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3 & 4 - Forecasting & Capacity
Chapters 3 & 4
25
Management
Undergraduate 3
05/03/2014

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Cards

Term
Causal Relationship Forecasting
Definition
Forecasting using independent variables other than time to predict future demand.
Term
Collaborative Planning, Forecasting, and Replenishment (CPFR)
Definition
An Internet tool to coordinate forecasting, production, and purchasing in a firm's supply chain.
Term
Decomposition
Definition
The process of identifying and separating time series data into fundamental components such as trend and seasonality.
Term
Exponential Smoothing
Definition
A time series forecasting technique using weights that decrease exponentially (1-alpha) for each past period.
Term
Forecast Error
Definition
The difference between actual demand and what was forecast.
Term
Linear Regression Forecasting
Definition
A forecasting technique that fits a straight line to past demand data.
Term
Mean Absolute Deviation (MAD)
Definition
The average of the absolute value of the actual forecast error.
Term
Mean Absolute Percent Error (MAPE)
Definition
MAD/Average Demand.
THe average error measured as a percentage of average demand.
Term
Moving Average
Definition
Forecast is the average of a fixed number of past periods.
Removes some of the random fluctuation from the data.
Term
Smoothing Constant alpha
Definition
alpha depends upon how much random variation is present.
Term
Smoothing Constant delta
Definition
delta depends upon how steady the trend is.
Term
Strategic Forecasts
Definition
Medium and long-term forecasts that are used to make decisions related to design and plans for meeting demand.
Term
Tactical Forecasts
Definition
Short-term forecasts used as input for making day-to-day decisions related to meeting demand.
Term
Time Series Analysis
Definition
Using the past to predict the future
(-3,3-24,24+)
Term
Tracking Signal
Definition
A measure of whether the forecast is keeping pace with any genuine upward or downward changes in demand. This is used to detect forecast bias.
Term
Weighted Moving Average
Definition
A forecast made with past data where more recent data are given more significance than older data.
Term
Best Operating Level
Definition
The level of capacity for which the process was designed and the volume of output at which average unit cost is minimized.
Term
Capacity Cushion
Definition
Capacity in excess of expected demand.
Term
Capacity
Definition
The amount of output that a system is capable of achieving over a specific period of time.
Term
Capacity Utilization Rate
Definition
Measures how close a firm's current output is to its best operating level.
Term
Economies of Scale
Definition
The notion that as a plant gets larger and volume increases, the average cost per unit drops. At some point, the plant gets too large and costs per unit begin to increase.
Term
Economies of Scope
Definition
This is when multiple products can be produced at a lower cost in combination than they can be separately.
Term
Focused Factory
Definition
A facility with a fairly limited set of production objectives. Typically the focus would relate to a specific product or product group.
Term
Plant within a Plant (PWP)
Definition
A concept that can be used to operationalize a focused factory by designating a specific area in a larger plant.
Term
Strategic Capacity Planning
Definition
Determining the overall capacity level of capital-intensive resources that best supports the company's long-range competitive strategy.
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