Beruflich Dokumente
Kultur Dokumente
2/21/2015
Operations &
Production Management
(OPM)
Dr. Muhammad Wasif
Visiting Faculty, IBA.
6 Forecasting
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Operations&ProductionManagement
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Section 6.1
Introduction to Forecasting
33
Forecasting
Process of predicting a future event
Underlying
decisions
Production
Inventory
Personnel
Facilities
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Applications of Forecasting
Accounting
Cost/profit estimates
Finance
Human Resources
Hiring/recruiting/training
Marketing
MIS
Operations
Product/service design
Short-range forecast
Medium-range
forecasting
Medium-range forecast
Long-range
forecasting
Long-range forecast
Short-range
forecasting
3 months to 3 years
Sales and production planning, budgeting
Production/operation control
3+ years
New product planning, facility location, research and
development
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Factory capacity
Types of Forecasts
Economic forecasts
Technological forecasts
Demand forecasts
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Seldom Perfect
Accurate
Meaningful
Written
Easy to use
Based on Assumptions
Reality
Ideal
Reliable
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Approaches to Forecast
Qualitative Methods
Used when situation is vague and little data exist; for example New
products, New technology
Quantitative Methods
Used when situation is stable and historical data exist; for example Existing
products, Current technology
Delphi method
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What consumers say, and what they actually do are often different
Naive approach
2.
Moving averages
3.
Exponential smoothing
4.
Trend projection
5.
Linear regression
time-series
models
associative
model
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Section 6.2
33
Obtained
time periods
Forecast
variables important
Assumes
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Seasonal Component
Period
Week
Month
Month
Year
Year
Year
Length
Day
Week
Day
Quarter
Month
Week
Number of
Seasons
7
4-4.5
28-31
4
12
52
Random Component
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1- Naive Approach
Moving average =
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Actual
Shed Sales
3-Month
Moving Average
January
February
March
April
May
June
July
10
12
13
16
19
23
26
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Actual
Shed Sales
January
February
March
April
May
June
July
10
12
13
16
19
23
26
3-Month Weighted
Moving Average
Period
Last month
Two months ago
Three months ago
Sum of weights
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3 - Exponential Smoothing
Ranges from 0 to 1
Subjectively chosen
3 - Exponential Smoothing
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Weight Assigned to
Smoothing
Constant
Most
Recent
Period
()
= .1
.1
.09
.081
.073
.066
= .5
.5
.25
.125
.063
.031
Demand
225
Actual
demand
200
= .5
175
= .1
150 |
1
|
2
|
3
|
4
|
5
|
6
|
7
|
8
|
9
Quarter
Resource Person : Dr. Muhammad Wasif
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Choosing
|Actual - Forecast|
n
(Forecast Errors)2
n
