A 5 page paper that provides an brief discussion of how companies forecast demands. The benefits of using simple rather than complex methodologies is discussed. The methods mentioned include smoothing and moving averages. The software program Xerox actually uses is described. Bibliography lists 4 sources.
Name of Research Paper File: MM12_PGxrxfr.rtf
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digital age but they realized their error and changed the image of the company as well as its products a number of years ago. Their success was the result of
strategic aggregate planning of the Document on Demand products. Both quantitative and qualitative forecasting tools were needed and continue to be needed for Xerox to maintain its competitive advantage.
Although specific data regarding the actual models Xerox uses was not accessible, it would make sense for the company to use either or both the moving average and exponential smoothing
methods of forecasting. Both are based on the assumption that the timing series is locally stationery and has slowly varying mean (Duke University, nd). The forecast would then be based
on the value of the mean of the average (Duke University, nd). This is considered a smoothing method because when short-term averaging is used, it smoothes out the bumps
in the original series of numbers (Duke University, nd). With this model, Xerox could calculate the short-term average of demand for a specific series of copiers, for example, in a
given region and gain a fairly accurate estimate of how many of this series it needs to have ready to ship and when. A more accurate model to use
would be the Simple Exponential Smoothing method. Here, the forecasting team would look at past history but place a value on each of the averages that related to the dates,
thus, the longer ago the data were, the less weight would be given to it - the most weight is given to the most recent data (Duke University, nd). This
is called Browns Simple Exponential Smoothing methodology and has been found to be effective in forecasting demand. For new product development, Xerox listens to the needs of their customers