DM307: Scheduling

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Questions and Answers

What is demand management? What are the key processes?

It is about how to manage customer demand that drives the businesses. There are three key processes about demand management: marketing management, customer relationship management (CRM) and demand planning.

What is independent demand. Specify your answers with real-life examples.

Independent demand: Need of a product is not related to other products. So it can be forecasted only. For example, demand of a car/smart phone/laptop.

What is dependant demand. Specify your answer with real life examples.

Dependent demand: Need of a product/component depends on other products. So it cannot be forecasted but calculated only (such as MRP). For example, demand of a component of a car/smart phone/laptop.

What are the principles of forecasting?

<ol> <li>Forecasts are always wrong, thus the expected value and measure of error should be included.</li> <li>Long-term forecasts are less accurate than short-term forecasts (forecast horizon is important)</li> <li>Aggregate forecasts are more accurate than disaggregate forecasts</li> <li>In general, information is distorted when moving up the supply chain. So, the farther up the SC an enterprise is, the larger is the forecast error.</li> </ol> Signup and view all the answers

Describe a real-life example in which it is the most appropriate to make forecasts using the Qualitative method:

Qualitative - It is useful when little historical data is available or when experts have market intelligence that may affect the forecast. For example, a team is going to forecast the future demand of new running shoe that its bottom can recover automatically. The product life cycle must be long for this new shoe and the investment in the material of the bottom is significant. However, there is no running shoe with similar features in the current market and it remains unclear whether people are willing to pay such a high price on this new shoe. Signup and view all the answers

Describe a real-life example in which it is the most appropriate to make forecasts using the Time Series method:

Time-series - It is useful when past demand history is a good indicator of future demand and the basic demand does not vary significantly from one year to the next. For example, we plan to forecast the demand of down jacket in Hong Kong, China. There is no big change in weathers such that it is always cold and dry in winter over the past few years. Signup and view all the answers

Describe a real-life example in which it is the most appropriate to make forecasts using the Causal method:

Causal - It is useful when certain factors in the environment are highly associated with the demand and such relationships must be identified especially those with strong positive/negative correlation with the future demand. For example, the price of housing is highly correlated with demand and supply. Other causal factors would be the interest rate and exchange rate. Signup and view all the answers

What is seasonality? How forecast can take seasonality into consideration?

Seasonality is noted when the underlying demand undergoes a predictable cyclic variation with respect to the time. For products with seasonal demand pattern, the forecasting process is as follows: <ol> <li>Create a seasonal index of demand for each period to account for seasonality in historical demand.</li> <li>Develop a deseasonalised demand forecast spanning all periods.</li> <li>Develop a seasonal forecast for each period by multiplying the deseasonalised demand by each period’s seasonal index.</li> </ol> Signup and view all the answers