Scenario
The manager is responsible for forecasting for a laptop manufacturing company in a highly competitive industry. To avoid production delays due to increased demand, supplies must be ordered well in advance.
Selecting the Ideal Forecasting Technique
For a company that produces laptops, the optimal forecasting method can be a combination of quantitative and qualitative forecasting methods due to the dynamic nature of the market. In this context, it is necessary to use such techniques as time series analysis, market research, and the Delphi method (Nguyen et al., 2021). The last tool is the main one since consulting with experts can help to fully cover the entire scope of work and determine the optimal strategy. In addition, it can help to achieve a consensus forecast that will represent the opinion of all experts.
Steps in the Forecasting Process
The first significant step in forecasting is data collection. This allows the company to rely on reliable information in the future so that no problems with inaccuracy or bias arise in the forecasting process. The next step is to analyze the data, which is imperative to determine the best way to study the circumstances and make a further plan (Kratsch et al., 2021). Selecting a forecasting model is the next step in determining the appropriate forecasting method. It is then important to test the selected tool to ensure its functionality and applicability to the specific case selected. Forecasting is the final step, which is intended to create a final version of the development of events within a given time frame.
Importance of Setting the Right Forecasting Timeframe
Selecting and considering the forecast time frame is vital for several reasons. One of them is that the organization will need to carry out supply chain planning (Stevenson, 2021). This directly depends on the time period for which the forecast is calculated. To use this report as a basis, it is crucial to understand market features and trends accurately. Another reason is the allocation of resources that can be divided efficiently depending on how short or long-term the plans are (Stevenson, 2021). Additionally, the forecast time period is essential for financial reporting as it is based on how the company allocates and affects inventory.
Consequences of Mismatched Forecast Periods
When a forecast is created in half the time required, disruptions in the supply chain may occur. This is because shorter forecasting decreases the valuable time the company can spend on planning (Stevenson, 2021). The company may need help regulating inventories since maintaining an optimal level of resources may be difficult due to the unknown future situation on the market. Planning such processes with a detailed forecast is possible as this will lead to further errors in distribution, which will negatively affect the financial situation.
References
Kratsch, W., Manderscheid, J., Röglinger, M., & Seyfried, J. (2021). Machine learning in business process monitoring: a comparison of deep learning and classical approaches used for outcome prediction. Business & Information Systems Engineering, 63, 261-276. Web.
Nguyen, H. D., Tran, K. P., Thomassey, S., & Hamad, M. (2021). Forecasting and anomaly detection approaches using LSTM and LSTM autoencoder techniques with the applications in supply chain management. International Journal of Information Management, 57. Web.
Stevenson, W. (2021). Operations management (14th ed.). McGraw-Hill Irwin.
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