Forecasting: Introduction & Its
Applications
Department of Mechanical Engineering
NITTTR, Chandigarh
Presented By:-
Deepam...
CONTENTS
 Introduction
 Characteristics of Forecasting
 Principles & Need of Forecasting
 Forecasting Process
 Areas ...
 Forecasting :-
• It is the technique of estimating the relevant future
events and problems on the basis of past & presen...
Contd..
 Why are we interested ?
 Affects the decisions we make today
 Where is forecasting used in POM ?
 Forecast de...
Forecasting Prediction
Objective
Scientific
Free from ‘bias’
Reproducible
Error analysis
possible
Subjective
Intuitive
Ind...
Characteristics of Good Forecast
Compatible
with existing
database
system
GOOD
FORECAST
Timely
Online
Capability
Easy to U...
Six Key Principles Of Forecasting
Iteration
PrudenceDisaggregation
Judgement
Tangiblisation
Triangulation
Need of Forecasting
 Lead time require that decisions be made in
advance of uncertain events.
 is important for all stra...
Forecasting Process
6. Check forecast
accuracy with one
or more measures
4. Select a forecast
model that seems
appropriate...
Importance of Forecasting
Pivotal role in an
Organization Key to
Success
Development of a Effective
Business Control
Imple...
Areas Of Forecasting
Technology
AREAS OF
FORECASTING
Supply of
Labour
Economic
Condition
Growth Trend
New Laws &
Regulatio...
Advantages of Forecasting
 The anticipation of future problems and events to
accelerate early achievements of objectives....
Limitation of Forecasting
 Forecasting is to be made on the basis of certain assumptions
and human judgments.
 Too much ...
Applications of Forecasting
1. Supply chain management
• includes the movement and storage of raw materials, work-in-
proc...
4.Egain Forecasting
• The process of climate change and increasing energy prices has
led to the usage of Egain Forecasting...
8.Transportation Forecasting
• the process of estimating the number of vehicles or people
that will use a specific transpo...
12.Technology Forecasting
• attempts to predict the future characteristics of useful
technological machines, procedures or...
CASE STUDY : HENKEL
 Introduction :-
 Henkel is a manufacturer which operates in three business areas:
- home care produ...
 Company’s Problem :-
 The main reasons to change the existing forecasting model
was the low forecasting accuracy and di...
 Social forecasting at Henkel :-
• The key to increasing the forecasting accuracy is the use of incentives
in Social Fore...
 Results :-
 These incentives greatly increased the forecasting accuracy as we
will show below.
 The average accuracy o...
REFERENCES
 Narasimhan, S.L., D.W. Mcleavey, and P.J. Billington. “Production
Planning And Inventory Control”. 2. New Del...
Email ID :- bkdeepamgoyal@gmail.com
Upcoming SlideShare
Loading in …5
×

Forecasting :- Introduction & its Applications

828 views
595 views

Published on

Production Management

Published in: Engineering, Business, Technology
0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total views
828
On SlideShare
0
From Embeds
0
Number of Embeds
8
Actions
Shares
0
Downloads
29
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide

