Forecasting production planning - A forecasting is the process of estimating how future requirements are include in requirement in the measure of quantity, quality, time, and location that is need in order to meet the demand for goods or services.
The forecasting may not always require in a stable market demand conditions, but forecasting will be much need if the condition of the market circumstances are complex and dynamic. Therefore, accurate forecasting is much need information in management decision making.
Forecasting production planning and Time Horizon
In relation with the horizon of the time, forecasting can be classify into three groups, in after:
- Long-term Forecasting, typically 2 to 10 years. Forecasting is use for product planning and resource planning.
- Medium-term Forecasting, generally 1 to 24 months. Forecasting more specifically than long-term forecasting, determination of cash flow, production planning, and determination a budget.
- Short-term Forecasting, generally 1 to 5 weeks. Forecasting is use to make decisions in case of need or not overtime, scheduling work, and other short term control decisions.
The Use Of Forecasting production planning
Among the main purposes of forecasting is:
- Determine the needs and size of plant expansion.
- Determine the medium term planning for existing products to existing with existing facilities.
- To determine the short term scheduling of existing products to produce existing equipment
Method of forecasting in production planning
Forecasting can be base on the time period in line with the time period in the time period, this type of forecasting is define base on usefulness, detail, and time frames.
Besides forecasting can be found in other ways:
- The subjective opinion of those in the field of sales and marketing
- Base on the business activity index
- The average of December sales data
- A statistical analysis of the sales data and then
- Combination.
This Type of Forecasting production planning
Therefore, a manager needs to fore forecasting on several important areas, including forecasting about technology developments, forecasting of economic conditions, demand forecasting, and as for me.On Production planning and controlling (PPC), the field of forecasting demand forecasting is focus.
Demand Forecast
Because of the operational part of the forecasting is forecasting is forecasting going to be a very important input in the decision of planning and control of the company. Demand forecasting is use for forecasting is use for predicting the demand of forecasting. finish product.
Factors that affect the demand for forecasting production planning
Those events are almost always a force that is beyond the control of the company. Various factors are:
- Business cycle. Recession, depression, and the period of recovery.
- The life cycle of a product is commonly call the curve S Curve S. describe the magnitude of demand over time, where the life cycle of a product will be divide into phases of introduction, growth Phase, a phase of maturity, and finally the phase of decline. To maintain the continuity of effort, then the need for product innovation at the right time
- Some factors such as improve quality, service, advertising budget, and credit payment policy.
A good Characteristics of Forecasting
A good forecasting of important criteria among others as follows:
Accuracy
The accuracy of forecasting. The result is said to be bias when forecasting is too high or too low compare to the fact that it actually happen. Forecasting is consistent if the magnitude of forecasting is relatively small. Forecast too low, would lead to a shortage of supplies, so that consumer demand cannot be met immediately. Forecasting that is too high will result in buildup of inventory, so much capital is absorb in vain. The accuracy of the forecasting plays an important role in balancing the ideal preparation, namely, managing the inventory buildup and maximizing service levels.
The cost
The necessary cost of accounting for forecasting methods is to be use. The third factor triggers these costs will influence how much data is need, how its data processing, manually or computerize data storage, how, and who experts who assist. Election forecasting methods must be adapt to the funds available and the level of accuracy that would be like to come up with, for example the important items will be foreseen with a sophisticate and expensive method, while the items that are important for dealing with the method are simple and cheap. This is the adoption of the law of Pareto (ABC Analysis).
Ease
The use of methods of forecasting is simple, easy to use, and is easily apply, will give you an advantage for the company. Is there no need to wear a sophisticate method, but it cannot be apply to a company system because of lack of funds, human resources and technology?
The Nature of the Forecasting Results
In making or implementing forecasting a, there are some things that should be considere, namely:
- Forecasting inevitably contains errors, meaning that forecasters can only reduce the uncertainty that will happen, but it can't eliminate the uncertainty.
- Forecasting should provide information about the size of a mistake, does that mean because of forecasting inevitably contain errors, then it is essential for the forecaster to inform how big errors that may occur.
- Short-term forecasting is more accurate than long-term forecasting. This is a short-term forecast, a number of factors that affect the demand for relatively constant, while still getting longer forecasting periods, the greater the possibility of changes in factors that affect demand.
