CHAPTER 8
FORECASTING SUPPLY CHAIN REQUIREMENTS

Planning and controlling logistics/supply chain activities requires accurate estimates of the product and service volumes to be handled by the supply chain. These estimated are typically in the form of forecast and prediction. However, it is not usually the responsibility of the logistician alone to produce the general forecast for the firm. More than likely this task will be assigned to marketing, economic planning, or specially designated group. Under certain circumstances, especially short-term planning such as inventory control, order sizing, or transport scheduling, the logistician often finds it necessary to take it upon him or her to produce this type of information. Therefore, this chapter is dedicated to an overview of those forecasting techniques most likely to be directly used for logistics planning and control.

The discussion is mainly at demand forecasting. The need for demand projections is general need throughout the planning and control process. However, certain types of planning problems such as inventory control,economical purchasing, cost control, forecasting lead times, and prices may be needed as well. The forecasting techniques discussed in this chapter are equally applicable to these.

When the uncertainty of the predictive variable is so high that standard forecasting techniques and their use in supply chain planning lead to unsatisfactory results, other planning approaches are needed. Collaborative forecasting is a contemporary approach to demand prediction. These alternatives to traditional forecasting are discussed as well.