Demand Management
For this paper, they are 4 main sections to respond to, the writer must clearly respond to this four main
point in the paper, using pear review articles from the resources and the internet to support every
respond. APA 6th Edition must be implore through out the entire paper.
Looking into the future is a conundrum: it is both necessary and impossible to do with complete accuracy.
From knowing what the weather will be like tomorrow to trying to decide what the stock market will do,
forecasting is an activity that consumes a considerable amount of our attention because it impacts our
lives so directly.
How important is forecasting to planning and decision making for a business?
Analyze the various techniques of forecasting and explain which would be appropriate or inappropriate to
(a) a manufacturing enterprise, and
Introduction
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a.) Forecasting is critical to planning and also in decision making process in a company besides
the financial budgetary demands. The advancement in technology and digital business operations
has resulted in more challenges to demand forecasting. Orders and quotations are increasing
using the e-business technology where most of the transactions are paperless and time spent per
transaction is reducing to a matter of minutes. The fierce and competitive business environment
has culminated into the critical need for prompt information that is constantly reviewed and
updated to reflect the changes in the business environment. Buyers expect to find the product
they want on the shelves when they need it or exactly when they will be available otherwise they
will definitely walk to the next shop where the product is available (Dey & Somani, n.d). The
importance of forecasting is to ensure that products are available throughout the business period
and at the quantities required by the customers. Forecasting also assists in financial planning
where budgetary allocations are made. The forecasts also help in calculation of lead times and
the reorder levels that may require adequate financial resources. Forecasting helps the
management to forecast when the company may need funding to facilitate its business operations
and processes. The forecasts assist in decision making process as they determine when the
company may need funding.
b) There are various techniques that are applied in forecasting. Currently, there are various types
of commercial forecasting software that are available in the market some of which are based on
stand-alone systems, specialize packages and other types that are applicable to modules on
management systems. The other ones like just-in-time processes are applicable to manufacturing
industries. Time based and quick response strategies are applied also in the manufacturing sector
(Gung, Leung, Lin & Tsai, 2002). The most widely used forecasting techniques however are
based on historical information on demand. But they have proved to be unreliable where the
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future demand is difficult to predict basing the outcome on the past sales trends which are
susceptible to sudden market changes.
c) A manufacturing firm would adopt the just-in-time forecasting technique which is based on
the past historical perforce of the firm (Lapide, 2006). Most of the sales from manufacturing
plants are mostly consistent and the forecasting method can be applied as changes are not erratic
or far apart.
d) A service provider requires a forecasting system that’s more proactive and which is more
sophisticated and relies on quantitative analytics to predict future demands. Service providers
mostly have loyal customers and whose demand can be easily forecasted based on the past
performance and historical records. However, sophisticated realtime forecasting packages can
also be utilized to forecast the demand more accurately (IBM Corporation, 2006).
To conclude, the best model for a demand management that would be suitable to a retail food
industry is one that is web based and which provides reliability, scalability and which supports
functionality with other realtime feedback systems that are systematically designed to
dynamically forecast against such variables like customer orders, inventory, supply and the
financial objectives of the firm (Barve, 2002). Realtime processing is critical to a retail food
industry because of the nature of the food industry that requires fresh orders and shorter lead
times.
Reference
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Barve, A. (2002, September 24). Lessons in Demand Management.
Lapide, L. (2006). Demand management revisited. Journal of Business Forecasting, 25(3).
Retrieved from ABI/INFORM Global database.
