Forecasting methods, error measures, S and OP, MRP and capacity planning.
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- What is a moving average forecast?
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A forecast calculated by averaging demand data from a fixed number of recent periods, giving equal weight to each period.- What does exponential smoothing do?
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Weights recent observations more heavily than older ones to produce a forecast, using a smoothing constant between 0 and 1.- What is a seasonal pattern in demand?
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Regular, recurring fluctuations in demand that happen at predictable intervals, such as higher sales in winter or summer.- What is the Delphi method?
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A qualitative forecasting technique using anonymous expert judgments collected through multiple rounds of questionnaires to reach consensus.- When is a causal (regression) forecasting method most appropriate?
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When there is a logical relationship between demand and one or more independent variables, such as price, advertising, or economic indicators.- What is a naive forecast?
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A forecast that assumes the next period's demand equals the current period's demand, or the same value as last year if seasonality exists.- How does forecast accuracy typically change with time horizon?
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Forecast accuracy decreases (error increases) as the time horizon extends further into the future.- What is a trend in demand forecasting?
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A long-term, gradual upward or downward movement in demand over time, independent of seasonal or cyclical effects.- What is Mean Absolute Deviation (MAD)?
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The average of the absolute differences between actual and forecasted demand values, measuring forecast error in the same units as demand.- What is Mean Squared Error (MSE)?
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The average of squared differences between actual and forecasted values, penalizing large errors more heavily than small ones.- What is bias in forecasting?
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The average tendency of a forecast to consistently over-forecast or under-forecast actual demand over time.- What is a tracking signal?
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A control statistic that measures whether a forecast is biased, calculated as cumulative forecast error divided by MAD.- What does RMSE measure?
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Root Mean Squared Error: the square root of MSE, expressing forecast error in the same units as demand while maintaining emphasis on large errors.- What is Sales and Operations Planning (S&OP)?
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A cross-functional business process that aligns supply and demand plans with business strategy, integrating sales, marketing, operations, and finance.- What are the main phases of the S&OP process?
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Demand planning, supply planning, pre-meeting analysis, executive S&OP meeting, and implementation.
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