Production and Operation Managements Forecasting Professor JIANG Zhibin Dr.GeNG Na gengna@sjtu.edu.cn 13917048340 Department of Industrial Engineering Logistics Management Shanghai Jiao Tong University
Production and Operation Managements Forecasting Professor JIANG Zhibin Dr. GENG Na gengna@sjtu.edu.cn 13917048340 Department of Industrial Engineering & Logistics Management Shanghai Jiao Tong University
What is forecasting? Forecasting is the process of predicting the future; What do you want to forecast? ·Your future ● Career Marriage House price ·Stock . Why forecast? How forecast??
What is forecasting? • Forecasting is the process of predicting the future; What do you want to forecast? • Your future • Career • Marriage • House price • Stock • … Why forecast? How forecast??
Introduction(1) Why forecast in a business factory? All business planning is based on a forecast: What a factory should forecast? Factors affecting the future success of a firm- >Sales of existing products >Customer demand patterns for new products; >Needs and availabilities of raw materials; >Changing skills of workers; >Interest rates; >Capacity requirements; >International policies; Marketing and production make the most use of forecasting methods. >Marketing needs to forecast for both new products and existing products; >Sales forecasts are used for production planning
Introduction(1) Why forecast in a business factory? All business planning is based on a forecast; What a factory should forecast? Factors affecting the future success of a firm- Sales of existing products Customer demand patterns for new products; Needs and availabilities of raw materials; Changing skills of workers; Interest rates; Capacity requirements; International policies; Marketing and production make the most use of forecasting methods. Marketing needs to forecast for both new products and existing products; Sales forecasts are used for production planning
Introduction(2) Examples of benefiting from good forecasting and paying price from poor one: Detroit make slow respond to customer tastes in automobiles from heavy gas guzzlers to smaller and more fuel efficient ones during 1960's, such that it suffered much when OPEC oil embargoing in late 1970 speed up the trend of shifting to smaller cars. Compaq Computer became a market leader in the early 1980s by properly predicating consumer demand for portable version of the IBM PC; Ford Motor's early success and later demise .It predicated that customer would want a simpler,less expensive, and easier to be maintained car,and developed its Model T car that dominated the market; .However,later,did not see that customer tired of the open Model T design,and failed to forecast the customer's desire for other designs that almost caused the end of a firm that has monopolized the industry only a few years ago
Introduction(2) Examples of benefiting from good forecasting and paying price from poor one: Detroit make slow respond to customer tastes in automobiles from heavy gas guzzlers to smaller and more fuel efficient ones during 1960’s, such that it suffered much when OPEC oil embargoing in late 1970 speed up the trend of shifting to smaller cars. Compaq Computer became a market leader in the early 1980s by properly predicating consumer demand for portable version of the IBM PC; Ford Motor’s early success and later demise •It predicated that customer would want a simpler, less expensive, and easier to be maintained car, and developed its Model T car that dominated the market; •However, later, did not see that customer tired of the open Model T design, and failed to forecast the customer’s desire for other designs that almost caused the end of a firm that has monopolized the industry only a few years ago
国 Forecasting .Contents .The Time Horizon in Forecasting; Subjective Foresting Methods; .Objective Forecasting Methods; .Evaluating Forecast .Notation Conventions; .Methods for Forecasting Stationary Series; .Trend-Based Methods; .Methods for Seasonal Series;
Forecasting •Contents •The Time Horizon in Forecasting; •Subjective Foresting Methods; •Objective Forecasting Methods; •Evaluating Forecast •Notation Conventions; •Methods for Forecasting Stationary Series; •Trend-Based Methods; •Methods for Seasonal Series;
The Time Horizon in Forecasting Short-term sales Product family sales Shift schedule Labor needs Resource requirements Resource requirements Days/Weeks Weeks/Months Short erme Long Capacity needs Long-term sales patterns Growth trends Fig.2-1 Forecast Horizons in Operation Planning
The Time Horizon in Forecasting Fig.2-1 Forecast Horizons in Operation Planning
he Time Horizon in Forecasting Short-term sales Product family sales Shift schedule Labor needs Resource requirements Resource requirements Days/Weeks Weeks/Months Short ermedo Long .The Short-term forecasting is required for day-to-day planning; Measured usually in day or weeks; Required for inventory management,production plan,and resource requirement planning,and shift scheduling
The Time Horizon in Forecasting Fig.2-1 Forecast Horizons in Operation Planning •The Short-term forecasting is required for day-to-day planning; •Measured usually in day or weeks; •Required for inventory management, production plan, and resource requirement planning, and shift scheduling
The Time Horizon in Forecasting Short-term sales Product family sales Shift schedule Labor needs Resource requirements Resource requirements Days/Weeks Weeks/Months Short ermed Long sioa/syiuow .The Intermediate term is measured in weeks or months; Typical intermediate term forecasting problems include sales pattern of product families,requirements and availabilities of workers,and resource requirements
The Time Horizon in Forecasting Fig.2-1 Forecast Horizons in Operation Planning •The Intermediate term is measured in weeks or months; •Typical intermediate term forecasting problems include sales pattern of product families, requirements and availabilities of workers, and resource requirements
The Time Horizon in Forecasting 'The long term is measured in months or years; It is one part of the overall firm's manufacturing strategy; Problems for long term forecasting include long term capacity planning;long term sales patterns,and growth trend. .One of example is long term planning of capacity. Long Capacity needs Long-term sales patterns Growth trends Fig.2-1 Forecast Horizons in Operation Planning
The Time Horizon in Forecasting Fig.2-1 Forecast Horizons in Operation Planning •The long term is measured in months or years; •It is one part of the overall firm’s manufacturing strategy; •Problems for long term forecasting include long term capacity planning; long term sales patterns, and growth trend. •One of example is long term planning of capacity
Classification of Forecasts Sales force composites; .Customer surveys Subjective-based on human Jury of executive opinion; judgment .The Delphi method; Causal Models-the forecast for a phenomenon is some function Objective-derived of some variables from analysis of .Time Series Methods- data forecast of future values of some economic or physical phenomenon is derived from a collection of their past observations
Classification of Forecasts Subjective-based on human judgment Objective-derived from analysis of data •Sales force composites; •Customer surveys •Jury of executive opinion; •The Delphi method; •Causal Models-the forecast for a phenomenon is some function of some variables •Time Series Methodsforecast of future values of some economic or physical phenomenon is derived from a collection of their past observations
