Chapter 4 (SCM 488)
1. What are the 5 elements of good forecasting?
2. Companies that are best-in-class forecasting average ____% less inventory; ____% higher order fulfillment;_____% shorter cash-to-cash cycles
3. What are the 7 basic steps to creating a forecast?
4. What are the time horizons of short, medium and long range forecasts?
5. During the 4 stages of product lifecycle when are qualitative and quantitative forecasts done?
6. What is a problem forecasting with simple moving averages?
7. What is a smoothing constant and what are typical values?
8. What is a problem with exponential smoothing forecasts?
9. What does a season index of 120% mean?
10. No linear correlation =___________Perfect linear correlation =__________
11. Coefficient of determination measures what?
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12. Simple Moving Average Forecast
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Month
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Sales
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Forecast
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1
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3
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2
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5
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3
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8
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4
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13. Weighted Moving Avg.
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60%
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most recent month
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30%
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2 months ago
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10%
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3 months ago
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Month
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Sales
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1
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3
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2
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5
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3
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8
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4
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14. Exponential Smoothing
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Week
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Demand
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Forecast (α=0.2)
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1
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500
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2
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600
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3
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400
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4
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300
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5
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500
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(β=0.4)
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15. Exponential Smoothing with Trend
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(α=0.2)
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Month
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Actual
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Smoothed Forecast
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Smoothed Trend
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Forecast Including Trend
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1
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10
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9
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2
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2
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20
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16. Season Indices
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Month
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2001
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2002
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2003
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Avg over 3 yrs
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Monthly avg
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Seasonal Index
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Jan
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60
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67
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70
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Feb
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64
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68
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69
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March
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90
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98
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100
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April
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100
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105
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110
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May
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100
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110
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120
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17. Forecast Accuracy
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Month
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Sales
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Forecast
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1
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30
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32
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2
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50
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39
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3
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30
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40
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4
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20
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32
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MAD =
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Is the forecast over or underestimating?
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MSE =
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MAPE =
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% accuracy =
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18. Forecast Tracking
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Absolute
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Absolute
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Month
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Sales
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Forecast
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Error
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RSFE
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Forecast Error
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Forecast Error
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MAD
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Tracking signal
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1
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30
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32
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2
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50
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39
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3
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30
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40
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4
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20
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32
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