Supply Chain Management, Lean System, Processes and operation

Homework Chapter 4 (SCM 488)

1. What are the 5 elements of good forecasting?

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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?

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4. What are the time horizons of short, medium and long range forecasts?

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5. During the 4 stages of product lifecycle when are qualitative and quantitative forecasts done?

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6. What is a problem forecasting with simple moving averages?

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7. What is a smoothing constant and what are typical values?

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8. What is a problem with exponential smoothing forecasts?

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9. What does a season index of 120% mean?

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10. No linear correlation =___________Perfect linear correlation =__________

11. Coefficient of determination measures what?

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12. Simple Moving Average Forecast
Month	Sales	Forecast
1	3
2	5
3	8
4

13. Weighted Moving Avg.
60%	most recent month
30%	2 months ago
10%	3 months ago
Month	Sales
1	3
2	5
3	8
4

14. Exponential Smoothing
Week	Demand	Forecast (α=0.2)
1	500
2	600
3	400
4	300
5	500
				(β=0.4)
15. Exponential Smoothing with Trend		(α=0.2)
Month	Actual	Smoothed Forecast	Smoothed Trend	Forecast Including Trend
1	10	9	2
2	20

16. Season Indices
Month	2001	2002	2003	Avg over 3 yrs	Monthly avg	Seasonal Index
Jan	60	67	70
Feb	64	68	69
March	90	98	100
April	100	105	110
May	100	110	120

17. Forecast Accuracy

Month	Sales	Forecast
1	30	32
2	50	39
3	30	40
4	20	32
		MAD =
		Is the forecast over or underestimating?
		MSE =
		MAPE =
		% accuracy =

18. Forecast Tracking

					Absolute	Absolute
Month	Sales	Forecast	Error	RSFE	Forecast Error	Forecast Error	MAD	Tracking signal
1	30	32
2	50	39
3	30	40
4	20	32