Demand forecasting (qualitative, causal, time series)

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There are four types of demand forecasting (qualitative, causal, time series, and simulation). Companies use one or more of these techniques to conduct demand forecasting. Using resources, do the following:

1. Select two major companies (e.g., Dell and Sears) and identify how demand forecasting is an essential part of their manufacturing process.
2. Based on your knowledge, or through research, postulate which of the forecasting techniques would be most beneficial and logical for the companies to use. Specify types of forecasting formulae, if possible.
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Select two major companies (e.g., Dell and Sears) and identify how demand forecasting is an essential part of their manufacturing process.

Dell, Inc. and its subsidiaries engage in the design, development, manufacture, marketing, sale, and support of a range of computer systems and services worldwide. The company provides products and services that enable customers to build their information-technology and Internet infrastructures.

It is an established brand that leads personal computer manufacturers both in U.S. sales and overall online sales, and is still #2 worldwide in the huge, competitive PC industry. Its trademark method of selling products to customers, corporate and consumer, emanates from the Dell Direct model, a Web-enabled infrastructure that allows customers to customize their PCs and order other products they need or desire.

Demand forecasting is an essential part of Dell, Dell by its informed, efficient value chain, to deliver quickly and keep inventory turnover to “10 or fewer days, on average, keeping related costs low.” Dell is able to keep up with demand using six manufacturing plants and plans to build two more, due to its efficient demand forecasting of worldwide.

Sears Holdings Corporation, through its subsidiaries, operates as a retailer in the United States. It offers home appliances, tools, lawn and garden products, home electronics, and automotive repair and maintenance products. As of March 28, 2005, the company operated 3,800 full-line and specialty retail stores in the United States and Canada. Sears Holdings is headquartered in Hoffman Estates, Illinois.

Demand forecasting is an essential component for Sears as to provide right kind of merchandise to its customers through out its more than 3800 stores.

1. Based on your knowledge, or through research, postulate which of the forecasting techniques would be most beneficial and logical for the companies to use. Specify types of forecasting formulae, if possible.

Use of Forecasting

Forecasting is an essential tool in any decision making process. There are various techniques of forecasting:

Qualitative techniques involve primarily judgment, and quantitative, involving primarily historical data and mathematical models.

Qualitative techniques rely on judgment, intuition, and subjective evaluation. Among the major techniques within this category are market research (surveys), Delphi (panel consensus), historical analogy, and management estimation (guess).

Evaluation of Qualitative techniques:

• These techniques are based on good theory and can yield valuable information for marketing decisions
• The Delphi …