MRP glossary TOP > The functional roles an MRP production control system performs > Demand Forecast
Demand Forecast
- Work Descriptions:
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The demand forecast in the manufacturing divisions if performed considering the performance according to the sales plan provided by the sales division.
The Sales division of smaller enterprises, or the planning/administration section of the operations division of larger enterprises with independent sales division usually performs it. - Problems:
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The problems are as follow:
1. Each forecast depends on the division/section and they may be inconsistent with each other, making its credibility of forecast precision lower.
2. Each forecast is based not on the fact but on the intuition or view of the person in charge, and thus past and present forecasts are contradictory to each other.
3. It take much time to collect data and prepare thre forecast model, and thus the consideration is not enough.
4. The created model is difficult to change, and it cannot respond to the change in environment, making it insignificant or even adverse.
5. The data of sales performance is not always perfect and thus the correction and addition are needed.
6. It is difficult to judge whether or not the demand forecast is valid, and only person in chage is involved in the work.
7. The forecast is often wrong, leading to the excessive inventory. - Funtcions:
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The demand amount by product of product group is forecasted using a forecast model according to the actual data of job order, the sales plan, and the product demand.
Another forecast model is also created based on economic indicators and the external factors of the company, and using it the demand amount forecast by product group is performed.It is compared and adjusted with the demand forecast of new products, and then the demand of the next new product is forecasted.
Reference：JIT Business Research Mr. Hirano Hiroyuki
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