Chapter 6 of the text is all about forecasting. It stresses the importance of an

Question

Chapter 6 of the text is all about forecasting. It stresses the importance of an accurate demand forecast since almost all of logistics is based on these forecasts. We position inventory based on these forecasts. We schedule manufacturing runs based on these forecasts. We book transport based on these forecasts. The undecided question is who should be making these forecasts for the firm—marketing or logistics? There are arguments supporting each; however, for the point of this discussion, let’s suppose that it is marketing that wins the toss and gets to make the forecast. The forecast is going to be either accurate or inaccurate. If it is accurate, everyone is happy. If it is inaccurate, you will be stocking either too much or too little. So we move to the discussion tasking at this point. How would you set up a control system that rewards marketing for making an accurate forecast and penalizes them for making an inaccurate forecast?

Explanation / Answer

The first issue for marketing is to confirm they do not confuse quota with forecast. A quota could be a nice goal however you must not build a forecast around it. training would want to be key for the promoting department. forecasting performance will improve with the right coaching that sets the tone with just how vital a corporation views forecasting. “Training is each an element affecting accuracy, and therefore the lack of it, a barrier to its improvement.” (Fildes, 1992, p. 30)Training might not seem to be a gift or a penalty however if somebody isn't meeting the forecast by either going over or beneath then they have coaching or probably grooming. Some can see this as a second likelihoodand understand they have to pay higher attention to their forecasts. Another a part of the system is making certain the forecaster has access to the info that they have to create smart forecasts. Positive incentives may be used onceforecasts are found to be correct. These variety of incentives have to be compelled to be monitored. If the sales persons are those that are setting the forecast and if they hit the forecast mark, then they will set it to a best-known possible goal then focus on simply creating that goal to confirm their incentive. The key to a decent forecast is that the correctcoaching. Marketing can with regards to always have a positive outlook on sales and can naturally need to forecast high. With the correct coaching and management mechanisms you'll be able to make sure the promoting doesn't take on too hefty or not enough to satisfy expected forecasts. you must develop midpoint reviews to form bound that if you're not on target to satisfy the forecast then take action modify|to regulate} inventory to either get back on the forecast or adjust the forecast to a a lot of correct number.

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