Demand Planning
What is demand planning?
The combined process of forecasting and managing customer demands to create a planned pattern of demand that meets the firm’s operational and financial goals.
Name a statistical model-based forecasting technique
Time series analysis.
What is demand management?
A proactive approach in which managers attempt to influence patterns of demand.
What are the two activities involved in demand planning?
Demand forecasting and demand management.
What is exponential smoothing?
A time series model that applies decreasing weights to each demand that occurred further back in time.
Name two tactics used in demand management.
Pricing changes and promotions, managing the timing of order fulfillment.
What is the purpose of accurate planning information?
Helps managers make good production plans and manage resources and operating processes effectively.
What is the Delphi method?
Develops forecasts by asking a panel of experts to individually and repeatedly respond to a series of questions.
What is dynamic pricing?
The practice of rapidly adjusting prices to increase, decrease, or shift demand in a given period.
Name two benefits of good demand planning.
Better capacity planning and meeting customer service levels.
What are simulation models?
Sophisticated mathematical programs that offer forecasters the ability to evaluate different business scenarios.
What role does the Internet of Things (IoT) play in demand management?
Enables real-time demand monitoring and instant communications to customers through online messaging or digital displays.
What are the costs of making forecasts that are too high?
Money lost in holding inventory, lost capacity, and lost wages spent paying workers who are not needed.
Define causal modeling.
Uses other independent, observed data to predict demand.
What are some operational inefficiencies caused by fluctuating demand?
Extra resources to expand and contract capacity, backlogging, customer dissatisfaction, and buffering the system with safety stocks.