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    Operation Management Questions

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    Rose Lacaba
    1. The forecasting time horizon influences the choice of forecasting model, with shorter horizons using simpler models and longer horizons using more complex models. 2. Forecasting helps organizations plan for uncertainties by allowing them to anticipate changes, optimize resources, and adjust strategies based on predictions to avoid potential failures or losses. 3. The type of available data influences the choice of forecasting model, with qualitative models used if data is limited and quantitative models requiring relevant historical data. Qualitative methods include expert panels and surveys while quantitative methods depend on statistical analysis.

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    Operation Management Questions

    Uploaded by

    Rose Lacaba
    61 views3 pages
    1. The forecasting time horizon influences the choice of forecasting model, with shorter horizons using simpler models and longer horizons using more complex models. 2. Forecasting helps organizations plan for uncertainties by allowing them to anticipate changes, optimize resources, and adjust strategies based on predictions to avoid potential failures or losses. 3. The type of available data influences the choice of forecasting model, with qualitative models used if data is limited and quantitative models requiring relevant historical data. Qualitative methods include expert panels and surveys while quantitative methods depend on statistical analysis.

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    OPERATION MANAGEMENT QUESTIONS

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    1. The forecasting time horizon influences the choice of forecasting model, with shorter horizons using simpler models and longer horizons using more complex models. 2. Forecasting helps organizations plan for uncertainties by allowing them to anticipate changes, optimize resources, and adjust strategies based on predictions to avoid potential failures or losses. 3. The type of available data influences the choice of forecasting model, with qualitative models used if data is limited and quantitative models requiring relevant historical data. Qualitative methods include expert panels and surveys while quantitative methods depend on statistical analysis.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    61 views3 pages

    Operation Management Questions

    Uploaded by

    Rose Lacaba
    1. The forecasting time horizon influences the choice of forecasting model, with shorter horizons using simpler models and longer horizons using more complex models. 2. Forecasting helps organizations plan for uncertainties by allowing them to anticipate changes, optimize resources, and adjust strategies based on predictions to avoid potential failures or losses. 3. The type of available data influences the choice of forecasting model, with qualitative models used if data is limited and quantitative models requiring relevant historical data. Qualitative methods include expert panels and surveys while quantitative methods depend on statistical analysis.

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    © All Rights Reserved
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    of 3

    SAMPLE ACTIVITIES/ASSESSMENTS

    1. What is the relationship between the forecasting time horizon and the choice of forecasting models?

    2. Explain how forecasting helps an organization handle uncertainties.

    ● Forecasts will provide you with the opportunity to compare the foreseeable results of possibly
    drastic decisions before their effects impact the company. This will allow you to make correct
    decisions and avoid missteps.

    ● Business forecasting consists of tools and techniques used to predict changes in business, such as
    sales, expenditures, profits and losses. The goal of business forecasting is to develop better
    strategies based on these informed predictions; helping to eliminate potential failure or losses
    before they happen.

    ● Forecasting gives visibility into data, allowing businesses to adjust and adapt to future
    predictions by optimizing resources. There are various tools that enhance a business’s ability to
    gain information as well as have an overview of how operations, processes, budget and more are
    running currently and what should be changed and/or improved in order to reach future goals and
    opportunities

    ● EXAMPLE: A sales forecast helps businesses estimate potential future sales. It also allows your
    business to anticipate its future needs such as workforce, resources, cash flow, inventory, and
    investment capital. A sales forecast will show the sales revenue that you might expect over a
    specific future time frame

    3. Is there a relationship between the choice of data and the type of forecasting model that one
    wishes to use?

    ● The appropriate forecasting methods depend largely on what data are available. If there are no
    data available, or if the data available are not relevant to the forecasts, then qualitative
    forecasting methods must be used.

    ● Qualitative forecasting is a method of making predictions about a company's finances that uses
    judgment from experts. Expert employees perform qualitative forecasting by identifying and
    analyzing the relationship between existing knowledge of past operations and potential future
    operations.

    ● Qualitative forecasting is an estimation methodology that uses expert judgment, rather than
    numerical analysis.
    I. Delphi technique: In this method, panels of experts are selected and are individually questioned
    about the upcoming events. They do not form a group. For long-range forecasting, this method is
    beneficial and very effective. The main disadvantage of this method is that from the returns there
    is a lack of and low reliability.

    II. Salesforce polling: In this method, the forecast is done based on the opinions of salespeople who
    have steady interactions with the clients. As they are closest to the customers, they can better
    predict the requirements of the customers for the future market. The main advantage of this
    forecasting method is that it is very simple to use and understand. The information can be
    segregated easily into different categories. But the drawback is that the salespeople can be either
    optimistic or pessimistic about their predictions and this could lead to inaccurate forecasting.

    III. Consumer surveys: In this method, the survey is conducted directly on the customers on their
    purchases. The surveys can be done through telephone contacts, personal interviews or
    questionnaires to obtain data from the customers. This method requires extensive statistical
    analysis to test consumer behavior.

    4. Suppose an organization wishes to forecast the demand for the next financial year to prepare its
    annual budget.

    5. What sources of data are useful for this exercise?

    6. What factors influence the choice of an appropriate fore- casting model?

    ● The selection of a method depends on many factors—the context of the forecast, the relevance
    and availability of historical data, the degree of accuracy desirable, the time period to be forecast,
    the cost/ benefit (or value) of the forecast to the company, and the time available for making the
    analysis.

    A number of factors influence the selection of a forecasting model.

    ● Amount and type of available data. Quantitative forecasting models require certain types of
    data. If there are not enough data in quantifiable form, it may be necessary to use a qualitative
    forecasting model. Also, different quantitative models require different amounts of data.
    Exponential smoothing requires a small amount of historical data, whereas linear regression
    requires considerably more. The amount and type of data available play a large role in the type of
    model that can be considered.
    ● Degree of accuracy required. The type of model selected is related to the degree of accuracy
    required. Some situations require only rough forecast estimates, whereas others require precise
    accuracy. Often, the greater the degree of accuracy required, the higher is the cost of the
    forecasting process. This is because increasing accuracy means increasing the costs of collecting
    and processing data, as well as the cost of the computer software required. A simpler and less
    costly forecasting model may be better overall than one that is very sophisticated but expensive.

    ● Length of forecast horizon. Some forecasting models are better suited to short forecast horizons,
    whereas others are better for long horizons. It is very important to select the correct model for the
    forecast horizon being used. For example, a manufacturer that wishes to forecast sales of a
    product ...

    7. What are the different methods available for assessing the accuracy of forecasts? How should one
    select an appropriate measure?

    8. Visit http://www.k2b.net/pdfs/k2b_resourcelibrary_for- rester.pdf. Read the article, “Demand


    Forecasting Done Right.”

    (a) What are the challenges in demand forecasting? How can you overcome some of them?
    (b) How do organizations benefit from accurate demand forecasting data?

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