Operations & Production Management
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MAPE =
100|Actuali - Forecasti|/Actuali
i=1
Quarter
Actual
Tonnage
Unloaded
Rounded
Forecast
with
= .10
Absolute
Deviation
for
= .10
1
2
3
4
5
6
7
8
180
168
159
175
190
205
180
182
175
175.5
174.75
173.18
173.36
175.02
178.02
178.22
5.00
7.50
15.75
1.82
16.64
29.98
1.98
3.78
82.45
Rounded
Forecast
with
= .50
175
177.50
172.75
165.88
170.44
180.22
192.61
186.30
Absolute
Deviation
for
= .50
5.00
9.50
13.75
9.12
19.56
24.78
12.61
4.30
98.62
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|deviations|
Rounded
Actual
Tonnage
Unloaded
Forecast
with
= .10
Absolute
Deviation
for
= .10
For1 = .10180
175
5.00
2
168
175.5
7.50
=159
82.45/8174.75
= 10.3115.75
3
173.18
1.82
For45 = .50175
190
173.36
16.64
6
=205
98.62/8175.02
= 12.3329.98
7
8
180
182
178.02
178.22
1.98
3.78
82.45
Rounded
Forecast
with
= .50
175
177.50
172.75
165.88
170.44
180.22
192.61
186.30
Absolute
Deviation
for
= .50
5.00
9.50
13.75
9.12
19.56
24.78
12.61
4.30
98.62
(forecastRounded
errors)2Absolute
Quarter
Actual
Tonnage
Unloaded
Forecast
with
= .10
Deviation
for
= .10
For1 = .10180
175
5.00
2
168
175.5
7.50
= 1,526.54/8
= 190.82
3
159
174.75
15.75
173.18
1.82
For45 = .50175
190
173.36
16.64
6 = 1,561.91/8
205
175.02
29.98
= 195.24
7
8
180
182
178.02
178.22
1.98
3.78
82.45
Rounded
Forecast
with
= .50
175
177.50
172.75
165.88
170.44
180.22
192.61
186.30
Absolute
Deviation
for
= .50
5.00
9.50
13.75
9.12
19.56
24.78
12.61
4.30
98.62
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100|deviation
Rounded i|/actual
Absolutei
1
Actual
MAPE = i =Tonnage
Quarter Unloaded
Forecast
with
n
= .10
Deviation
for
= .10
For
1 = .10
180
175
5.00
2
168
175.5
7.50
= 44.75/8
= 5.59%
3
159
174.75
15.75
4
175
173.18
1.82
For
= .50
5
190
173.36
16.64
6
205
175.02
29.98
= 54.05/8
= 6.76%
7
8
180
182
178.02
178.22
1.98
3.78
82.45
Rounded
Forecast
with
= .50
175
177.50
172.75
165.88
170.44
180.22
192.61
186.30
Absolute
Deviation
for
= .50
5.00
9.50
13.75
9.12
19.56
24.78
12.61
4.30
98.62
Actual
Tonnage
Unloaded
Rounded
Forecast
with
= .10
1
2
3
4
5
6
7
8
180
168
159
175
190
205
180
182
175
175.5
174.75
173.18
173.36
175.02
178.02
178.22
MAD
MSE
MAPE
Absolute
Deviation
for
= .10
5.00
7.50
15.75
1.82
16.64
29.98
1.98
3.78
82.45
10.31
190.82
5.59%
Rounded
Forecast
with
= .50
175
177.50
172.75
165.88
170.44
180.22
192.61
186.30
Absolute
Deviation
for
= .50
5.00
9.50
13.75
9.12
19.56
24.78
12.61
4.30
98.62
12.33
195.24
6.76%
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Actial
180
168
159
175
190
205
180
182
MAD
MAPE
Dev.
175
175.5
174.75
173.18
173.36
175.05
178.02
178.22
5
7.5
15.75
1.82
16.64
29.95
1.98
3.78
82.42
10.3025
5.591537
0.3
0.4
0.2
F
Dev.
F
Dev.
F
Dev.
175
5
175
5
175
5
176
8
176.5
8.5
177
9
174.4
15.4
173.95
14.95
173.4
14.4
171.32
3.68 169.465
5.535
167.64
7.36
172.056
17.944 171.1255 18.8745 170.584
19.416
175.6448 29.3552 176.7879 28.21215 178.3504 26.6496
181.5158 1.51584 185.2515 5.251495 189.0102 9.01024
181.2127 0.787328 183.676 1.676047 185.4061 3.406144
81.68237
87.99919
94.24198
10.2103
10.9999
11.78025
5.545828
5.992131
6.436648
0.5
F
175
177.5
172.75
165.88
170.44
180.22
192.61
186.3
Dev.
