Tuesday, September 11, 2012

Seasonal Forecasting

Seasonal forecasting includes products that have a higher demand during a specific time of year.  This type of forecasting helps procurement managers prepare for these peak season and provide enough materials to produce the final product and have enough inventory to fulfill the demand given the time of year.  However, there is still an area of uncertainty in seasonal forecasting because of unforeseen events that can occur during a specific year.  For example, if a it is a mild winter, many companies who produce skis or snowboards will see a decrease in sales of their products during the winter months because not as many people are going to ski resorts due to the lack of snow.  These producers have probably preparing inventory for the entire year prior to the season to prepare for the peak season.  Because of the lack of snow this season, there is an excess supply that cannot meet the demand.  This example demonstrates the uncertainty in forecasting and the risk that managers take when preparing for the peak season.
    There is not a more accurate way to predict these types of events, but is a financial risk that a supply chain manager may make.  The majority of the time, these types of events are rare so it does make more sense for managers to go ahead preparing for the season rather than having not enough products to sell during the peak demand.  Having extra inventory is not always a bad strategy compared to the alternative of not having the supply to meeting the demand and missing that window of opportunity to optimizing profits.

1 comment:

  1. where can i get more information on seasonal forecasting ....email me kagit1@morgan.edu


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