This document discusses various forecasting methods used for different planning horizons. It outlines long, medium, and short term planning decisions and notes that demand forecasting is essential for planning. The document then describes several subjective and objective forecasting methods, including opinion polls, moving averages, regression models, and time series analysis. It also discusses normal and abnormal demand patterns and delves deeper into opinion polls and the Delphi method.

2. FORECASTING
 Forecasting is essential for a number of planning
decisions.
 Long term decisions
New product introduction
Plant expansion

3. MEDIUM TERM DECISIONS
 Aggregate production planning
 Man power planning
 Inventory policy
SHORT TERM DECISIONS:
• Production planning
• Scheduling of job orders

4. PLANNING PROCESS
 A forecast of demand is an essential input for
planning.
System to be
managed
System
objective
s
Plan of
action
Constraints
budget/space
Resources
Men/materials
Demand forecast

5. METHODS OF FORECASTING
(A) subjective or intuitive methods
-opinion polls, interviews
-Delphi
(B) Methods based on averaging of past data
-moving averages
-exponential smoothing

6. (C) Regression models on historical data
-trend extrapolation
(D) Causal or economic models
(E) time- series analysis using stochastic models
- Box Jenkins Models

7. FORECASTING
 Objective
 Scientific
 Free from ‘bias’
 Reproducible
 Error analysis possible
PREDICTION
 Subjective
 Intuitive
 Individual bias
 Non reproducible
 Error analysis limited

8. NORMAL PATTERNS OF DEMAND
 Constant
 Linear trend
 Cyclic
 Seasonal pattern with growth

9. ABNORMAL DEMAND PATTERNS
Transient impulse sudden rise sudden fall

10. OPINION POLLS
 Personal interviews
Eg: aggregation of opinion of sales representatives to obtain sales
forecast of a region.
 Knowledge base (experience)
 Subjective bias
 Questionnaire method
 Questionnaire design
 Choice of respondents
 Obtaining respondents
 Analysis and presentation of results (forecasting)
 Telephonic conversation
 Fast
 DELPHI

11. DELPHI
 A structured method of obtaining responses from
experts
 Utilizes the vast knowledge base of experts
 Eliminates subjective bias and ‘influencing’ the
members through anonymity
 Iterative in character with statistical summary at end
of each round (generally 3 rounds)
 Consensus (or divergent view points) usually emerge at
the end of the exercise.

12. DELPHI
Coordinator
mean
median
standard deviatiom
1990 1995 2000 2005 2010
year
Exp
ert 1
Exp
ert 2
Exp
ert n

13. DELPHI
 ROUND 1
 ROUND 2
 ROUND 3

14. DELPHI-moving to divergent points
 Round 1
 Round 2
 Round 3