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Forecasting.

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Presentation on theme: "Forecasting."— Presentation transcript:

1 Forecasting

2 Planning Forecast Customer Production Process Finished Goods Inputs

3 Forecasting Marketing: forecasts sales for new and existing products.
Production: uses sales forecasts to plan production and operations; sometimes involved in generating sales forecasts.

4 Characteristics of Forecasts
They are usually wrong A good forecast is usually more than a single number Aggregate forecast are more accurate The longer the forecasting horizon, the less accurate the forecasts will be Forecasts should not be used to the exclusion of known information

5 Forecasting Horizon Short term Intermediate term Long term
(inventory management, production plans..) Intermediate term (sales patterns for product families..) Long term (long term planning of capacity needs)

6 Forecasting Techniques
Judgmental Models Time Series Methods Causal Methods Delphi Method Moving Average Regression Analysis Exponential Smoothing Seasonality Models

7 Types of forecasting Methods
Subjective methods FREE HAND METHOD Objective methods SEMI AVERAGE EVEN DATA ODD DATA LEAST SQUARE TREND MOMENT

8 FREE HAND METHOD

9 SEMI AVERAGE EVEN DATA

10 Y = a + bX No. Year Sales (Y-axis) Base time (X-axis) 1 1988 1850
∑ 1-6 = 11520 2 1989 1800 Y1 1920 3 1990 1900 X1 2.5 4 1991 2000 5 1992 1950 6 1993 2020 a= and b= 7 1994 1980 ∑ 7-12 = 11979 8 1995 1960 Y2 1996.5 9 1996 X2 8.5 10 1997 2200 11 1998 2240 12 1999 2220

11 SEMI AVERAGE ODD DATA

12 Y = a + bX No. Year Sales (Y-axis) Base time (X-axis) 1 1988 1850
∑ 1-5 = 9500 2 1989 1800 Y1 1900 3 1990 X1 4 1991 2000 5 1992 1950 6 1993 2020 a= 1868 and b= 16 7 1994 1980 ∑ 7-11 = 9980 8 1995 1960 Y2 1996 9 X2 10 1997 2200 11 1998 2240

13 TREND MOMENT METHOD

14

15 LEAST SQUARE METHOD

16 EVEN DATA CASE


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