This slide is for forecasting

1. FORECASTING
Presented By
Sanjeev Kumar Das
Anita Khadka

2. MEANING

4. TYPES OF FORECASTS
 Economic forecasts
 Address business cycle – inflation rate, money
supply, housing starts, etc.
 Technological forecasts
 Predict rate of technological progress
 Impacts development of new products
 Demand forecasts
 Predict sales of existing product

5. THE STRATEGIC IMPORTANCE OF
FORECASTING

6. Human Resources
Capacity
Supply Chain Management
Let’s look at the impact of product
forecast on three activities:-

7. Time Series Components
Trend
Seasonal
Cyclical
Random

8. Components of DemandDemandforproductorservice
| | | |
1 2 3 4
Year
Average demand
over four years
Seasonal peaks
Trend
component
Actual
demand
Random
variation

9. The Realities!
 Forecasts are seldom perfect
 Most techniques assume an underlying
stability in the system
 Product family and aggregated forecasts are
more accurate than individual product
forecasts

10. Steps in the Forecasting Process
Determine purpose
of forecast
Establish a time
horizon
Select a forecast
technique
Monitor the
forecast
Make the forecastObtain, clean and
analyze the data

11. DEMAND FORECASTING OF
MCDONALD’S
 The most important key performance indicator (KPI) is ‘no
item may ever be out of stock’.
 The forecasting application used by McDonald is JDA
Manugistics 7.
 Daily point-of-sale (POS) data at item level, the product list,
stock levels at the restaurants, and inventory and shipments at
the distribution centers are used as input for the forecast.
 In addition, the marketing plan is taken into consideration –
e.g. whether the data concerns a standard product or one on
promotion – as are the plans of each franchisee, whose own
promotional campaign or local adaptations may need to be
factored in.
 The forecast’s output is validated by forecast accuracy
measures.

13. CONCLUSION
Importance of forecasting:
 Promotion of new business
 Estimation of financial requirements
 Smooth and continuous working of a concern
 Correctness of management decisions
 Success in business