As the company prepares to meet demand and capacity requirements for its planned future growth, you've been asked to review the current forecasting strategy and help implement a new strategic plan for forecasting demand. The new forecasting plan ties directly to the overall strategic planning methodology established by the company. The company historically has used a time series method. The forecasting methods under consideration are the following:
Qualitative: human judgment, usually best used when little data is available
Simulation: the use of computer models or judgment to imitate customer behavior
Causal: used when there is a direct tie between demand and an environmental factor, such as cold weather
Time series: the use of historical data to predict future needs
Using course materials and other research:
1. Identify which forecasting technique or multiple techniques should be used in the future for Manychip's strategy. Are there other techniques available that are not listed above?
2. Explain the technique you identify and give an example of how it is used in the manufacturing, retail, and health care industries.
3. Detail if one of the four techniques listed above should NOT be used and why.
4. Evaluate the significance of forecasting error for the technique or techniques you have selected. What is the impact of error on your chosen technique.
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Identify which forecasting technique or multiple techniques should be used in the future for Manychip's strategy. Are there other techniques available that are not listed above?
Manychip should continue to use the time series method in order to forecast the demand for its product. There are various advantages of this method for Manychip. First of all, this method has been historically used by Manychip and is easily understood by the employees. Further, even though an improvement is required in the use of this method to forecast more accurately by incorporating better tools and analysis, it is still better than other tools such as qualitative forecasting or causal which will either be inaccurate or irrelavant for Manychip. Historical data can be fully utilized to predict future demand patterns. Even though accurate results may not be obtained, keeping a close eye onto new market developments can assist in using this method more efficiently.
Further, Causal forecasting technique can also be used in combination of time series if any or ...
This solution discusses which forecasting technique or multiple techniques should be used in the future for Manychip's strategy. It also identifies other techniques available that are not listed above. This solution is approximately 600 words.