SCM 301 Chapter Notes - Chapter 9: Average Absolute Deviation, Delphi Method, Gauge Theory
Document Summary
Forecast: an estimate of the future level of some variable, common variables that are forecasted include demand levels, supply levels, and price. Demand in the market for a particular product or service increases or decreases (hybrid cars) Other sources of demand that will impact how much of the market level demand the firm will capture. Technological & political trends that might affect supply. Forecast prices for key materials and services they purchase. Forward buying: companies buy larger quantities than usual. Futures contract: a legal agreement to buy or sell a commodity at a future date at a price that is fixed at the commodity at a future date at a price that is fixed at the time of agreement. Law 1: forecasts are almost always wrong (but still useful) No forecast approach can predict the exact level. Law 2: forecasts for the near term tend to be more accurate.