5
9.5
13.75
9.12
19.56
24.78
12.61
4.3
98.62
12.3275
6.755313
Ft = (At - 1) + (1 - )(Ft - 1 + Tt - 1)
Tt = (Ft - Ft - 1) + (1 - )Tt - 1
Step 1: Compute Ft
Step 2: Compute Tt
Step 3: Calculate the forecast FITt = Ft + Tt
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Actual
Demand (At)
12
17
20
19
24
21
31
28
36
Smoothed
Forecast, Ft
11
Smoothed
Trend, Tt
2
Forecast
Including
Trend, FITt
13.00
Actual
Demand (At)
12
17
20
19
24
21
31
28
36
Smoothed
Forecast, Ft
11
Smoothed
Trend, Tt
2
Forecast
Including
Trend, FITt
13.00
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Forecast
Actual
Smoothed
Smoothed
Including
Trend, Tt
Trend, FITt
Demand (At) Forecast, Ft
12
11
2
13.00
17
12.80
20
19
Step 2: Trend for Month 2
24
21
T2 = (F2 - F1) + (1 - )T1
31
28
T2 = (.4)(12.8 - 11) + (1 - .4)(2)
36
Forecast
Actual
Smoothed
Smoothed
Including
Trend, Tt
Trend, FITt
Demand (At) Forecast, Ft
12
11
2
13.00
17
12.80
1.92
20
19
Step 3: Calculate FIT for Month 2
24
21
FIT2 = F2 + T2
31
28
FIT2 = 12.8 + 1.92
36
= 14.72 units
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Actual
Demand (At)
12
17
20
19
24
21
31
28
36
Smoothed
Forecast, Ft
11
12.80
15.18
17.82
19.91
22.51
24.11
27.14
29.28
32.48
Smoothed
Trend, Tt
2
1.92
2.10
2.32
2.23
2.38
2.07
2.45
2.32
2.68
Forecast
Including
Trend, FITt
13.00
14.72
17.28
20.14
22.14
24.89
26.18
29.59
31.60
35.16
Product demand
30
25
20
15
10
5
0 |
1
|
2
|
3
|
4
|
5
|
6
|
7
|
8
|
9
Time (month)
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4 - Trend Projections
y^ = a + bx
^ = computed value of the variable to
where y
be predicted (dependent variable)
a = y-axis intercept
b = slope of the regression line
x = the independent variable
Resource Person : Dr. Muhammad Wasif
Least squares method minimizes the sum of the squared errors (deviations)
Actual observation
(y-value)
Deviation7
Deviation5
Deviation6
Deviation3
Deviation4
Deviation1
(error)
Deviation2
Trend line, y^ = a + bx
Time period
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b=
xy - nxy
x2 - nx2
a = y - bx
Time
Period (x)
Electrical Power
Demand
1
2
3
4
5
6
7
x = 28
x=4
b=
74
79
80
90
105
142
122
y = 692
y = 98.86
x2
xy
1
4
9
16
25
36
49
x2 = 140
74
158
240
360
525
852
854
xy = 3,063
3,063 - (7)(4)(98.86)
xy - nxy
=
= 10.54
2
2
140 - (7)(42)
x - nx
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Time
Period (x)
2003
1
2004
2
2005
3
The
trend line
2006
4
2007^
5
2008y = 56.70
6
2009
7
x = 28
x=4
b=
Electrical Power
Demand
74
79
80
is
90
105
142
+ 10.54x
122
y = 692
y = 98.86
x2
xy
1
4
9
16
25
36
49
2
x = 140
74
158
240
360
525
852
854
xy = 3,063
3,063 - (7)(4)(98.86)
xy - nxy
=
= 10.54
2
2
140 - (7)(42)
x - nx
Power demand
Trend line,
y^ = 56.70 + 10.54x
|
2003
|
2004
|
2005
|
2006
|
2007
Year
|
2008
|
2009
|
2010
|
2011
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2.
3.
4.
5.
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Month
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sept
Oct
Nov
Dec
Demand
2007 2008 2009
80
70
80
90
113
110
100
88
85
77
75
82
85
85
93
95
125
115
102
102
90
78
72
78
105
85
82
115
131
120
113
110
95
85
83
80
Average
2007-2009
Average
Monthly
90
80
85
100
123
115
105
100
90
80
80
80
94
94
94
94
94
94
94
94
94
94
94
94
Seasonal
Index
Month
Demand
2007 2008 2009
Average
2007-2009
Average
Monthly
Seasonal
Index
Jan
80
85 105
90
94
Feb
70
85
85
80
94
Mar
80
93 Average
82
85 monthly 94
2007-2009
demand
Seasonal90index95= 115 Average monthly
Apr
100
94
demand
May
113 125 131
123
94
= 90/94 = .957
Jun
110 115 120
115
94
Jul
100 102 113
105
94
Aug
88 102 110
100
94
Sept
85
90
95
90
