Forecasting in Production and Operations Management

Forecasting Techniques

Forecasting is a comprehensive activity. The complexity of forecasting emanates from the need to transform historical information, qualitative and quantitative data, into business statements that can help the company to anticipate and develop future plans. There are four main types of forecasting techniques. These include time series analyses, qualitative, casual relationships, and simulation (Mukherjee & Kachwala, 2009).

Qualitative techniques

Qualitative techniques are more analytical in nature. They are developed from the estimate and opinions. The estimates are derived from the analysis of the available qualitative data. The opinions are often analytical in nature since they are based on the past historical occurrences. This technique is applicable in situations where organizational managers have to engage other people in the decision making process. As a manufacturing organization, Hersey, the qualitative techniques are important since they help in enhancing research on the sustainability of supplies, as well as the changes in the production environment that can affect the cost of manufacturing and distribution of products. One main weakness of this technique is that it is too much reliant on the prevailing information (Mukherjee & Kachwala, 2009). Therefore, it may be difficult to deal with the forces that emanate from the emergent patterns of demand and supply.

Time series analyses

This is where past data on demand and supply is used as the basis on which the projections about the future operational environment are made. Time series develop comparative relationships through an analytical comparison of key attributes of business; for example, sales against time. Therefore, it is important to note that time series analyses are a clear basis on which quantitative information can be developed and used to make adjustments to the structures of business to capture the expected future changes in the internal and external environment in which an organization operates. The future changes in the prices of raw materials and finished products can be easily assessed using this technique (Mukherjee & Kachwala, 2009).

Casual techniques

Unlike the other methods, which do not make a cross-comparison, casual studies entail the comparison between the leading and the forecasted variables. It is used to develop information that is quite broad and can help managers to understand the whole business system and its impact on a specific business component (Kolli, 2000). The comprehension of the entire marketing process in Hersey can be based on the analysis of factors that surround the sales of specific products according to the changes in the external markets.

Simulation techniques

Simulation techniques are based on the causal factor as they seek to justify the essence of devising and implementing new policies and practices in management. Just like the time series and qualitative techniques, past behaviors are assessed and transformed into a mathematical model from which the conclusions are reached in a computational manner. The need to adopt and develop a technology platform for service enhancement can be attained through deployment of this technique (Kolli, 2000). A financial analysis of the projected IT platform for service enhancement in the Hersey can be best achieved through the use of the model.

Analysis of the impact of production plans, master production schedules, rough-cut capacity planning, workforce size, and carrying inventory on a manufacturing firm

Production plans are important in enhancing the production sustainability of an organization. Production plans are used as guiding factors as far as mirroring of the external environment in which a company is operating in concerned. Production planning and controlling is the basis on which the production potential of an organization is put to full test through the incorporation of all elements and controls in the production process (Greasley, 2008). Plans are made based on the potential of the organization to raise revenues and implement functions, thus it is a critical element of budgeting.

According to Panneerselvam (2012), master production schedules incorporate the different elements of production in the production system to enhance the efficiency of production. Master plan schedules contain each element and the exact units that ought to be deployed in the production process. Therefore, the quality of a production cycle is elevated through incorporation of master plan schedules. The plans help in enhancing accountability in terms of the real costs and expenditure that are incurred by an organization in a complex production system.

Workforce control is a desirable parameter in establishing a system of controlling the expenses that are incurred in the production process. This is attained through work scheduling, where the management has to ensure that the number of employees who are engaged in a production system are all making meaningful contributions to the production process. Here, work-in-progress inventory is developed. Therefore, workforce control ensures that the work-centered objectives are in line with the budgetary objectives of the organization. Work force size goes hand in hand with the practice of job sequencing (Greasley, 2008).

Capacity planning involves the establishment of standards that help in assessing the readiness and ability of a firm to sustain productivity. Capacity planning needs to be done in an incremental manner. This implies the peace-meal allocation of orders, supplies and equipment for specified production exercises, which run within the specified timelines. This can be used to ascertain the outcomes of such production exercises, thence; aiding in the development of long term plans and budgeting for the production resources over an extended span of time (Panneerselvam, 2012).

A substantial number of firms seem to underestimate the carrying inventory cost, yet this cost significantly affects the budget of the organization. It is, thus, important for organizations to sum up all the overhead costs that are associated with all the logistical functions in the organization. Each of the choices in the discharge of the logistical functions has an effect on the balance between the cost and expenditures of a firm (Wild, 2003).

Material requirements planning in a manufacturing organization

The organization selected in this case is a manufacturing organization, which also deals in the distribution of products. Therefore, material requirement planning is critical in the organization. For this organization, the material requirement process is quite detailed through the incorporation of all elements of the materials that are required for the production of different sets of products. Planning entails the identification of the suppliers for each of the products that are needed in the production process. In this case, capacity is assessed from a dual perspective; the ability of the suppliers to deliver the required quantities and qualities of supplies at the set time. The other critical factor in material requirements planning in regard to the manufacturing organization is balancing the production process.

This entails the control of orders for the finished products as the production process continues. It ensures that the amount of goods that are produced meets the demand of the customers. The sustainability of the operations of a manufacturing organization is dependent on the ability of the managers of such an organization to strike a balance between the manufacturing practice and distribution of the products. The manufacturing function depends on the ease and efficiency with which the firm gets the required supplies. This is why it is important to keep an inventory of materials that are used in the production process, a factor that will provide guidance on acquisition of supplies (Panneerselvam, 2012).

Comparison and contrast of the use of material requirements planning system concepts for a manufacturing organization

A material requirement plan has a close relation to the material scheduling system in a firm. This process requires time and accuracy to allow the manager to schedule each order according to the level of urgency in the supply system of the organization. In the stipulated manufacturing organizations, schedules for placement of orders for material supplies are placed based on the data that is generated by the established system that controls material used in the organization. Both people and machines are critical elements in the material requirements planning system.

The supply of people or laborers in a manufacturing organization is dependent on the availability of materials to be deployed in the production process and the status of the machines to be used. In most cases, the availability of efficient machines and supplies is a critical factor in determining the amount of labor that is deployed in the production process. However, this depends on the nature of production that is embraced by an organization. Therefore, the labor content is a factor that is dependent as far as the material requirements planning system in the manufacturing organization is concerned (Panneerselvam, 2012).


Greasley, A. (2008). Operations management. Los Angeles, CA: SAGE Publications.

Kolli, S. (2000). The essentials of production & operations management. Piscataway, NJ: Research & Education Association.

Mukherjee, P. N., & Kachwala, T. T. (2009). Operations management and productivity techniques. New Delhi: PHI Learning.

Panneerselvam, R. (2012). Production and operations management. New Delhi: PHI Learning Private Ltd.

Wild, R. (2003). Essentials of operations management. London: Thomson Learning.