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24 Cards in this Set

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  • Back
strategy relating to the percentage of capacity being used
yeild management
two uses for forecasts
to help managers plan the system and
to help them plan the use of the system
planning the use of the system involves what type of planning
short to mid range planning, inventory, work force levels, purchasing and production, budgeting and scheduling
Features common to all forecasts are
assume that what continued in the past will continue in the future

rarely perfect

groups more accurate than individual items

s/t more accurate than l/t
flexible business organizations, require a ___ forecast horison
shorter
Elements of a good forecast are
timely

accurate

reliable

exist in meaningful units

written

simple and easy to understand

cost-effective
the steps in the forecasting process are
determine the purpose of the forecast

establish a time horizon

obtain appropriate data

make forecast

monitor the forecast
two approaches to forecasting
qualitative (soft)
quantitative (hard)
rely on the analysis of subjective inputs obtained from various sources
judgemental forecasts
projects past experiences into the future
time-series forecasts
use equations that consist of one or more explanatory variables that can be used to predict demand
associative models
a time ordered sequence of observations taken at regular intervals, used to make a prediction
time series forecast
Patterns in historical data usually take the form of
trend
seasonality
cycles
irregular variations
random variations
wavelike variations of more than a year's duration
cycle
short term, fairly regular variation
seasonality
unusual circumstances that cause variations in data
irregular variations
residual variations in data that ca nnot be explained by trend, seasonality, cycles, or irregular variations
random variations
a forecast that uses a single previous value of a time serices as a basis of a forecast
naive forecast
benefits of naive forecasting
virtually no cost
quick and easy to prepare
easily understood
is a viable standard of comparison for other methods
term for random variation in historical data
white noise
Three techniques for averaging are
moving average
weighted moving average
exponential smoothing
a method of forecasting that assigns more weight to recent values in a series
weighted moving average
equation for exponential smoothing
Next forecast = previous forecast + α (Actual – Previous forecast)

α is a smoothing constant
A linear trend equation has the form
F=a+bt