Demand Forecasting & Demand Planning Master Notes (Ch. 1–5)

Comprehensive vocabulary flashcards covering the fundamentals, evolution, and management of demand forecasting and supply planning.

Micro Forecasting

Company-level forecasting involving sales, shipments, and cash flow, categorized into operational and strategic types.

Macro Forecasting

Country-level forecasting focusing on broad economic indicators such as GDP, inflation, and unemployment.

Operational Forecasts

Short-term forecasts (less than or equal to $6$ months) used for production, procurement, and logistics.

Strategic Forecasts

Long-term forecasts (greater than $6$ months) used for capacity planning, marketing strategy, and M&A.

Silo Forecasting

An early process where each business function forecasts independently, often resulting in chaos.

Consensus Forecasting

A collaborative approach where a business uses one single, shared forecast across all functions.

S&OP

Sales and Operations Planning; a monthly cycle where executives join the decision-making process to align supply and demand.

CPFR®

Collaborative Planning, Forecasting, and Replenishment; a collaborative initiative with customers that utilizes POS data.

Lean Forecasting

A strategy that focuses forecasting efforts specifically on high-value, hard-to-forecast SKUs.

POS (Point of Sale) Data

Direct sales data to consumers; it is considered the most stable and least distorted reflection of true consumer behavior.

Forecast

An expectation or prediction of what will happen in the future.

Goal

An aspiration or targeted achievement, distinct from a realistic forecast.

Budget

A specific financial target set by an organization.

Plan

The set of assumptions utilized to build a forecast.

Functional Bias

The tendency of departments to skew forecasts based on their specific KPIs, such as Sales under-forecasting to lower quotas.

Forecast Horizon

The length of the forecast period, which is driven by production and supplier lead times.

Bullwhip Effect

The distortion of demand signals up the supply chain; it is reduced by using consumer-based forecasts.

Demand Management

The process of managing and growing demand while improving forecasts, reducing costs, and minimizing risk.

SKU Rationalization

The process of pruning the product portfolio to focus on profitable items, which reduces costs and improves forecast accuracy.

Syndicated Data

Third-party aggregated data that includes POS data from various sources along with competitor information.

Private Exchanges

Methods of POS data transmission such as Retail Link or Partners Online.

EDI 852

A standard electronic data interchange method used for transmitting sales and inventory information.

MAPE / WMAPE

Key performance indicators (KPIs) used to monitor the performance and accuracy of forecasts.

Exception Management

A business policy for handling unusual or unpredictable events in the forecasting and planning process.

Intermittent Demand

A characteristic of products that are difficult to forecast because their demand is not continuous or stable.