisions
• Future are unknown –
errors.
• Choice of appropriate
forecasting techniques
– to reduce errors.
• To consider factors that
influence demand, impact
of these factors, whether it
still influence future
demand
CHAPTER 5: DEMAND FORECASTING & COLLABORATION
PLANNING, FORECASTING, REPLENISHMENT
FORECASTING TECHNIQUES:
• Qualitative forecasting
Generally used when data
are limited, unavailable, or
not currently relevant.
Forecast depends on skill
& experience of
forecaster(s) & available
information.
Four qualitative models used
are:
1. Jury of executive
2. Delphi method
3. Sales force composite
4. Consumer survey
FORECASTING TECHNIQUES:
• Qualitative forecasting
is based on opinion and
intuition.
• Quantitative forecasting
uses mathematical
models and historical data
to make forecasts.
• Time series models are
the most frequently used
among all the forecasting
models.
FORECASTING TECHNIQUES:
• Quantitative forecasting
Time series forecasting- based
on the assumption that the future
is an extension of the past.
Historical data is used to predict
future demand.
Associative forecasting-
assumes that one or more factors
(independent variables) predict
future demand.
It is generally recommended to
use a combination of
quantitative and qualitative
techniques.
FORECASTING TECHNIQUES (continue) FORECASTING TECHNIQUE(Continue)
Components of Time Series- Data should Time Series Forecasting Models
be plotted to detect for the following
components: – Simple Moving Average
Forecasting Model.
– Trend variations: either Simple moving average
increasing or decreasing forecasting method uses
historical data to generate a
– Cyclical variations: wave-
forecast. Works well when
like movements that are
demand is fairly stable over
longer than a year
time.
– Seasonal variations: show
peaks and valleys that
repeat over a consistent
interval such as hours, days,
weeks, months, years, or
seasons
– Random variations: due to
unexpected or unpredictable
events

CHAPTER 5: DEMAND FORECASTING & COLLABORATION

PLANNING, FORECASTING, REPLENISHMENT