What are the laws of forecasting and what are their implications for operations and supply chain managers?
What will be an ideal response?c
Answer: Forecasts are almost always wrong; forecasts for the near term tend to be more accurate; forecasts for groups of products or services tend to be more accurate; and forecasts are no substitute for calculated values. The first law suggests that operations managers recognize that achieving a close estimate is beneficial, and that the amount of time, effort, and money required to improve a forecast have diminishing returns. The second law recognizes that the immediate future is more predictable and that techniques to shorten the time horizon for a forecast, such as delayed differentiation, are in the firm's best interest. The third law accounts for overforecasting and underforecasting errors to cancel each other. If a producer can standardize parts or models and delay differentiation, perhaps by making model differences attributable to software, then the effects of this law can be mitigated. Finally, if it is possible to directly calculate values, such as with dependent demand items, this should be done instead of forecasting.
You might also like to view...
Operational inefficiencies occur because accounts common to many concurrent transactions need to be updated in real time
Indicate whether the statement is true or false
Common stock is the last stock in line for any corporate payouts, including dividends and liquidation payments
a. True b. False Indicate whether the statement is true or false
When using the periodic inventory system, the process of recording the ending Merchandise Inventory is completed by making an adjusting entry
Indicate whether the statement is true or false
Compare the contractual liability of an intoxicated person to that of a person who is mentally ill. How are their situations similar? How are they different with regard to capacity?