SC HW1

Jack Poliviou Intro to Supply Chain Management 10/2/23 HW #1 1. What is the difference between qualitative forecasting techniques and quantitative forecasting techniques? - Businesses use forecasting to estimate future demand for products so that they can buy or make an appropriate quantity to meet demand. They use either qualitative forecasting, which is based on opinion and intuition, or quantitative forecasting, which uses more mathematical models and historical data to make predictions. 2. When is it more appropriate to use a qualitative forecast? - A business is more likely to use a qualitative forecast when data is limited, unavailable, or not currently relevant possibly due to new product or new demand trends. 3. When is it more appropriate to use a quantitative forecast? - A business is more likely to use a quantitative forecast when historical data exists and is likely to be useful in helping predict future demands. For example, quantitative forecasting has the ability to analyze historical trends, seasonal variations, and cyclical variation to provide a more accurate forecast than a qualitative estimate would. 4. Compute the sales forecast for July using the following approaches: a) 4-month simple moving average; b) 40-month weighted moving average using factors of 50% for the previous month, 30% for 2 months prior, 15% for 3 months prior, 5% for 4 months prior. - a) (19000+23000+15000+20000+22000+25000)/6 = 20,666.66 Units for July - b) (19000x .5)+(23000x .3)+(15000x .15)+(20000x .05)= 19,650 Units for July 5. Calculate the Mean Absolute Deviation (MAD) for each forecast 1: 2: Real 1D 2D Jan 275 268 269 6 1 Feb 275 287 289 14 2 Mar 290 292 294 4 2 Apr 283 283 278 5 5 May 275 274 268 7 6 Jun 268 270 269 1 1 - Forecast 1 MAD = (6+14+4+5+7+1)/6 = 6.167 - Forecast 2 MAD = (1+2+2+5+6+1)/6= 2.833