BU385 Chapter Notes - Chapter 3: Forecast Error, Operations Management, Time Series
Document Summary
Demand forecast are the basis for many decisions. All managers need to understand and use demand forecasts. Product demand forecasts developed by sales/ marketing function, received and used by operations. Operations function develops demand/ usage forecasts for supplies and spare parts. Primary goal of operations management is to match supply to demand. Essential for determine capacity/ supplied needed to meet demand. Uncertainty clouding planning makes it difficult to plan effectively. Demand forecast- estimate of expected demand during a specified future period. Two types of information when making forecasts: current factors/ conditions; past experience in similar situation (everyday situations) Model past patterns and extrapolating while considering new developments. Three types of demand used; help design systems, help plan medium-term use of system, schedule short-term use of system. Designing involves long-term plans about which goods/ services to offer: capacities, facilities, equipment, location, etc. Planning medium-term use involves planning overall inventory and workforce levels, planning production at the aggregate product family level.
