Module no. 2 - Forecasting Technology.pptx

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1. Course Code : R4ME4003S Course Title: Operations Management Prerequisites Manufacturing Processes COURSE OUTCOMES The student should be able to – 1. Demonstrate the variations in MPC system for different types of organizations. 2. Outline the processes from forecasting to sales and to use the different production planning techniques 3. Apply the different operations research techniques to solve MPC related problems 4. Evaluate the inventory control decisions

2. Course Title: Operations Management Prerequisites Manufacturing Processes Text Books 1. Krajewski , L. J., Ritzman , L. P. and Malhotra, M. K., Operations Management, Prentice Hall, New Delhi, 2009 2. Ebert, J and Adams, D.J., Production/Operations Management, Prentice Hall of India , New Delhi, 2007 3. Thomas Vollmann , William Berry, Manufacturing planning and control Systems, McGraw Hill Education, Fifth Edition, 2004 4. Premkumar Gupta and Hira, Operation Research, S. Chand Company Ltd., New Delhi , 2007 . 5. Jay Heizer , Barry Render, Jagadeesh Rajashekhar . Operation Management, Person Publication, 3 rd Edition, 2011 .

3. Module 2 : Forecasting Need for forecasting, types of forecast. Extrapolative methods- Moving average method , Exponential smoothing method, Forecast errors, Linear trend model. Causal methods - Simple regression analysis.

4. What is Forecasting ? Casting data forward is called forecasting. It is a projection based upon past data or it is an estimate of an event which will happen in future. Need of forecasting:  When there is a time lag between awareness of an impending event or need and occurrence of that event. This lead time is the main reason of planning and forecasting.  Planning is the fundamental activity of management. Forecasting forms the basis of planning.  It is essential for the organization to know for what level of activities one is planning before investments in input.

5. Types of Forecasting Short Term forecasting is the forecasting that made for short term objectives covering less than one year. Ex. Material Requirement Planning (MRP), scheduling, sequencing, budgeting etc. Long Term Forecasting is the forecasting that made for that made for long term objectives covering more than five years. Ex. Product diversification, sales and advertisement. Basic categories of forecasting methods: Forecasting methods can be divided in to three main categories. A. Extrapolative or Time-series Methods B. Casual or explanatory methods C. Qualitative or judgmental methods Time-series Methods and explanatory methods are quantitative methods and judgmental methods are qualitative methods. Quantitative methods will be adopted when sufficient quantitative information available and when little or no qualitative information available but sufficient qualitative knowledge available qualitative methods will be preferable.

6. Types of Forecasting A. Extrapolative or Time-series Methods • Time series forecasting models try to predict the future based on past data. • Relate the forecast to only one factor – time. • Include  Moving average  Exponential smoothing Moving Average:- • Naive forecast: demand in current period is used as next period’s forecast • Simple moving average: Uses average demand for a fixed sequence of periods. Stable demand with no pronounced behavioral patterns. • Weighted moving average  Weights are assigned to most recent data.

7. Numerical on Types of Forecasting Moving Average Method Weighted Moving Average Exponential Method Regression analysis and Straight line fit……. All types cover in class lecture