94
Oct
77
78
85
80
94
Nov
75
72
83
80
94
Dec
82
78
80
80
94
Resource Person : Dr. Muhammad Wasif
0.957
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Month
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sept
Oct
Nov
Dec
Demand
2007 2008 2009
80
70
80
90
113
110
100
88
85
77
75
82
85
85
93
95
125
115
102
102
90
78
72
78
105
85
82
115
131
120
113
110
95
85
83
80
Average
2007-2009
Average
Monthly
Seasonal
Index
90
80
85
100
123
115
105
100
90
80
80
80
94
94
94
94
94
94
94
94
94
94
94
94
0.957
0.851
0.904
1.064
1.309
1.223
1.117
1.064
0.957
0.851
0.851
0.851
Month
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sept
Oct
Nov
Dec
Demand
2007 2008 2009
Average
2007-2009
Average
Monthly
80
85 105
90
94
70
85Forecast
85
80
94
for 2010
80
93
82
85
94
90
95
115
100
94
Expected annual demand = 1,200
113 125 131
123
94
110 115 120
115
94
1,200
100 Jan
102 113
105 = 96
94
x .957
12
88 102 110
100
94
1,200
85
90
95
90
94
Feb
x .851 = 85
77
78
8512
80
94
75
72
83
80
94
82
78
80
80
94
Seasonal
Index
0.957
0.851
0.904
1.064
1.309
1.223
1.117
1.064
0.957
0.851
0.851
0.851
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140
130
Demand
120
110
100
90
80
70
|
J
|
F
|
M
|
A
|
M
|
J
|
J
|
A
|
S
|
O
|
N
|
D
Time
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Section 6.3
Associative Forecasting
33
Associative Forecasting
Forecasting an outcome based on predictor variables
using the least squares technique
bx
where
computed value of the variable to be predicted
(dependent variable)
a = y-axis intercept
b = slope of the regression line
x = the independent variable though to predict the value of
the dependent variable
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4.0
Sales
Sales
($ millions), y
2.0
3.0
2.5
2.0
2.0
3.5
3.0
2.0
1.0
0
|
1
|
2
|
|
|
3 4
5
Area payroll
|
6
|
7
Payroll, x
1
3
4
2
1
7
x = 18
x2
1
9
16
4
1
49
x2 = 80
xy
2.0
9.0
10.0
4.0
2.0
24.5
xy = 51.5
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y = 1.75 + .25x
4.0
Sales
3.25
3.0
2.0
1.0
0
|
1
|
2
|
|
|
3 4
5
Area payroll
|
6
|
7
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Sy,x = .306
The standard
error of the
estimate is
$306,000 in sales
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Tracking
=
signal
|Actual - Forecast|/n)
Tracking Signal
Signal exceeding limit
Tracking signal
+
0 MADs
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Actual
Demand
(AD)
1
2
3
4
5
6
90
95
115
100
125
140
Forecast
Demand
(FD)
100
100
100
110
110
110
Error
RSFE
(AD-FD)
-10
-5
+15
-10
+15
+30
-10
-15
0
-10
+5
+35
Absolute
Forecast
Error
|RSFE|
10
5
15
10
15
30
Cumulative
Absolute
Forecast
Error
MAD
(CAF)
CAF/Qtr
10
15
30
40
55
85
10.0
7.5
10.0
10.0
11.0
14.2
Qtr
1
2
3
4
5
6
Tracking
Actual
Forecast
Signal
Demand Demand
(RSFE/MAD)
90 =100
-10/10
-1
-15/7.5
-2
95 =100
0/10 = 0
115 100
-10/10 = -1
100
110
+5/11 = +0.5
+35/14.2
+2.5
125 =110
140
110
Error
RSFE
Absolute
Forecast
Error
-10
-5
+15
-10
+15
+30
-10
-15
0
-10
+5
+35
10
5
15
10
15
30
Cumulative
Absolute
Forecast
Error
MAD
10
15
30
40
55
85
10.0
7.5
10.0
10.0
11.0
14.2
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Section 6.4
Miscellaneous Forecasting
33
Adaptive Forecasting
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Focus Forecasting
1.
2.
Unusual events
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20%
15%
10%
5%
11-12
1-2
12-1
(Lunchtime)
2-3
3-4
7-8
6-7
(Dinnertime)
Hour of day
4-5
5-6
8-9
9-10
10-11
6
8
A.M.
10
12
Hour of day
6
8
P.M.
10
12
ResourcePerson:Dr.MuhammadWasif
38
Operations&ProductionManagement
2/21/2015
References
ResourcePerson:Dr.MuhammadWasif
39