Forecasting in Production and Operations Management Coursework

Exclusively available on Available only on IvyPanda® Made by Human No AI

Introduction

The forecast process predicts the future outcome of events. The process is grounded on estimation. The forecast process includes the gathering of related data.

Thesis statement

The forecast enhances the operations head’s prerogatives.

Forecast

The Forecast Perspectives. There are several forecast process perspectives. The perspectives include the reasons for conducting the forecast, choice of forecast methods, and preferred forecast questions (Higgins, 2011). The other perspectives include salaries of workers, investment or budget amount, and raw materials used to generate the final product (Mahadevan, 2009).

Various methods of forecasting and applications. There are various forecasting methods and applications. The methods and applications are classified as either qualitative or quantitative. The qualitative method involves gathering the opinions of different individuals, experts, or groups. The research respondents can be experts on the research topic. The Gantt chart improves the forecasting process. The chart contains the time schedule of the project’s intertwined activities (Schwalbe, 2010). For example, the researcher asks the neighbor whether the Superman movie is worth viewing. The neighbor offers a personal opinion. Second, the researcher conducts market research. The researcher asks the McDonald’s customer how the food tastes. (Balakrishan, 2010).

The second group of forecasting methods is the quantitative group. Under this group, the last period method is based on the prior month’s actual output. If the current month’s revenue is $ 50,000, next month’s revenue forecast will remain at $50,000. If one Mcdonald’s store consistently generated a 10 percent increase in the prior month’s revenues, the researcher can predict next month’s profit will produce the same output (Balakrishan, 2010).

Time series forecasting has several approaches. The moving average approach creates an increase or decrease in the next month’s forecasting output. If the past several months’ revenues produced the same revenue, the next month’s forecast revenue is projected to be similar (Zhu, 2010). Further, The Delphi approach uses the computers’ speed in the prediction process. The Growth Curve approach focuses on the three product demand’s growth stages (Zhu, 2010). Extrapolation is another forecasting alternative. The alternative incorporates trending factors. If there are no external factors affecting the current production path, the future operating period’s outputs will continue on the same trend line path. If the graph’s trend line shows a 10 percent monthly production output increase, next month’s production output is projected to act in the same manner. Another name for the alternative is trend estimation (Zhu, 2010).

How to Evaluate the Forecast method’s Outputs/ Predictions. The evaluation of the predictive outcomes of the forecasting methods’ effectiveness can be done. Comparing the actual outcomes with the forecast figures will show the significant variances. To reduce the next period’s production output variance, the variances are incorporated into the next month’s production forecast. If there is a significant variance between one month’s projected 100,000 units and the 80,000 actual output, management must reduce the next forecast closer to the 80,000 actual production units (Zhu, 2010).

When analyzing the variance between the forecast amount and the actual amount, management must incorporate other external factors. For example, an unexpected hurricane destroyed one of the production facilities. Consequently, overall production performance drops. Further, new regulations or policies may prevent or reduce the production of banned products. Surely, incorporating material external factors into the forecasting process increases the effectiveness of the forecast results (Zhu, 2010).

By ensuring all relevant and valid data are retrieved, the effectiveness of the forecast outputs is increased. Further, a lack of relevant data may cast doubts on the accuracy of the forecast outputs. Likewise, using wrong forecast information produces wrong forecast amounts. Clearly, using both relevant and valid data ensures effective forecast outcomes (Shah, 2009).

Conclusion

The forecast perspectives help predict future outputs. There are several forecast methods and applications. By ensuring all relevant and valid data are used, the forecast outputs are more effective. Overwhelmingly, the forecast improves the effectiveness of the operations administrators’ prerogatives.

References

Balakrishan, N. (2010). Methods and Applications of Statistics. New York: J. Wiley & Sons.

Higgins, M. (2011). Advances in Forecasting. New York: W Upjohn Press.

Mahadevan, B. (2009). Operation Management. New York: Pearson Press.

Schwalbe, K. (2010). Information Technology Project Management. New York: Cengage Learning.

Shah, J. (2009). Supply Chain Management. New York: Pearson.

Zhu, J. (2010). Forecasting Models: Methods and Applications. New York: CreateSpace.

More related papers Related Essay Examples
Cite This paper
You're welcome to use this sample in your assignment. Be sure to cite it correctly

Reference

IvyPanda. (2022, May 29). Forecasting in Production and Operations Management. https://ivypanda.com/essays/forecasting-in-production-and-operations-management/

Work Cited

"Forecasting in Production and Operations Management." IvyPanda, 29 May 2022, ivypanda.com/essays/forecasting-in-production-and-operations-management/.

References

IvyPanda. (2022) 'Forecasting in Production and Operations Management'. 29 May.

References

IvyPanda. 2022. "Forecasting in Production and Operations Management." May 29, 2022. https://ivypanda.com/essays/forecasting-in-production-and-operations-management/.

1. IvyPanda. "Forecasting in Production and Operations Management." May 29, 2022. https://ivypanda.com/essays/forecasting-in-production-and-operations-management/.


Bibliography


IvyPanda. "Forecasting in Production and Operations Management." May 29, 2022. https://ivypanda.com/essays/forecasting-in-production-and-operations-management/.

If, for any reason, you believe that this content should not be published on our website, please request its removal.
Updated:
This academic paper example has been carefully picked, checked and refined by our editorial team.
No AI was involved: only quilified experts contributed.
You are free to use it for the following purposes:
  • To find inspiration for your paper and overcome writer’s block
  • As a source of information (ensure proper referencing)
  • As a template for you assignment
Privacy Settings

IvyPanda uses cookies and similar technologies to enhance your experience, enabling functionalities such as:

  • Basic site functions
  • Ensuring secure, safe transactions
  • Secure account login
  • Remembering account, browser, and regional preferences
  • Remembering privacy and security settings
  • Analyzing site traffic and usage
  • Personalized search, content, and recommendations
  • Displaying relevant, targeted ads on and off IvyPanda

Please refer to IvyPanda's Cookies Policy and Privacy Policy for detailed information.

Required Cookies & Technologies
Always active

Certain technologies we use are essential for critical functions such as security and site integrity, account authentication, security and privacy preferences, internal site usage and maintenance data, and ensuring the site operates correctly for browsing and transactions.

Site Customization

Cookies and similar technologies are used to enhance your experience by:

  • Remembering general and regional preferences
  • Personalizing content, search, recommendations, and offers

Some functions, such as personalized recommendations, account preferences, or localization, may not work correctly without these technologies. For more details, please refer to IvyPanda's Cookies Policy.

Personalized Advertising

To enable personalized advertising (such as interest-based ads), we may share your data with our marketing and advertising partners using cookies and other technologies. These partners may have their own information collected about you. Turning off the personalized advertising setting won't stop you from seeing IvyPanda ads, but it may make the ads you see less relevant or more repetitive.

Personalized advertising may be considered a "sale" or "sharing" of the information under California and other state privacy laws, and you may have the right to opt out. Turning off personalized advertising allows you to exercise your right to opt out. Learn more in IvyPanda's Cookies Policy and Privacy Policy.

1 / 1