Professional Documents
Culture Documents
Demand Forecasting
Demand Forecasting
Demand Forecasting
Weria Khaksar
Email: weria@uniten.edu.my
Room No. BN-03-08
Accounting:
product/process
cost estimates,
ForecastsNew
are
a basic input
in the
cash management,
decision
making
processes
Finance: Equipment needs, Amount of funding,
because
they
provide
Human Resource: Hiring and Layoff activities,
information
on
FUTURE
Marketing: Pricing and Promotion,
e-business
strategies,
global competition strategies,
DEMAND.
Operations: Scheduling, capacity planning, work
Why?
assignments, inventory
planning, project
management,
Because
the primary goal of the
Product/Service Design: Revision of current
production
planners
is
to
match
features, design of new products or services,
1. Timely
2. Accurate
3. Reliable
4. Meaningful
5. Based
on
a
simple
understandable method
6. Cost-effective
and
217
215
213
216
216
215
210
214
213
211
219
214
216
217
212
216
217
215
213
216
3
9
1.41%
-3
. 1
1
216 215
1
=
=
= . %0.46%
=
=
=
.
= = = .
210
214
-4
4
16
1.90%
213
211
0.94%
219
214
25
2.28%
216
217
-1
0.46%
212
216
-4
16
1.89%
-2
22
76
10.26%
0.92%
There are
techniques:
three
classes
of
forecasting
JUDGMENTAL FORECASTS
TIME-SERIES FORECAST
ASSOCIATIVE MODLS
JUDGMENTAL FORECASTS
Available
In theseapproaches:
approaches, forecasts
rely solely on
judgment
opinion. For instance:
Executiveand
Opinion
TIME-SERIES FORECAST
TIME-SERIES FORECAST
Irregula
r
variatio
n
Trend
2. Seasonality
3. Cycles
Cycles
4. Irregular variations
Seasonal
variations
5. Random variations
90
89
88
+ + +
= =
=
Demand
42
40
43
40
41
Answer: = . , = .
= =
= + + +
=
Demand
42
40
43
40
41
Answer: = .
= 1 + 1 1
= 1 + 1
= 1 1 + 1
Example:
= .
= .
Period,
(t)
Demand
Forecast
Forecast
42
40
43
40
41
39
46
44
45
10
38
11
40
12
Example:
= .
= .
Period,
(t)
Demand
Forecast
Forecast
42
40
42
42
43
41.8
41.2
40
41.92
41.92
41
41.73
41.15
39
41.66
41.09
46
41.39
40.25
44
41.85
42.55
45
42.07
43.13
10
38
42.35
43.88
11
40
41.92
41.53
41.73
40.92
12
Example:
Period,
t
Deman
d
42
40
43
40
41
39
46
44
45
10
38
11
40
MAD
MSE
MAPE
Foreca
st
Error
Two-Period MA
Foreca
st
Error
ES
Foreca
st
Error
Example:
Foreca
st
Two-Period MA
Period,
t
Deman
d
Error
Foreca
st
42
40
42
-2
43
40
41
40
43
-3
41
40
39
Error
ES
Foreca
st
Error
42
-2
41.8
1.2
41.5
-1.5
41.92
-1.92
41.5
-0.5
41.73
-0.73
41
-2
40.5
-1.5
41.66
-2.66
46
39
40
41.39
4.61
44
46
-2
42.5
1.5
41.85
2.15
45
44
45
42.07
2.93
10
38
45
-7
44.5
-6.5
42.36
-4.36
11
40
38
41.5
-1.5
41.92
-1.92
MAD
3.11
2.33
2.50
MSE
16.25
11.44
8.73
MAPE
7.49%
5.64%
5.98%
= +
=
( )
=
700
724
720
728
740
742
758
750
770
10
775
780
760
Sales
Week (t)
740
720
700
680
0
6
Week
10
12
55(55)
1
700
700
724
1448
720
2160
728
2912
740
3700
742
4452
758
5306
750
6000
770
6930
10
775
7750
7407
41358
760
7407 7.51(55)
=
= 699.40
10
Sales
740
720
= 699.40 + 7.51
700
680
0
2 = .4 ,
6
Week
=789.52
8
10
12
Linear Regression:
Obtain a equation of
a straight line that
Minimizes the sum of
squared vertical
Deviations of data
points from the line
(Least Squares Error)
Linear Regression:
= +
=
( )( )
( ) ( )
or
Linear Regression:
= . , = .
= = . + . = .
Linear Regression:
How accurate a prediction might be for a
linear regression line:
Standard Error of Estimates:
=
( )
( )( )
( 2 ) ( )2
1, +1
2 ( )2
+1:
Direct Relationship
0: No linear relationship
1:
Inverse Relationship
Unit Sold, Y
10