CH 4 What is forecasting: Process of predicting a future event, underlying basis of all business decisions: Production, Inventory, Personnel, Facilities.

1) Long-range
forecast (comprehensive): 3 years, New product planning facility location, research and development, Short-range forecast (more accurate) Up to 1 year, generally
less than 3 months, Purchasing, job scheduling, workforce levels, job assignments, production levels. Medium-range forecast : 3 months, Sales and production
planning, budgeting. 2) STRATEGY BASED ON PRODUCT LIFE CYCLE: A) Introduction: Product design and development critical, short production runs. B) Growth:
Forecasting critical, increase capacity C) Maturity: Standardization, Long product runs D) Decline: Cost minimization, Prune line to eliminate items not returning
good margin. 3) Seven steps: Determine the USE of the forecast, Select the items to be forecasted, Determine the time horizon of the forecast, Select the
forecasting Model, Gather the data, make the forecast, Validate and implement results. 4) Realities: Forecasts are seldom perfect, most techniques assume an
underlying Stability in the system, Product family and aggregated forecasts are more accurate than individual product forecasts. 5) FC methods: Qualitative
methods: Used when situations is vague (Radical) and little data exist (New products and technology), Involves Intuition, experience. 6) Qualitative Methods: Jury
of executive opinion (Pool Opinions of high level experts, group estimates demand by working together) B) Delphi method, Panel of experts, queried iteratively
(Iterative group process continue until consensus is reached). 7) Quantitative Methods: Used when situations is stable and historical data exist (Existing products,
current technology), Involves mathematical techniques, ex forecasting sales of color televisions. 7) Time series forecasting: Set of evenly spaced numerical data,
Obtained by observing response variable at regular time periods. Forecasts based only on past values, no other variables important. (Assumes that factors
influencing past and present will continue influence in future) . 8) Naïve approach: Assumes demand in next period is the same as demand in most recent period.
9) Weighted moving average: Ʃ (weight for period N) * (demand in period n)/ Ʃ weights. (Problems are: increasing N (number of time period) smooths the
forecast but makes it less sensitive to changes, do not forecast trends , require extensive historical data). 10) Exponential Smoothing: Most recent data weighted
most, past forecast and past actual, constant “a”, Ranges from 0 to 1, subjectively chosen, Involves little record keeping of past data. Ft= F t-1+ a(At-1 - Ft-1) .
MAD = Ʃ (actual—forecast)/ n. 11) Trend Projections: Fitting a trend line to historical data points to project into medium to long range, linear trends can be found
using the least squares technique y^=a+bx . 12)Least Squares requirements: we always plot the data to insure a linear relationship, we do not predict time
periods far beyond the database. Deviations around the least squares line are assumed to be random. 13) Associative (regression forecasting): used when changes
in one or more independent variables (cause) can be used to predict the changes (effect) in the dependent variable, (Most common technique is linear regression
analysis).Multiple regression analysis : If more than one independent variable is to be used in the model, linear regression can be extended to multiple regression
to accommodate several independent variables. _ _

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Ch9 1) Cycle time: the maximum time that a product is allowed at each workstation (Production time available per day/units required per day).
(Minimum # of workstations= time for task i/ cycle time), (Efficiency = Ʃ task times/ (actual # of workstations)*(largest assigned cycle time).
2)Strategic Importance of Layout Decisions: The objective of layout strategy is to develop an effective and efficient layout that will meet the
firms competitive requirements. 3) Layout Design Considerations: Higher utilization of space, equipment and people, improved flow of
information, materials or people, improved employee morale and safer working conditions, Improved customer interaction, Flexibility. 4)
Layout strategies: Office: Locate workers requiring frequent contact close to one another (Allstate); Retail: Expose customers to high margin
items(Walgreens); Warehouse: Balance low cost storage with low cost material handling(Gap distribution); Project (fixed position) Move
material to the limited storages areas around the site (airport); Job Shop(process oriented) : Manage varied material flow for each product and
minimize moving cost(olive garden); Workcell: Identify a product family, build teams cross train team members (Hallmark);
Repetitive/continuous (product oriented) Equalize the task time at each workstation. 5) Retail Layout5 tips: Locate high draw items around
the periphery of the store. B) Use prominent locations for high impulse and high margin items C) Distribute power items: to both sides of an
isle and disperse them to increase viewing of other items. D) Use end aisle locations E) Convey mission of store through careful positioning of
lead off department.6) Servicescapes: Physical surroundings in which the service is delivered and how the surrounding have a humanistic
effect on customers and employees. A) Ambien condition: background characteristics such as lighting , sound and temperature. B) Spatial
Layout and functionality: which involve customer circulation path planning, aisle characteristics and product grouping. C) Signs, symbols and
artifacts : characteristics of building design that carry social significance. 7) Warehousing and storage layouts: Objective is to optimize trade
offs between handling costs and costs associated with warehouse space. 8)Fixed position layout: Product remains in one place, Workers and
equipment come to site, (Complicated factors: Limited space at site, different material, volume of materials 9) Process Oriented Layout:
Arrange work centers so as to minimize the costs of material handling, COSTS ARE number of loads, Distance. 10) Advantages of Work Cells,
reduced inventory, less floor space, reduced direct labor, heightened sense of employee participation, Increased use of equipment and
machinery. Reorganizes people and machines into groups to focus on single products or product groups, group techonology identifies
products that have similar characteristics for particular cells 12) Product oriented layouts: --- High volume required, work stoppage at any
point ties up the whole operation, lack of flexibility. 13) Assembly Line Balancing: objective is to minimize the imbalance between machines or
personnel while meeting required output.