Demand Paper
2003
Prof.
Operations Management / MGT554
University of Phoenix
Introduction
Product (service is also considered a product on this context) demand is an essential part of a business, this is the customer demand. To determine a business demand, forecasting tools are usually employed to obtain the desired information. "A forecast is a prediction of future events used for planning purposes" (Krajewski and Ritzman, 2001, p.174). The main idea behind determining the customer demand is then to plan. To plan the use of resources, the manufacturing schedule; also to determine the amount of resources or items to be manufactured. At the end we want to satisfy our customer needs or expectations with regard obtaining what they are looking for.
As might be expected on an offer/demand system, customers create tendencies for product demand. These tendencies occur as time series and can be grouped in five categories: horizontal, trend, seasonal, cyclical, and random. Horizontal trends are created when variations in the demand occur around a constant mean. Trends are created when the mean value constantly increases or decreases.
Seasonal is a type of trend that can be associated to certain time period. For example, the next day after Thanksgiving is recognized as the highest day in sale for retail business. Another example is the type of clothing brought into stores for summer sales or any other season. Cyclical trends are less predictable since changes happen over long periods of time. Random trends present an unforecastable tendency. (Krajewski and Ritzman, 2001)
Although product demand comes from our customers, it is influenced by two types of factors, internal and external. Internal factors are tho ...