Demand Forecasting & Planning
The unprecedented growth in the production systems, flexibility in manufacturing opportunities, and variety of products has made the global market more competitive. From consumers’ perspective these developments brought obvious benefits but these changes make it crucially difficult for retailers and manufacturers to decide and predict which of their products will sell. From a production point of view, manufacturers either produce more than the demand in the market or they cannot satisfy the demand at all. Therefore manufacturers either end up with excessive inventories or they face lost sales that have an indirect cost implication.
To address the problem of inaccurate forecasts and determining appropriate production lot sizes, the practitioners of supply chain management use sophisticated forecasting methods. The basic problem is how to incorporate the demand uncertainty into production-planning processes. The production lot sizes are determined based on the past sales and customer reactions. Though determining the optimal level of production amounts are obtained through an optimization process, the basic parameter demand has to be accurately estimated. Hence forecasting plays a crucial role.
Forecasting is a difficult phenomenon simply because customer reactions are never easy to estimate. The introduction of new products into market, the variety of different products and market size directly affect the demand. The uncertainty of demand has to be handled properly and robustly. Worst-case scenarios have to be taken into consideration and results have to be provided accordingly.
SOLVOYO serves as the center of forecasting. The entire forecasting methods ranging from moving averages and exponential smoothing to ARIMA models and CROSTON are processed for a given sales data in SOLVOYO’s PlanLM. By the fruits of parallel programming and by the power of modern computing systems in very short amount of times nearly 25 different forecasting methods are used and each provide results that characterize past sales and give an overall understanding for the future sales. The customers get a detailed report for the future sales.