...Business Forecasting Coursework Introduction The data of this coursework are business investment in the quarterly series in the manufacturing sector from 1994 to the second quarter of 2008 in UK. In the coursework, firstly analyze the former 50 data to forecast the latter 8 ones and then compare with the real data to see if the forecasting model is a good fit or not. As adopting two different approaches to make the forecasting work, including regression with Dummy Variables method and Box-Jenkins ARIMA method, according to the results, relative comparisons will be made to demonstrate which one is a better choice for this certain question. Then discuss the underlying assumptions of the chosen model and evaluate whether it is sensitive to these assumptions. All the analyses are based on the SPSS software and the graphs are from the output. Part 1. Examine the data To apply certain model to forecast future value, find out the seasonal component, trends and cycles component is the basic job. There are two approaches to examine the data: see the time series plot (chart 1) or use ACF (chart 2). Chart 1 Plot of the data [pic] Chart 2 ACF/PACF of the data [pic][pic] [pic][pic] From both Chart 1 and Chart 2, the drawing conclusion is that the data has trend-cycle and seasonal components. Firstly, although there is no general upward trend and downward trend, clearly there is a cycle component: the data value climbs up in the first 20 data and then displays a down trend following...
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...Business Forecasting for Coastal Regions: Post-Tsunami April 9, 2011 Table of Contents I. Introduction a. A hypothetical business description. b. Introduction to the actual paper and the issues to be covered. II. Background c. Geographical location, including talking about recent events that have occurred and have affected the Japanese market. d. The current situation in Japan, after the natural disasters and how it has affected the business world. III. Japan v United States – Cultural Differences e. Comparative study of the Japanese culture vs the U.S. culture, and its impact on the business world. f. Importance of individuals to understand the cultures, customs and traditions of the region in order to function properly. IV. Strengths and Weaknesses g. Strengths of having a business in this region. h. Possible threats in this region i. Cyber-terror threats and the advancement in technology’s affect on security. V. Reducing the risk j. Ways to reduce the regional risk. k. Possibility of unionization, and labor protection VI. Conclusion VII. Bibliography Business Forecasting for Coastal Regions: Post-Tsunami I. Introduction In early March of 2011, thousands of individuals were killed by a 9.0 magnitude earthquake and subsequent tsunami in many coastal regions, but mainly Japan. Coastal regions are unique when it comes to business in the fact that not only do they...
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...Forecasting is an important aspect in today’s business world. Every day businesses strive or lose, depending on the successfulness and accurateness of their forecasting. For successful forecasting, the forecaster needs to have a clear understanding of the current business activities, past trends, and the company’s business strategy. Case 5 exhibits key principles on the way financial forecasting is done. Understanding the Financial Relationships of the Business Enterprise Forecasters use current information to predict the future business activities of the company. This information is found on the financial statements of the company. For example, the balance sheet provides a snapshot of the business’ assets, liabilities and equity at a specific point in time, whereas the incomes statement provides a view of the flow of costs during a specific time frame. Financial ratios measure the relationships between various items on the financial statements. By comparing various ratios with those of previous years, trends can be identified. Because many financial ratios tend to be perserved over time, these ratios are very valuable for the forcaster. The forecaster can estimate only one financial statement line item and, by applying this number to the various ratios, he can make a complete forecast. Grounding Business Forecasts in the Reality of the Industry and Macroenvironment An accurate forecast is made by recognizing not only internal data, but also external data. The environment...
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...Forecasting: Relying On The Unknown http://www.manufacturing.net/articles/2007/10/forecasting-relying-on-the-unknown September 23, 2007 was the autumnal equinox — the official end of summer. The leaves are beginning to turn colors and the seasons are changing. For some manufacturers, the end of summer could be the end of a busy season, or it could just be the beginning. If you manufacture beach towels or Christmas trees, you’re locked into seasonal demand. How do you adjust your operations to handle your peak time? How much of a peak period will you have? How much capacity will you need? What will be your inventory storage and holding costs? Factors and Consequences There is a lot of variability when it comes to demand — consumer tastes may change, competition could increase, weather patterns could change, etc. “The farther away in time a forecast is from the sales it projects, the less accurate the forecast will be. This stands to reason that the longer the horizon, the more changes will take place between the forecast and the actual sales,” said Jane Lee, Vice President of Supply Chain, Supply Chain Consultants. “Picture a company that makes orange juice,” said Jim LeSage, Executive Vice President with The Facility Group. “They may be producing more at the start of the school year or during cold and flu season, but the oranges are only harvested at a certain time.” That leaves the orange juice company with few options, LeSage explains. The company...
