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    Demand Forecasting

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    lali62
    This document discusses demand forecasting approaches and principles. It describes using both qualitative and quantitative methods, including statistical analysis, market research, expert judgment, time series analysis, regression, and conceptual models. Qualitative methods are used when little data exists, and quantitative when historical data is available. Forecasting can involve top-down or bottom-up approaches, and principles include accepting errors, using multiple iterative methods, and aiming for practical precision over exact figures.

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    Demand Forecasting

    Uploaded by

    lali62
    139 views28 pages
    This document discusses demand forecasting approaches and principles. It describes using both qualitative and quantitative methods, including statistical analysis, market research, expert judgment, time series analysis, regression, and conceptual models. Qualitative methods are used when little data exists, and quantitative when historical data is available. Forecasting can involve top-down or bottom-up approaches, and principles include accepting errors, using multiple iterative methods, and aiming for practical precision over exact figures.

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    Demand forecasting

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    This document discusses demand forecasting approaches and principles. It describes using both qualitative and quantitative methods, including statistical analysis, market research, expert judgment, time series analysis, regression, and conceptual models. Qualitative methods are used when little data exists, and quantitative when historical data is available. Forecasting can involve top-down or bottom-up approaches, and principles include accepting errors, using multiple iterative methods, and aiming for practical precision over exact figures.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as ppt, pdf, or txt
    139 views28 pages

    Demand Forecasting

    Uploaded by

    lali62
    This document discusses demand forecasting approaches and principles. It describes using both qualitative and quantitative methods, including statistical analysis, market research, expert judgment, time series analysis, regression, and conceptual models. Qualitative methods are used when little data exists, and quantitative when historical data is available. Forecasting can involve top-down or bottom-up approaches, and principles include accepting errors, using multiple iterative methods, and aiming for practical precision over exact figures.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as ppt, pdf, or txt
    of 28

    Demand Forecasting

    Demand Forecasting
    Pivotal to operations demand management and PSI planning An unbelievable amount of information exists

    Multiple methods always deepen understanding and lower risk. Precision is usually more apparent than real
    Goal: get close and have contingency plans

    Forecasting Approaches
    Statistical analysis
    Regression, Time Series, etc.

    Market research Conceptual models

    Expert judgment
    Complementary not mutually exclusive

    Qualitative
    Judgment
    Qualitative Methods
    Used when situation is vague & little data exist
    New products New technology

    Quantitative
    Numbers
    Quantitative Methods
    Used in stable situations when historical data exist
    Existing products Current technology

    Intuition, experience e.g., Internet sales

    Math / stats techniques e.g., color televisions

    Demand Forecasting
    Judgment Numbers Qualitative Quantitative

    Top-down

    Disaggregate

    Model

    Bottom-up

    Roll-up

    Extrapolate

    Demand Forecasting
    Judgment Numbers Qualitative Quantitative

    Top-down

    Disaggregate

    Model

    Bottom-up

    Roll-up

    Extrapolate

    Top Down Disaggregation

    Industry Category Product Item

    Top Down Disaggregation

    Industry Company Product Item

    Tyranny of 100
    Share gains must come at the expense of specific competitors (who are very likely to retaliate)

    Which competitor(s)? Why? How?

    Demand Forecasting
    Judgment Numbers Qualitative Quantitative

    Top-down

    Disaggregate

    Model

    Bottom-up

    Roll-up

    Extrapolate

    Bottom-up Aggregation
    Item

    Customer 1

    Customer 2

    Customer 3

    Item

    Item

    Item

    Demand Forecasting
    Judgment Numbers Qualitative Quantitative

    Top-down

    Disaggregate

    Model

    Bottom-up

    Roll-up

    Extrapolate

    Time Series Analysis


    80 70 60 50 40 30 20 10

    Actual

    Projected

    10

    Years

    Time Series Analysis


    Analogous Products
    80 70 60 50 40 30 20 10

    New Product

    Analogous Product

    10

    Years

    Demand Forecasting
    Judgment Numbers Qualitative Quantitative

    Top-down

    Disaggregate

    Model

    Bottom-up

    Roll-up

    Extrapolate

    Intent Translation Model


    ILLUSTRATIVE L TRANSLATION PROSPECTS PERCENT WEIGHT PROFILE BUYERS Definitely Probably Might or might not Probably not Definitely not 90% 40% 10 % 0 0 1 0% 2 0% 2 0% 1 5% 3 5% 9% 8% 2% 0 0 19%
    Source: Thomas, p.206

    Linear Regression Model


    Shows linear relationship between dependent & explanatory variables
    Example: Diapers & # Babies (not time)
    Y-intercept Slope

    ^ Yi = a + b X i
    Dependent (response) variable Independent (explanatory) variable

    Regression Issues
    Illusory correlation
    No cause and effect

    Meaningless coefficients
    Unexplainable variations

    Sequential Factoring
    Total TV Households Cable Homes

    Wired For Cable


    Baseball Fanatics

    Cable/ Baseball Population Baseball Pay Per View Market

    Premium Service Buyers


    * A.K.A. Factor Decomposition, Factor Analysis

    For example
    How much dog food sold annually in the U.S.?
    Express answer in $$$$

    Sequential Factoring
    How much dog food?
    How many people? How many homes? Homes with dogs? Number of dogs per home? Proportion of big & little dogs ? Daily consumption ? (ounces) Ounces per can ? Price per can ?

    How Much Dog Food ?


    Big Eats Little Eats Dog Food Big/little split

    # Big
    # Little Dogs / Home Population

    # Dogs Homes w/ dogs

    Homes People / House % Dogs

    Demand Forecasting
    Market Factoring
    MARKET POTENTIAL MARKET SIZE
    MARKET
    PENETRATION

    SALES MARKET SHARE

    Market Forecasting
    Time Dimension

    Keys to Success
    Practical precision
    Structured approach Multiple methods

    Iterative convergence

    Demand Forecasting
    General Principles

    Errors are a certainty


    Aggregate series most stable

    Tendency to over-correct (especially short-run)

    Demand Forecasting
    Market Disaggregation Time Series Analogies Regression Analysis

    MARKET POTENTIAL

    Bottom-up Composites

    MARKET SIZE
    MARKET
    PENETRATION

    Majority Fallacy

    SALES
    Cannibalization Effect

    Diffusion Model Intent Translation A-T-R Model

    MARKET SHARE
    Value Function Conjoint Analysis Tyranny of 100

    Demand Forecasting

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