Tech 147 Dr. Samuel C. Obi

Unit 3

Planning Modern Manufacturing Systems: Forecasting

• If a man take no thought about what is distant, he will find sorrow near at hand (Confucius)

Forecasting Defined

· The process of estimation in unknown situations

· The process of prediction

· The practice of demand planning

Key Managerial Steps in Manufacturing planning and Control

• Product demand forecasting

• Master production schedule

• Material requirement planning

• Order releases

• Operations management

Definitions

Exponential smoothing Trend (e.g. seasonal)

Forecast Prediction

Growth analysis Qualitative forecast

Horizon Quantitative forecast

Time-series forecast Inventory item

Lead time Regression forecast

Model-forecast Moving average

MRP Net requirements

Planning period JIT

Gross requirements Scheduled receipts

Vollmann Et Al Chapter 2: Demand Management

• Through demand management all potential demands on manufacturing capacity are collected and coordinated

• This activity manages day-to-day interactions between customers and the company

Demand Management in MPC Systems

• Demand management and production planning

• Demand management and master production schedule

• Data capture and dealing with day-to-day customer orders

Demand Management and the MPC Environment

• Aggregating and disaggregating forecasts

• Make-to-stock demand (MTS) management

• Assemble-to-order (ATO) demand management

• Make (Engineer)-to-order (MTO) demand management

• Forecasts of demand are one important input to manufacturing planning and control systems

• Forecasts of end items, spare parts, and other items in demand should be a part of the front-end modules of the MPC system.

Basic Forecasting Techniques

• Causal / econometric methods

· Time (trend) series

· Judgmental methods

· Other methods

Causal/econometric methods

· Regression analysis using linear regression or non-linear regression

· Autoregressive moving average (ARMA)

· Autoregressive integrated moving average (ARIMA)

· Econometrics

Time series

· Moving average

· Basic exponential smoothing model (pp. 34-36)

– Trend enhancement of the basic exponential smoothing

– Seasonal enhancement of the basic exponential smoothing

· Extrapolation

· Linear prediction

· Trend estimation

· Growth curve

Judgmental methods

· Composite forecasts

· Surveys

· Delphi method

· Scenario building

· Technology forecasting

· Forecast by analogy

Other forecasting methods

· Simulation

· Prediction market

· Probabilistic forecasting

Trend enhancement of the basic exponential smoothing