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...successful operation. Without customer satisfaction business can’t run successfully. If the customer is not satisfied with the service, they may not continue to visit the same supermarket. On the other hand if they are satisfied then they will obviously continue to visit. Along with that with their word of mouth the supermarket can have more regular customers. So their profit generation will increase with a huge percentage. b. Forecasting: Forecasting means the future expectation of an operation or product or service or any kind of situation. Forecasting is very important for the supermarket’s success. Because if they can’t forecast properly that how much their customers need and how much they should supply, then company might face a huge threat to business. So for the successful operation for any supermarket they need to be conscious about their forecasting. c. Capacity planning: Capacity planning means the planning of the organization about their capacity of any kind of business related activities to reach their best effective operation. Capacity planning is also a vital part of the supermarket’s successful operation. If they are unable to plan successfully that how much their capacity is to run the operation then supermarket might face a serious threat to their business operation. d. Location: Location means the operational place of the business. Location is a valuable element of supermarket business. Because, if depending on targeted customer supermarket...
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...Sample questions 1. Time-series forecasting models: a. | are useful whenever changes occur rapidly and wildly | b. | are more effective in making long-run forecasts than short-run forecasts | c. | are based solely on historical observations of the values of the variable being forecasted | d. | attempt to explain the underlying causal relationships which produce the observed outcome | e. | none of the above | 2. The forecasting technique which attempts to forecast short-run changes and makes use of economic indicators known as leading, coincident or lagging indicators is known as: a. | econometric technique | b. | time-series forecasting | c. | opinion polling | d. | barometric technique | e. | judgment forecasting | 3. The use of quarterly data to develop the forecasting model Yt = a +bYt1 is an example of which forecasting technique? a. | Barometric forecasting | b. | Time-series forecasting | c. | Survey and opinion | d. | Econometric methods based on an understanding of the underlying economic variables involved | e. | Input-output analysis | 4. The variation in an economic time-series which is caused by major expansions or contractions usually of greater than a year in duration is known as: a. | secular trend | b. | cyclical variation | c. | seasonal effect | d. | unpredictable random factor | e. | none of the above | 5. The type of economic indicator that can best be used for business forecasting is the: a. | leading indicator |...
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...Staffing Forecasting and Planning (Book Review) ORGS 6200 MANAGING HUMAN RESOURCES Synopses: J Phillips and S Gully start this well researched and practical book by stressing the importance of workforce planning through recognizing the value of strategic staffing on the company’s ability to improve its capabilities and survive any economic environment while reducing its labor related costs as well as many other expenses indirectly associated with its employees. It is further stressed that talent and its acquisition are to be treated as investments not costs of doing business. It is argued that a single most important factor in order to ensure an organization’s strategic goals are met, is its ability to hire the right people at the right time in order to enhance the firm’s return on its investment. The authors then further expand on this theory by defining a set of common goals for staffing forecasting and planning activities that can benefit any company in any industry and economic life cycle. In addition, the book discusses the importance of understanding a company’s strategy, goals and competition in order to identify what type of talents will the firm need and when. “Ensuring that the right people are in the place at the right time, requires understanding and forecasting the firm’s labor demand and maintaining an awareness of relevant pipelines of labor supply and talent. Action plans can then be developed to address any gaps between labor supply...
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...Controlling the Supply Chain ISCOM 471 December 24, 2012 Planning and Controlling the Supply Chain Within the many different organizations in todays business world there are some key factors that will establish the profitability, growth, and longevity of a company. Some of the things we will discuss will be that of how my chosen corporation American Express applies some of the forecasting techniques to better develop the company. There will also be the analysis of production plans, master production schedules, and carrying inventory and how it relates to the overall American Express budget. Along with all the above we will also compare and contrast how planning usage differentiates between a service organization such as American Express and a manufacturing organization. Lastly we will also compare and contrast the use of material requirements planning system concepts. When it comes to forecasting it is first important to determine the different types of forecasting and how they are classified. In forecasting there are four basic types which are qualitative, time series analysis, casual relationship, and simulation. The first forecasting type qualitative is "subjective or judgmental and are based on estimates and opinions", (Chase, Jacobs, & Aquilano, 2006). Some of the main characteristics of qualitative forecasting are market research which is encompassed by collecting data by surveys and interviews which help determine market hypothesis. This research is most commonly...
