Instructor:

Cecil Bozarth , PhD
North Carolina State University
Author of "Introduction to Operations and Supply Chain Management," 2nd edition, Pearson, Prentice-Hall

 

SECTION Index

Introduction

Basic Rules of Forecasting

Time Series Models

   1. Exponential Smoothing

   2. Double Exponential Smoothing

Advanced Techniques

   1. Single Regression

   2. Multiple Regression

Qualitative Methods

Measuring Forecast Accuracy

Forecasting Strategies

   1. 3-Step Process

   2. Q2 Forecasting

Summary

References

 

 

Approaches to Forecasting : A Tutorial

Basic Rules of Forecasting

 

Forecasts

Forecasts Are No Substitue for Calculated Values

Two Distinct Approaches to Forecasting

 

What Are the Basic Rules of Forecasts

• Forecasts are almost always wrong.
• Important to measure forecast accuracy and take actions to improve when necessary

• Near-term forecasts tend to be more accurate.

• Forecasts for groups (product categories, multiple stores, etc.) tend to be more accurate.

• Forecasts are no substitute for calculated values.

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Forecasts Are No Substitue for Calculated Values

Recall our earlier example…

 

POS forecasts were used to calculate the replenishment forecast at the DC

 

Disconnect

 

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Two Distinct Approaches to Forecasting

Qualitative Methods

• Used when situation is vague & little data exist
• New products
• New technology

• Involves intuition, experience

• ex., Forecasting sales to a new market

Quantitative Methods

• Used when situation is ‘stable’ & historical data exist
• Existing products
• Current technology

• Heavy use of mathematical techniques

• ex., Forecasting sales of a mature products

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