The Method of Forecasting
In General, the forecasting of the class is classify into two kinds, namely:
- Forecasting is inherently subjective.
- The nature of the objective forecasting.
The difference between these two types is base on how to obtain the forecast values.
Forecasting production planning Of Subjective
Forecasting is more important, personal opinions, and intuition that although seemingly less scientific but can give good results. This subjective forecasting will be represent by the Delphi method and method of market research.
The Delphi Method. This method is a systematic way, the decision together from a group of experts and comes from different disciplines. But instead, instead, they ask the opinion separately and may not mutually negotiate. Place order to avoid bias opinions due to influence of the group. Different differing opinions from other experts in the group will be ask to answer the question, how come the numbers can be accept at specific intervals which can be accept.
The Delphi method is already use on a long term operation. In addition, this method also benefits in new product development, the development of production capacity, the new market segmentation of tunneling and other business decision strategies.
Methods of Market Research.
This method collects and processes facts in the related fields of marketing. One of the main techniques in this market research is a survey of consumers. Consumer surveys will provide information on the expect consumer tastes, where information is obtain from the sample with the questionnaire. Market research is often use for planning new products, advertising, and promotion systems. The results of market research are also sometimes use as the basis for forecasting demand for new products.
Objective Forecasting
Objective forecasting the forecast procedure follows mathematical rules and statistics. It shows the relationship between requesting one or more variables. In addition, the objective forecasting also assumes that the level of closeness and types of relationships will also be repeat in the future. Objective forecasting consists of two methods, namely the intrinsic method and extrinsic method.
The Intrinsic Method
This method makes forecasting only base on historical demand projects without considering external factors that may affect the magnitude of demand. This method is only suitable for short-term forecasting in production activities, where in order to control production and inventory the control of raw materials are often companies have to involve many different items. This is certainly method of forecasting, easy and cheap. The intrinsic method is represent by time series analysis.
Extrinsic Method
This method considers the external factors that may affect the magnitude of demand in the foreseeable future in the forecasting model. This method is a longer term forecast because it can indicate a clear causal relationship in the results of its so-called causal methods and can predict the points change.
The downside of this method is the high application fees and the frequency of repairs that are low because of the difficulty of forecasting provides information on changes in external factors that are unsure. Extrinsic method is for the level of the aggregate. This method will be represent by the regression method.
Approach of Forecasting
With the consideration that the data method is made to the data which then is a forecast for demand, do the steps as follows:
- Create a plot against time demand (demand versus time).
- Determine the techniques use.
- Evaluate the expect error.
- Decisions to use techniques that are consider or tried to get better.
There are several methods of forecasting:
- Least Square / Linear Forecasting
- Forecasting of Constant
- Forecasting of The Cyclic
- Linear Forecasting-Cyclic
- Other Forecasting: Moving Average, Exponential Smoothing, Regression, Combination.
Time Series Analysis (Time Series)
In time series analysis the approach is base on the assumption that the pattern of Seasonal / Season (S), the Random Variation / Random (R) that will show a particular pattern. These components are then use as the basis in making mathematical equations. Time series analysis is use to predict the exact demand pattern of demand in the past quite consistent in the long period of time, so hopefully these patterns will still be continue.
The demand for analysis of time series will be influence by the four major components of T, C, S, and R. Description of these components are as follows.
1. The tendency / Trend (T)
The trend is the nature of past time for occurrence, whether such requests tend to go up, down, or a constant.
2. Cycle / Cycle (C)
Request a product can have a cycle that repeats periodically, usually more than one year, so this pattern doesn't need to be place in short term forecasting. This pattern is very useful for forecasting medium and long term.
3. The pattern of Seasonal / Season (S)
Fluctuations in demand for products that are up and down around the trend line are usually repeat every year. This is usually cause by the weather, which will be repeat periodically each year.
4. Random / Random Variation (R)
The request for a natural disaster, the downfall of company competitors, special promotions, and other events that have no particular pattern. Random variation is need to determine security inventory in a shortage of surge in demand supplies.
The moving average (MA = Moving Average)
The Moving Average is obtain with the average request base on some past data. The main purpose of the technique is to reduce random variations of demand in relation to time.
This goal is achieve by averaging some data values together, and using the average forecast demand for the coming period. Call moving average because it's so any actual new time series query data available, the actual time the most previous requests will be exclude from the calculation, then the average will be calculate.
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