Академический Документы
Профессиональный Документы
Культура Документы
Content
Role of forecasting
The basis for all strategic and planning decisions in a
supply chain
Used for both push and pull processes
Examples:
Production: scheduling, inventory, aggregate
planning
Marketing: sales force allocation, promotions, new
production introduction
Finance: plant/equipment investment, budgetary
planning
Personnel: workforce planning, hiring, layoffs
All of these decisions are interrelated
Characteristics of forecasting
Forecasts are always wrong. Should include expected
value and measure of error.
Long-term forecasts are less accurate than short-term
forecasts (forecast horizon is important)
Aggregate forecasts are more accurate than
disaggregate forecasts
Forecasting methods
Qualitative: primarily subjective; rely on judgment and
opinion
Time Series: use historical demand only
Static
Adaptive
Causal: use the relationship between demand and some
other factor to develop forecast
Simulation
Components of a demand
O=S+R+E
O= Observed demand
S = Systematic component: expected value of demand
R = Random component: part of the forecast that deviates from
the systematic component
E = Forecast Error: difference between forecast and actual
demand
Systematic component
Level
Trend
Seasonality
(current deseasonalized demand) (growth or decline in the demand) (predictable seasonable fluctuation)
Static Methods
Assume a mixed model:
Systematic component = (level + trend)(seasonal factor)
Ft+l = [L + (t + l)T]St+l
= forecast in period t for demand in period t + l
L = estimate of level for period 0
T = estimate of trend
St = estimate of seasonal factor for period t
Dt = actual demand in period t
Ft = forecast of demand in period t
7-9
Static Methods
7-10
Demand Dt
8000
13000
23000
34000
10000
18000
23000
38000
12000
13000
32000
41000
Deseasonalizing Demand
Dt =
S Di / p
for p odd (sum is from i = t-(p/2) to t+(p/2)), p/2 truncated to
lower integer
Deseasonalizing Demand
For the example, p = 4 is even
For t = 3:
D3 = {D1 + D5 + Sum(i=2 to 4) [2Di]}/8
= {8000+10000+[(2)(13000)+(2)(23000)+(2)(34000)]}/8
= 19750
D4 = {D2 + D6 + Sum(i=3 to 5) [2Di]}/8
= {13000+18000+[(2)(23000)+(2)(34000)+(2)(10000)]/8
= 20625
7-15
Deseasonalizing Demand
Then include trend
Dt = L + tT
Where
Dt = deseasonalized demand in period t
L = level (deseasonalized demand at period 0)
T = trend (rate of growth of deseasonalized demand)
Trend is determined by linear regression using deseasonalized
demand as the dependent variable and period as the
independent variable
In the example, L = 18,439 and T = 524
7-16
50000
Demand
40000
30000
Dt
Dt-bar
20000
10000
0
1 2 3 4 5 6 7 8 9 10 11 12
Period
7-17
D2 = 13000
S2 = 13000/19487 = 0.67
The seasonal factors for the other periods are calculated
in the same manner
7-18
Dt Dt-bar S-bar
8000 18963 0.42 = 8000/18963
13000 19487 0.67 = 13000/19487
23000 20011 1.15 = 23000/20011
34000 20535 1.66 = 34000/20535
10000 21059 0.47 = 10000/21059
18000 21583 0.83 = 18000/21583
23000 22107 1.04 = 23000/22107
38000 22631 1.68 = 38000/22631
12000 23155 0.52 = 12000/23155
13000 23679 0.55 = 13000/23679
32000 24203 1.32 = 32000/24203
41000 24727 1.66 = 41000/24727
7-19
7-21
Adaptive Forecasting
The estimates of level, trend, and seasonality are
adjusted after each demand observation
General steps in adaptive forecasting
Moving average
Simple exponential smoothing
Trend-corrected exponential smoothing (Holts model)
Trend- and seasonality-corrected exponential smoothing
(Winters model)
7-22
Moving Average
Used when demand has no observable trend or
seasonality
Systematic component of demand = level
The level in period t is the average demand over the last N
periods (the N-period moving average)
Current forecast for all future periods is the same and is
based on the current estimate of the level
Lt = (Dt + Dt-1 + + Dt-N+1) / N
Ft+1 = Lt and Ft+n = Lt
After observing the demand for period t+1, revise the
estimates as follows:
Lt+1 = (Dt+1 + Dt + + Dt-N+2) / N
Ft+2 = Lt+1
7-35
Moving average
Simple exponential smoothing
Trend-corrected exponential smoothing
Trend- and seasonality-corrected exponential
smoothing
7-37
Shoppers Stop
Westside (Trent)
Pantaloon (Big Bazaar)
Lifestyle
RPG Retail (Foodworld, Musicworld)
Crossword
Questionnaire
How is the forecasting done?
Past data and Targeted growth
Tastes and trends are subjective terms
What are some tips for developing a forecasting model for new
product?
try out different forecasting techniques
What is the period of time in the future for which you do forecasting?
a six monthly basis, place orders at 2 months in advance
Questionnaire
Does the volume of sale have a bearing on the rack
space you allocate to a good?
They have a fixed rack space and that dictates how much they can stock.
Conclusion
The increasing competition in Indian Retail Sector is
compelling retailers to use demand forecasting tools.
Retailers who have their own brand labels use the
forecasting techniques of the kind we study in theory.
On the other hand, small scale retailers can employ
qualitative techniques on the historical data and
considering the behavior trends in the market.
References
Supply Chain Management by Sunil Chopra, Peter
Meindl, Dharam Vir Kalra
Images retail. http://www.imagesretail.com/india retail
report.htm.
www.sciencedirect.com