forecasting presentation

FORECASTING AT ROSS PRODUCTS

By: Ravi Kanudawala (3905139) Mayur Somaiya (3905128) Ajay Raval (3905225)

FORECASTING

Forecasting is the process of making statements about events

whose actual outcomes (typically) have not yet been observed.

For example, it might be estimation for some variable of interest

at some specified value date.

Forecasting is used in the practice of Customer Demand

Planning in every day business forecasting for manufacturing

companies.

TYPES OF FORECASTING

Quantitative forecasting

Naïve forecasting Approach

Time Series Forecasting methods

Causal / econometric forecasting methods

Judgmental forecasting methods

Artificial Intelligence forecasting methods

REGRESSION ANALYSIS

The Regression Analysis is part of Causal / econometric

forecasting methods.

It includes a large group of methods that can be used to

predict future values of a variable using information about

other variables.

STRATEGIC BUSINESS PLANNING

Level of aggregation Total sales or output volume

Top Management involvement intensive

Forecast frequency Annual or less

Length of forecast Year by years or quarters

Usual techniques Management judgment, regression.

SALES AND OPERATIONS PLANNING

Level of aggregation Product family units

Top Management involvement When reconciling functional plans or moderate

Forecast frequency Monthly to quarterly

Length of forecast Several months to a year by months

Usual techniques Aggregation of detailed forecasts, customer plans

MASTER PRODUCTION SCHEDULING AND CONTROL

Level of aggregation Individual finished goods or components

Top Management involvement Very little or Minimal

Forecast frequency Constantly

Length of forecast A few days to weeks

Usual techniques Projection techniques (smoothing, moving average)

INTRODUCTION

The Ross Products is division of Abbott laboratories and is situated in

Columbus , Ohio.

It produces a variety of nutritional products including adult medical

nutrition supplements, pediatric infant formulas, as well as ancillary

equipment.

For example, pump which supplies nutritional liquids to the stomach.

Mainly there are four manufacturing facilities in US.

Ross markets its products in United States and Overseas.

They using log*plus program to perform demand management activities.

Log*plus produces forecasts from nation inputs and monitors actual

demands against these forecasts.

PROCEDURE

Vendor-managed inventory

Other Customers Orders

Marketing and sales forecasts by

products groups

Demand Management

Breakout of national forecast by plant

Forecast consolidation and

conversion ( to SKU by plant)

Meeting for revising the forecast

Forecast available for manufacturing

Planning

Meeting for forecast review

International Forecast

EDI

Deviation

Deviation

Deviation

Deviation

Deviation

Deviation

Deviation

Time

Valu

es o

f D

ep

en

den

t V

ari

ab

le

bxaY ˆ

Actual observation

Point on regression line

Used for forecasting linear trend line

Assumes relationship between response variable, Y, and time, X, is a linear function

iY a bX i= +

LINEAR TREND PROJECTION

LINEAR REGRESSION EQUATIONS

Equation:

ii bxaY

Slope: 22

i

n

1i

ii

n

1i

xnx

yxnyx b

Y-Intercept:

xby a

Questions ???

Thank you