Untitled Flashcards Set

What is forecasting?

The scientific process of predicting a future event.

Give three examples of forecasting.

Weather forecast, sports games, sales forecast.

What is the focus of demand/sales forecasting?

Studying and predicting future sales or demand for products.

What is short-range forecasting?

Predicts a few days into the future and is used for day-to-day operational decisions.

List two characteristics of short-range forecasting.

More accurate and uses quantitative techniques.

What is long-range forecasting?

Predicts a few years into the future and is used for strategic long-term decisions.

List two characteristics of long-range forecasting.

Less accurate and uses qualitative techniques.

What does PLC stand for?

Product Life Cycle.

How is PLC related to forecasting?

Different phases of PLC (Introduction, Growth, Maturity, Decline) require varying forecasting lengths.

Describe the growth phase of the PLC.

Sales grow rapidly as consumers start liking and knowing the product.

What is the maturity phase of the PLC?

Sales stabilize, and growth flattens out due to competition.

What is the decline phase of the PLC?

Sales begin to decrease as demand wanes.

Why is forecasting important for supply chain management?

It helps determine how much to order and when for supplies and materials.

How does forecasting assist in capacity planning?

It indicates how much capacity is needed for storage, production, and sales.

What role does forecasting play in human resource planning?

It helps determine the number of employees needed and where they should be stationed.

Why is scheduling important in forecasting?

It helps decide when to schedule employees and for how long based on demand.

How does forecasting assist in market positioning?

It informs product and advertising release timing according to market conditions.

What is the Jury of Executive Opinion technique?

A qualitative technique involving a small group of high-level experts who provide insights based on experience.

What are the disadvantages of the Jury of Executive Opinion?

It may lead to 'group think' which can limit diverse ideas.

Describe the Delphi method.

An iterative process where feedback from a group is pooled until consensus is reached.

What is the Sales Force Composite forecasting method?

It aggregates sales projections from each salesperson in their territory to predict future sales.

Why may the Sales Force Composite be overly optimistic?

Sales reps may overestimate sales based on their strong relationships with customers.

What is a time series?

A series of data points collected at regular time intervals to identify trends over time.

List the four components of a time series.

Trend, seasonality, cyclicals, random errors.

What signifies a trend in a time series?

A gradual upward or downward movement over time.

How does seasonality affect a time series?

Regular fluctuations in data that occurs due to seasons or time cycles.

What are cyclicals in a time series?

These are movements tied to macroeconomic events like economic cycles.

What are random errors in the context of time series?

Unpredictable fluctuations that are unsystematic and random.

Why is location important in strategic decision-making?

It significantly affects costs, is hard to change once established, and impacts long-term success.

What are some factors that affect location decisions?

Labor productivity, wage rates, exchange rates, and proximity to consumers.

What is a numeric question related to the Factor-Rating Method?

Calculate the weighted score by multiplying weights and their respective scores.

Describe the Center-of-gravity method.

It identifies the location of a distribution center to minimize transportation costs.

What is new forecast calculation in exponential smoothing?

New forecast = last period’s forecast + a(last period’s actual demand - last period’s forecast).

What does the least squares method calculate?

It calculates regression variables to determine relationships between data points.

How do you calculate Mean Squared Error (MSE)?

MSE = sum of (forecast errors)^2 / n.

Explain Mean Absolute Deviation (MAD).

MAD = sum of absolute value of error / n.

What is the formula for Mean Absolute Percent Error (MAPE)?

MAPE = ((sum of absolute value of error / actual value) / n) * 100.

How is a weighted moving average calculated?

Weighted moving average = sum of (weight for period n × demand in period n) / sum of weights.

What is a critical use of forecasting in business?

It enables companies to anticipate market changes and adapt accordingly.

How does demand forecasting help businesses?

It allows businesses to align inventory levels with expected sales.

What are the implications of inaccurate forecasting?

It can lead to either overproduction or stockouts, affecting sales and customer satisfaction.

What is an example of a qualitative forecasting technique?

Market survey through questionnaires.

How does the Jury of Executive Opinion rely on expertise?

It uses the intuitive judgment of experienced executives to forecast outcomes.

How does the Delphi method ensure unbiased results?

It solicits anonymous feedback from participants, reducing influence from dominant voices.

What type of forecast is more suitable for new products?

Long-range forecasts due to uncertainty in demand.

Why is seasonal forecasting important in retail?

It helps retailers stock appropriately for different times of the year.

What is the challenge of forecasting in volatile markets?

Increased unpredictability can lead to forecasting errors.

How do organizations use salesforce forecasting effectively?

By combining individual forecasts for a more accurate aggregate prediction.

What is the significance of the variables in the least squares regression?

They help in understanding the relationship between dependent and independent variables.

Describe how random errors impact forecasting.

They introduce unpredictability, making it harder to achieve accurate forecasts.

What is the advantage of qualitative forecasting methods?

They allow for insights that quantitative data may not capture.

What role does technology play in modern forecasting?

It enhances data analysis and modeling capabilities for more accurate forecasts.

Why is it crucial for businesses to adapt forecasting methods over time?

Market conditions and consumer behaviors change, requiring updated forecasting techniques.

What is necessary for effective capacity planning?

Accurate forecasting to align production capacity with future demand.

How does proximity to consumers affect location decisions?

Being close to the market can reduce transportation costs and improve service.

What is one strategy for managing forecasting errors?

Regularly reviewing and adjusting forecasts based on real-time data.

What does the ‘group think’ disadvantage imply for forecasting teams?

It could suppress diverse opinions and lead to less accurate predictions.

What does the time series trend line indicate about sales?

It demonstrates the overall direction of sales performance over time.

In forecasting, how are qualitative beliefs transformed into predictions?

By structuring expert opinions into a systematic method for assessment.

What role do economic indicators play in forecasting?

They provide data that can help predict future market trends.

How does seasonal forecasting benefit supply chain management?

It prepares organizations for fluctuations in demand throughout the year.