Hand in A

Q1
While making a forecast there are different approaches one needs to address in their attempt in
creating a realistic and somewhat “correct” forecast of the future. Promotions, events or one off events
are essential to map out and make sure are not included in a forecast of the future, if these events are
not planned to happen again. One also has to do the opposite, if one expects a one-off event that is
certain to spike the demand then one should account for it in their forecast.

One must also account for the length of the forecast, the longer into the future the forecast is, the
bigger the chances that the forecast will deviate from reality. The time interval being forecasted is also
a necessity for one's consideration. It is much easier to forecast longer periods such as a year or a
month than a day or a week. Volatility evens out and makes less of a difference during longer periods
of time.

Q2
Problems that can occur with forecasts can include having an insufficient holistic view over the
entirety, this could be for instance a company that cannot or has not accounted for all the costs or
revenues within perhaps core production operations. Organizational misalignment is a common and
dangerous occurrence within companies as well. For forecasts to be properly handled the entirety of
the company must be on par on how their goals and milestones shall be accomplished. Different
departments have to work towards the same goal and in the same direction.

Q3
Sales and Operations planning (SoP) is achieved with 5 steps. The first step in the process is gathering
and collecting data, this might entail data on past sales, costs and trends. During this process the
company might want to determine what KPIs to record and analyze that will reflect performance. The
second step requires the development of a demand plan. This includes tasks such as validating
forecasts and accounting for variability and generating revenue projections as well as forecast
statistics. The third step Supply planning necessitates setting inventory targets and the level of safety
stock. The fourth step has the aim to record gaps in the Supply chain and determine if the objectives
can be met in the sales plan. The company should also review the supply performance and present
forecasts. This step aims to reconcile the plans. The fifth step sees to it that the supply plans are
finalized. The results from all previous steps are then presented to the executives and this is then
either approved or rejected. During this last step one might try to resolve the remaining issues, review
KPIs as well as review recommendations and make adjustments.
Q4
Both SoP and budgeting strive to take into account the holistic view of the company. Both methods
are adequate and be used by a company to evaluate and map the condition and prerequisites of
success. Both methods offer different perspectives on what can be considered a healthy company
condition. Although, their similarities, budgeting is more lace-like than SoP and strives for more
specific goals.