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Management Science
PROF. AK MARAVILLAS
Week 12 Lesson
8th edition
3-2 Forecasting
CHAPTER
3
Forecasting
Forecasting
3-4 Forecasting
FORECAST:
A statement about the future value of a variable of
interest such as demand.
Forecasts affect decisions and activities throughout
an organization
Accounting, finance
Human resources
Marketing
MIS
Operations
Product / service design
3-5 Forecasting
Uses of Forecasts
Timely
Reliable Accurate
Written
3-8 Forecasting
3-9 Forecasting
3-10 Forecasting
3-11 Forecasting
“The forecast”
Types of Forecasts
Judgmental Forecasts
Executive opinions
Sales force opinions
Consumer surveys
Outside opinion
Delphi method
Opinions of managers and staff
Achieves a consensus forecast
3-14 Forecasting
Forecast Variations
Figure 3.1
Irregular
variatio
n
Trend
Cycles
90
89
88
Seasonal variations
3-16 Forecasting
Naive Forecasts
QUALITATIVE
3-19 Forecasting
3-20 Forecasting
3-21 Forecasting
3-22 Forecasting
3-23 Forecasting
3-24 Forecasting
Quantitative
3-25 Forecasting
3-26 Forecasting
3-27 Forecasting
Moving Averages
i=1
Ai
MAn =
n
Weighted moving average – More recent values in a
series are given more weight in computing the
forecast.
3-28 Forecasting
3-29 Forecasting
3-30 Forecasting
3-31 Forecasting
3-32 Forecasting
3-33 Forecasting
Exponential Smoothing
Exponential Smoothing
Forecast horizon
3-49 Forecasting
REFERENCES
Hillier, F. (2019) Introduction to management
science : a modeling and case studies approach
with spreadsheets. New York, NY : McGraw-
Hill
Winston, W. (2019) Practical management
science. Mason, OH : Cengage Learning, Inc.
Stevenson, W. (2018) Operation management.
New York : McGraw-Hill Education.