1. Pertemuan 11

2. Demand Forecasting in a Supply Chain

3. Topics The role of forecasting in a supply chain
Characteristics of forecasts
Components of a forecasts and forecasting methods
Basic approach to demand forecasting
Time-series forecasting methods
Measures of forecast error
The role of IT in forecasting

4. The role of forecasting in a supply chain
Demand forecasts form the basis of all supply chain planning.
All push processes are performed in response to customer demand. All pull processes also need forecast because not the exact amount will executed.

5. Characteristics of forecasts
Forecast are always inaccurate
Long-term forecasts are usually less accurate than short-term
Aggregate forecasts are usually more accurate than disaggregate forecasts
The farther up the supply chain a company is, the greater is the distortion of information it receives.

6. Components of a forecasts and forecasting methods
Forecasting methods are classified according to four types:
Qualitative
Time Series
Causal
Simulation

7. Basic approach to demand forecasting
Five points to forecast effectively:
Understand the objective of forecasting
Integrate demand planning and forecasting throughout the supply chain
Identify the major factors that influence the demand forecast
Forecast at the appropriate level of aggregation
Establish performance and error measures for the forecast

8. Time-series forecasting methods
Multiplicative
Systematic component = level x trend x seasonal factor
Additive
Systematic component = level + trend + seasonal factor
Mixed
Systematic component = (level + trend) x seasonal factor

9. Measures of forecast error
Finding an error that is well beyond historical estimates nay indicate that the forecasting method in use is no longer appropriate or demand has fundamentally changed.

10. Measures of forecast error [cont]
Forecast errors contain valuable information and must be analyzed carefully for two reason:
Managers use error analysis to determine whether the current forecasting method is predicting the systematic component of demand accurately
All contingency plans must account for forecast error

11. The role of IT in forecasting
Forecasts are virtually always inaccurate. A good IT system should help track historical forecast errors so they can be incorporated into future decision. Forecasting module for supply chain are available in ERP from SAP and Oracle. And statistical analysis software such SAS and SPSS can be used for forecasting.

12. Sales and Operations Planning: Planning Supply and Demand in a Supply Chain

13. Topics Responding to predictable variability in the Supply Chain
Managing Supply
Managing Demand

14. Responding to predictable variability in the Supply Chain
Faced with predictable variability, a company’s goal is to respond in a manner that balances supply with demand to maximize profitability. The goal of sales and operations planning is to appropriately combine two broad option to handle predictable variability:
Manage supply using capacity, inventory, subcontracting, and backlogs
Manage demand using short-term price discounts and promotions

15. Managing Supply
A firm can vary supply of product by controlling a combination of the following two factors:
Production Capacity
Inventory

16. Managing Supply [cont.]
Managing Capacity
Time flexibility from workforce
Use of seasonal workforce
Use of subcontracting
Use of dual facilities-specialized and flexible
Designing product flexibility into the production processes

17. Managing Supply [cont.]
Managing Inventory
Using common components across multiple products
Build inventory of high-demand or predictable-demand products

18. Managing Demand
Supply chains can influence demand by using pricing and other forms of promotion.
Four key factors influence the timing of a promotion:
Impact of the promotion on demand
Cost of holding inventory
Cost of changing the level of capacity
Product margins