Forecasting :- Introduction & its Applications

  1. 1. Forecasting: Introduction & Its Applications Department of Mechanical Engineering NITTTR, Chandigarh Presented By:- Deepam Goyal
  2. 2. CONTENTS  Introduction  Characteristics of Forecasting  Principles & Need of Forecasting  Forecasting Process  Areas of Forecasting  Advantages & Disadvantages of Forecasting  Applications of Forecasting  Case Study : Henkel  References
  3. 3.  Forecasting :- • It is the technique of estimating the relevant future events and problems on the basis of past & present data. • It is a systematic guess of the future course of events. • It provides basis for a planning.  Sales forecast:- Estimate of a firm’s revenue for a specified time period. INTRODUCTION
  4. 4. Contd..  Why are we interested ?  Affects the decisions we make today  Where is forecasting used in POM ?  Forecast demand for products and services  Forecast availability/need for manpower  Forecast inventory and material needs daily
  5. 5. Forecasting Prediction Objective Scientific Free from ‘bias’ Reproducible Error analysis possible Subjective Intuitive Individual bias Non reproducible Error analysis limited
  6. 6. Characteristics of Good Forecast Compatible with existing database system GOOD FORECAST Timely Online Capability Easy to Use & Understand Meaningful Units Writing Presentation ReliableAccurate
  7. 7. Six Key Principles Of Forecasting Iteration PrudenceDisaggregation Judgement Tangiblisation Triangulation
  8. 8. Need of Forecasting  Lead time require that decisions be made in advance of uncertain events.  is important for all strategic i.e. changing the engineering design and planning decisions in a supply chain.  Forecasts of product demand, materials, labour, financing are an important inputs to scheduling, acquiring resources & determining resource requirements.
  9. 9. Forecasting Process 6. Check forecast accuracy with one or more measures 4. Select a forecast model that seems appropriate for data 5. Develop/compute forecast for period of historical data 8a. Forecast over planning horizon 9. Adjust forecast based on additional qualitative information and insight 10. Monitor results and measure forecast accuracy 8b. Select new forecast model or adjust parameters of existing model 7. Is accuracy of forecast acceptable? 1. Identify the purpose of forecast 3. Plot data and identify patterns 2. Collect historical data Yes No
  10. 10. Importance of Forecasting Pivotal role in an Organization Key to Success Development of a Effective Business Control Implementation of Co-ordination Project Primacy to Planning
  11. 11. Areas Of Forecasting Technology AREAS OF FORECASTING Supply of Labour Economic Condition Growth Trend New Laws & Regulations Social Change Political ChangeCompetition
  12. 12. Advantages of Forecasting  The anticipation of future problems and events to accelerate early achievements of objectives.  Facilitates Planning  Ensures Coordination  Easy Controlling
  13. 13. Limitation of Forecasting  Forecasting is to be made on the basis of certain assumptions and human judgments.  Too much of expectation will cause disappointment and impair the initiative of the executives.  It requires high degree of skill and the process must be undertaken by specialists.  Long-term forecasts will be less accurate as compared to short-term forecast  Heavy cost and time
  14. 14. Applications of Forecasting 1. Supply chain management • includes the movement and storage of raw materials, work-in- process inventory, and finished goods from point of origin to point of consumption. 2. Economic forecasting • is the process of making predictions about the economy 3.Earthquake Forecasting • defined as the specification of the time, location, and magnitude of a future earthquake within stated limits", and particularly of "the next strong earthquake to occur in a region
  15. 15. 4.Egain Forecasting • The process of climate change and increasing energy prices has led to the usage of Egain Forecasting of buildings 5.Land Use Forecasting • undertakes to project the distribution and intensity of trip generating activities in the urban area 6.Player & Team Performance in Sports • PECOTA, is a sabermetric system for forecasting Major League Baseball player performance 7. Political Forecasting • aims at predicting the outcome of elections Contd..
  16. 16. 8.Transportation Forecasting • the process of estimating the number of vehicles or people that will use a specific transportation facility in the future 9. Telecommunications Forecasting • Telecommunications service providers perform forecasting calculations to assist them in planning their networks 10. Product Forecasting • is the science of predicting the degree of success a new product will enjoy in the marketplace. 11. Sales Forecasting Contd..
  17. 17. 12.Technology Forecasting • attempts to predict the future characteristics of useful technological machines, procedures or techniques 13.Weather Forecasting • is the application of science and technology to predict the state of the atmosphere for a given location. 14. Flood Forecasting • the use of real-time precipitation and streamflow data in rainfall-runoff and streamflow routing models to forecast flow rates and water levels for periods ranging from a few hours to days ahead, depending on the size of the watershed or river basin. Contd..
  18. 18. CASE STUDY : HENKEL  Introduction :-  Henkel is a manufacturer which operates in three business areas: - home care products - sanitary - adhesive technologies  The Henkel group has a workforce of approximately 48,000 employees in over 120 countries around the world, and is amongst the 500 most profitable companies.  Aim :- To improve the accuracy of their sales forecasts of existing and upcoming products. The goal was not an incremental improvement, but a “step-change” in the forecasting accuracy.
  19. 19.  Company’s Problem :-  The main reasons to change the existing forecasting model was the low forecasting accuracy and difficulties with evaluating the potential of new products.  Price promotions performed by competitors influenced Henkel’s data-only based predictions and made them inaccurate.
  20. 20.  Social forecasting at Henkel :- • The key to increasing the forecasting accuracy is the use of incentives in Social Forecasting. • Each month the top 10 forecasters can win iPads and other valuable prizes. These top 10 forecasters also gain recognition. • The difference in a survey is that participants are not rewarded for their mere participation but for their actual forecasting accuracy.
  21. 21.  Results :-  These incentives greatly increased the forecasting accuracy as we will show below.  The average accuracy of Social Forecasting is 85.3%, while Henkel’s method achieved only 69.3%.
  22. 22. REFERENCES  Narasimhan, S.L., D.W. Mcleavey, and P.J. Billington. “Production Planning And Inventory Control”. 2. New Delhi: Prentice Hall of India Learning Private Limited, 2009. 25-52. Print.  Groover, M.P., Emory W. Zimmers JR. “CAD/CAM:Computer-Aided Design and Manufacturing”. 25. New Delhi: Prentice Hall of India Private Limited, 2002. 324-332. Print.  Mukhopadhyay, S.K. ”Production Planning and Control”. 2. New Delhi: Prentice Hall of India Private Limited, 2004. 27-63. Print.  Reddy, J.Mahender. ”Demand forecasting : methods, applications & cases”. 1. New Delhi: Light & Life Publishers, 1981. 152-192. Print. Internet Source :-  www.crowdsourcing.org
  23. 23. Email ID :- bkdeepamgoyal@gmail.com

×