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...information was determined easily, such as how long a trip would last or how many people were coming. Some things, however, needed a forecast. Was it likely to rain? What would we do if it did rain? The best plans had two essential ingredients: First, everyone worked to the same plan; second, all pertinent information was included in that plan. In the business world, there are many methods of forecasting product demand, and they must include all known information. Extrinsic forecasting methods involve factors such as economic conditions, market trends, competition, government regulations, or the sale of related goods. These techniques look for patterns or correlations linking product demand with these outside factors. Qualitative forecasting techniques most often are used for extrinsic forecasting. They are employed by senior managers and involve using good judgment, intuition, and informal opinions. Qualitative forecasting is necessary for products where no previous sales data exist. Intrinsic forecasting, on the other hand, uses data from previous sales, and the forecast is developed using that sales history. This quantitative forecasting is done by most members of a supply chain, especially those near the final consumer. Many factors can be included in the forecast along with traditional methods to improve forecast reliability. Principle 2: Forecasts must include some measure of error. The forecast is going to be wrong—but by how much? Estimates of forecast error can be made by...
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...Merriwell’s competitors. Company Strategy The family attributes the success of Merriwell Bag Company to the fact that it has found a market niche and has no “serious” competition. Merriwell supplies stock bags to many small chain stores scattered over a wide geographical area. It ships the bags directly to small regional warehouses or drop ships directly to the individual stores. The family reasons that the large bag manufacturers cannot profitably provide service to accounts on that small of a scale. In fact, Ed Merriwell formed the business with one second-hand bagging machine to provide bags for a small discount store chain and a regional chain of drug stores. These two organizations have grown tremendously over the years, and Ed Merriwell proudly points out that the Bag Company has grown with them. Today, these two original clients are Merriwell’s largest customers. The Merriwell family does not want its business to be too heavily reliant on any one customer. Hence, they have a policy that no single customer can account for over than 15% sales. In fact, Merriwell Bag Company encourages its major customers to establish alternative sources of bag supply for insurance against stock outs because of paper shortages, freight line difficulties, local trucking/warehousing strikes, and production problems that may...
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...packaged goods. There are no magical algorithms, forecasting tools, or proprietary process solutions that offer much more than a "like as" or analog-based planning solution. The companies that do the best job in forecasting new ¡Hnáucts work the details in a methodical way, challenge underlying assumptions, and examine all available data to givei: PATRICK BOWER Mr. Bower is Senior Director of Corporate Planning & Customer Service at Combe Incorporated, producer of high-quality personal care products. He is a frequent writer and speaker on supply chain subjects, and is a self-professed "S&OP geek." Prior to Combe, he was with a consulting firm where he worked for clients such as Diageo, Bayer, Glaxo Smith Kline, Pfizer, Foster Farms, Farley's and Sather, Cabot Industries, and American Girl. His experience also includes employment at Cadbury, Kraft Foods, Unisys, and Snapple. He has been twice recognized as a "Pro to Know" by Supply atid Detnand Chain Executive magazine. He is also the recipient of the IBF 2012 award for "Excellence in Business Forecasting & Planning." His expertise includes S&OP, demand planning, inventory, network optimization, and production scheduling. Copyright ©2013 Journal of Business Forecasting 1 All Rights Reserved I Winter 2012-2013 ne of the toughest demand planning tasks is forei goods world. Why? First, we don't really have good math tg^nnelp us. It would be great if there were a forecasting algorithm that reads consurriefs'' minds, but there...
