Forecasting Flashcards
What is production lead-time P
How long it takes to make the product
What is the demand lead-time D
How long a customer is willing to wait for the product
What is engineer-to-order P:D ratio
Production designed and built to customer order
P from supply chain to marketplace
D from supply chain to end of marketplace
What is make-to-order P:D ratio
Material ordered and product made only after the order is received
P from factory to marketplace
D from factory to end of marketplace
What is assemble-to-order P:D ratio
Producers hold components stock to assemble an order as required
P from supply chain to marketplace
D from [components] in the factory to the end of the marketplace
What is make-to-stock P:D ratio
Goods made to be placed in stocks prior to receiving an order
P from supply chain to marketplace
D from [FGI] in marketplace to end of marketplace
What are the two forms of demand
Dependent and independent demand
What is independent demand
Finished products, based on market demand, requires forecastin
What is dependent demand
Parts that go into the finished products, depended demand is a known function of independent demand, no forecasting is required
How to calculate a moving average
Average demand of last 4 time periods
What is exponential smoothing for forecasting
Contains information of all previous demands, but each demand is given a weight that is decreasing exponentially back in time
How to calculate exponential smoothing
S(t) = a x(t) + a (1-a) x(t-1) + a (1-a)^2 x(t-2) + …
How does exponential smoothing cope with step changes, linear and quadratic trends
Copes OK with step changes, does not cope well with linear trends
How to calculate double exponential smoothing for forecasting
A(t) = a x(t) + (1-a) (A(t-1) + T(t-1)) T(t) = b (A(t) - A(t-1)) + (1 - b) T(t-1) S(t) = A(t) + T(t)
How to define forecast error, e(t)
e(t) = x(t) - S(t-1) where x(t) is the actual demand and S(t-1) is the forecast
