Lp06 Assignment: Forecasts

ForecastsA forecast is a statement of estimation of the future value of a variable. Forecasts can be short –term or long term. Forecasts can be assigned a level of accuracy to reflect the potential size of error in the forecast. Operations forecasts are used in scheduling, material requirement planning and workload planning. In the absence of actual data on the future, operations managers use forecasted demand to forecast requirements of human resources, production capacity and materials planning. Demand forecasting is used to make more effective production scheduling to meet future demand patterns and to align availability of materials. Forecasting thus provides an organisation witha basis on which to plan production cycles. Forecasts are used in inventory management to work more effectively with suppliers, reduce the probability of shortages, plan for scheduled deliveries and optimise the level of inventory. When used in this manner forecasting is used to support decisions relating to warehousing capacity, streamline operations and reducing the amount of time inventory is held in a warehouse CITATION Jac17 \l 7177 (Jacobs & Chase, 2017).Forecasting is used in decisions related to management of costs holding inventory by providing a foresight into the quantities necessary to meet expected customer orders.