COMM 225 Chapter Notes - Chapter 3: Forecast Error, Exponential Smoothing, Operations Management
9 Dec 2016
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Product demand forecasts are typically developed by sales/marketing function. Operations function, through production planning, will receive and use demand forecasts. Operations f(x) develops demand/usage forecasts for suppliers and spare parts. Forecasts are basic input in decision processes of operations management because they provide info on future demand. Primary goal of om is to match supply to demand. Having forecast of demand essential for determining how much capacity/ supply will be needed to meet demand. Demand forecast - estimate of expected demand during speci(cid:222)ed future period. Helps operating managers by reducing some of uncertainty, letting them develop more meaningful plans. Models past pattern of item demand and projects it into future while taking new developments into account. Usually, marketing/sales departments are responsible for preparing demand forecasts for (cid:222)nished goods or services, but operations managers should be knowledgeable about them. Forecasting horizon - range of time period we are forecasting for.
