CPSM Study Cheats 2A – 4 Primary Forecasting Techniques
Forecasting is part of the 2nd CPSM Exam. It is important that every supply chain professional must know about forecasting because this helps organizations plan for the future. Some professionals employ a subjective criteria and often amount resort to wild guesses or wishful thinking. A wise professional usually base forecasting on a measurable, historical quantitative data, which in turn is given greater credence analysts and potential investors.
It is important to note that there is no forecasting tool that can predict the future with complete certainty, however, they remain essential in estimating an organization’s forward prospects.
Here is a list of primary forecasting techniques:
The RAND corporation developed Delphi technique in the late 1950s. This technique involves a group of experts, which respond to series of questionnaires, which are kept unaware of each other. The first set of questionnaires is compiled while the second questionnaires are based on the results of the experts who reevaluate their responses based on their first questionnaire.
This type of forecasting involves generation of different outcomes based on different starting criteria. The forecaster decides on the most likely outcome from the numerous scenarios presented. Scenario writing usually yields best, worst and middle options.
Forecasters are allowed to predict outcomes that are based on subjective thoughts and feelings. This session usually uses brainstorming sessions to generate ideas and to solve problems casually, free from criticism and peer pressure.
This forecasting technique is useful especially when there are constraints that prohibit objective forecasts.
This is a quantitative strategy. It gauges information or data gathered over time to identify the trends. The information may be assumed control over any interim: hourly; day by day; week by week; month to month; yearly; or more. Pattern, cyclical, occasional and unpredictable make up the time series. It is frequently indicated as an upward- or descending slanting line to speak to expanding or diminishing patterns, individually. Cyclical parts lie above or underneath the pattern line and rehash for a year or more. The business cycle delineates a cyclical part. Occasional segments are like cyclicals in their dull nature, yet they happen in one-year periods. The yearly increment in gas costs amid the late spring driving season and the relating abatement amid the winter months is an illustration of a regular occasion. Eccentric segments happen arbitrarily and can’t be anticipated.
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