FORECASTING AND CAPACITY PLANNING

Operations Management Training Program

DEFINING DEMAND
FORECASTING
➤ to fine-tune your production, you need to
➤ be able to forecast demand for your
products
➤ must have more accurate methods for
forecasting future demand
➤ the scientific process of estimating
without having all the necessary
information
DEFINING DEMAND
FORECASTING
➤ forecasts contribute to almost every
significant management decision
➤ demand forecasting in particular often uses
information
➤ about past demand levels and possible
changes
➤ forecasts lessen risk and uncertainty by
allowing operating levels to be adjusted
➤ contributes to production planning, capacity
planning, scheduling, and inventory
management
DEFINING DEMAND
FORECASTING
➤ Reflect
➤ Why do you think demand forecasting
might be relevant to service organizations
and not just manufacturing ones?
DEFINING DEMAND
FORECASTING
➤ crucial in service organizations because
capacity is finite and services are
perishable
➤ capacity is finite because human beings,
unlike machines, need regular breaks
➤ availability of specific skillsets and the
psychological and emotional aspects
affecting human productivity
➤ "raw materials" of services are perishable
DEFINING DEMAND
FORECASTING
➤ once they're created, services cannot be
stored
➤ perishability is a factor when there's an
oversupply of services
➤ customers will be frustrated if they have
to wait too often
FORECASTING AND CAPACITY PLANNING
Operations Management Training Program