Aggregate forecasts

If the upward bias of aggregate forecasts over the period were estimated to be 5%, for example, the corresponding cutbacks relative to these forecasts would be about 25% and 10%, respectively. 

Aggregate forecasts are more accurate—Demand forecasts for the entire product family are more accurate compared to those made for each member of the product family. 

In all instances of a supply chain the first step is to forecast what the customer demand will be in the future. It is important to note that is not possible to produce a perfect forecast as there are so many variables affecting a future demand, such as past demand, promotion and advertising of the product, market share, state of the economy, price discounts, competition and new products introduction. Peter Drucker once said the best way to predict future is to create it . There are also some recognized characteristics of forecasts, for example, there will always be a forecast error, longer-term forecasts are less accurate than short-term forecasts and aggregate forecasts are usually more accurate than individual forecasts. 

Aggregate Forecasting Vendor Innu e(l Inventor ( Ml). lointly Managed Inventory (JMl)... 

If the result of this rough cut planning activity is that there is not enough capacity, resources or material to achieve the aggregate forecast then either demand has to be managed , e.g. delivery lead times re-negotiated, prices adjusted to reduce demand, etc, or additional capacity has to be found - possibly by using external providers. 

As discussed in Chapter 12, postponement refers to the delay of product differentiation until closer to the sale of the product. With postponement, all activities prior to product differentiation require aggregate forecasts that are more accurate than individual product forecasts. Individual product forecasts are required close to the time of sale when demand is known with greater accuracy. As a result, postponement allows a supply chain to better match supply with demand. Postponement can be a powerful managerial lever to increase profitability. It can be particularly valuable if customers are willing to wait for delivery. If the supply chain can postpone product differentiation until after receiving the customer order, a significant increase in profits and reduction in inventories can be achieved. 

The other approach is the bottom-up procedure, which proceeds to aggregate projected sales data. You start with the projected sales data in each territory for each product and sum up the forecasts into successively larger amalgamations. 

Revenue management is focused on demand forecasting - aggregated and disaggregated - demand distribution models or arrival processes to... 

Demand is forecasted with price and quantity in a first step and aggregated to a total demand volume with an average price. 

The rolling planning process starts with a first phase ( ) typically in the first half of the period. The regions update the regional demand forecast by price and quantity that is aggregated to a global demand. In analogy, offers... 

Elasticity analysis algorithm as pragmatic approach to determine average price elasticity of aggregated demand forecasts that analyzes underlying customer price-quantity demand. 

From our experience in the pharmaceutical world, however, these types of forecasting analyses boil down to fwo sefs of aggregate assumptions about an indication marketplace and the position of fhe NCE wifhin it, as shown in Figure 35.3. 

Unpredictable variability in individual responses, coupled with the need to forecast the aggregate responses of an entire population of future subjects, provide the reasons why biostatisticians are involved in clinical trial design and analysis. Inferential statistics is the discipline of making inferences about populations by analyzing data from samples that were drawn from those populations in a prescribed way. If we could somehow look into a crystal ball and measure the actual future responses to a new drug from the entire... 

Two methods [6-10] are used to obtain aggregate impacts from overlays (a) conventional weighting, the weights being a measure of relative importance (b) threshold technique, in which a unit square is excluded from further consideration whenever a designated number of impacts are forecast to occur, or whenever an individual impact is unacceptably high. 

Using daily exchange rates as opposed to weekly or monthly exchange rates ensures the convergence of GARCH parameters and minimizes standard errors. The aggregation formula for monthly GARCH forecasts is ... 

---