BU385 Chapter Notes - Chapter 3: Average Absolute Deviation, Standard Deviation, Seasonality
Document Summary
Help managers plan the medium-term use of the system. To schedule the short-term use of the system. Demand forecast the estimate of expected demand during a specified future period. Demand forecasting basically involves modelling the past pattern of demand for an item and projecting it into the future while taking new developments into account. Supply chain partners have started to collaborate on the forecasting process. Forecasting techniques generally assume that the same underlying casual system that existed in the past will continue to exist in the future. Forecasts are rarely perfect; actual results usually differ from predicted values. Forecasts for groups of items tend to be more accurate than forecasts for individual items, because forecasting errors among items in a group usually have a cancelling effect. Forecast accuracy decreases the farther the forecasts time period is into the future. Forecasting horizon the range of time periods we are forecasting for. There are two general approaches to forecasting: judgmental and quantitative.