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...The Accuracy of Demand Forecasting Between Point of Sale and Order History Supply Chain Management TBS908 Table of Contents 1. Executive Summary 4 2. Company Profile 4 3. Demand 5 3.1 Demand Forecasting 6 3.2 Demand Forecasting Methods 6 3.2.1 Opinion Polling / Qualitative Method (subjective): 6 3.2.2 Statistical Methods/Quantitative Approach (objective): 6 4. Order History Vs. Point-of-sale 8 5. Planning Promotions 8 5.1 Promotion Planning and Supply Chain Contracting in a High-Low Pricing Environment 9 5.1.1 Basic Household Inventory Model: 9 6. Types of demand forecast in GCC and UAE 10 7. Objective 10 8. Methodology 11 Table 3 13 Figure 1 13 9. Result 14 10. Recommendations 14 11. Conclusion: 15 11. References 16 12. Appendixes 17 Appendix I 17 Appendix II 19 1. Executive Summary Demand forecasting is essentially anticipating future prospects by reviewing historical data in the most calculated way in an uncontrollable environment. Foreseeing what and when buyers will purchase has never been a simple procedure for producers or retailers. Troubled by the overwhelming undertaking of correctly coordinating supply with interest, makers are always enhancing procedures to accomplish the most noteworthy estimate exactness that will guarantee when the customer enters a store, the item they are searching for is on the rack. This is getting significantly tricky as the uncertainty level increase. In the below report the demand...
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...Forecasting Forecasting is one of the most important business functions because all other business decisions are based on a forecast of the future. Poor forecasting results in incorrect business decisions and leaves the company unprepared to meet future demands. The consequences can be very costly in terms of lost sales and can even force a company out of business. Forecasts are so important that companies are investing billions of dollars in technologies that can help them better plan for the future. For example, the ice-cream giant Ben & Jerry’s have invested in business intelligence software that tracks the life of each pint of ice cream, from ingredients to sale. Each pint is stamped with a tracking number that is stored in an Oracle database. Then the company uses the information to track trends, problems, and new business opportunities. They can track such things as seeing if the ice-cream flavor Chocolate Chip Cookie Dough is gaining on Cherry Garcia for the top sales spot, product sales by location, and rates of change. This information is then used to more accurately forecast product sales. Numerous other companies, such as Procter & Gamble, General Electric, Lands’ End, Sears, and Red Robin Gourmet Burgers, are investing in the same type of software in order to improve forecast accuracy. (R. Dan Reid & Nada R. Sanders, 2009) It is not possible to accurately forecast the future. Because of the qualitative nature of forecasting, a business can come up with different...
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...Supply Chains Design Paper OPS/571 Supply Chains Design Paper Riordan Manufacturing is a company owned by Fortune 1000 Riordan Industries, Inc. The company is a leader is manufacturing plastic with customers which “include automotive parts manufacturers, aircraft manufacturers, the Department of Defense, beverage makers and bottlers, and appliance manufacturers”(Riordan, 2005.) A review of Riordan Manufacturing will include the company’s manufacturing strategy, process flow chart for the electric fan supply, metrics to evaluate the electric supply chain, and how the supplier relationship and the effects on the supply chain. Additionally, the review will also explain the lean production schedule, forecasting techniques, aggregate production plan, master schedule, and materials requirement schedule. Riordan Manufacturing Strategy The manufacturing strategy which best fits Riordan’s manufacturing strategy is a stable workforce. Stable workforce is the best manufacturing strategy because “it schedules production of fans to meet the forecasted sales and the forecast is calculated by taking the average of sales for the last three years and extrapolating it into the next year” (Riordan, 2005). Another indication can be found in the employee turnover report for 2009-2012. The percentage of involuntary separations decreased from 3.4% in 2009 to 2.0% in 2012. The decrease in involuntary turnovers indicates maintenance of a stable workforce. The stability of the workforce benefits...
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...Discussion Questions: 1,7, and 15 1: (a) What is forecasting? Why is it so important in the management of business firms and other enterprises? (b) What are the different types of forecasting? (c) How can the firm determine the most suitable forecasting method to use? a) Forecasting is used to try and predict the economic activity of a firm’s future. It aims to reduce risk/uncertainty that is faced in the short-term operational decision making. It is also used to plan for the firm’s long-term growth. Forecasting helps make decisions by using macroforecasts of the general economic activity as inputs for their microforecasts of the industry’s and firm’s demand and sales. Forecasting helps decide a firm’s marketing strategy, production needs, sales forecast, and helps predict financial needs such as cash flow, profits, and outside financing. Furthermore, it helps make personal based decisions, as well as assist for the long-term future of the firm (Salvatore, 2012). b) Forcasting types range from expensive to inexpensive, as well as simple to complex. Forecasting techniques can be qualitative, and others can be quantitative. Salvatore focuses on qualitative forecasts. These forecasts include: time-series, smoothing techniques (moving averages), barometric forecasts with leading indicators, econometric forecasts, and input-output forecasts. c) A firm determines the most suitable forecasting method to use by using the following criterion: ...
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