FORECASTING

Forecasting of demand

Forecasting is the process of estimation in situations of uncertainty. The term forecast is similar, but more general, and usually refers to estimation of time series or instant data. The prognosis has evolved into the practice of the daily forecast demand plan business. The practice of the demand plan also refers to the prognosis of the supply chain.

Then you have that forecasts are critical and continuous process needed to obtain good results during the planning of a project. If they are classified regarding time span, it can be divided into:

1.     Short term forecasts: in modern enterprises, this type of forecasting is carried out every month or less, and their planning time is valid for one year. Used for programs of supply, production, allocation of labor workers templates, and the departments of manufacturing planning.

2.     Medium-term forecasts: covers a period of six months to three years. This is used to estimate sales, production and flows of cash and budgeting plans.

3.     Long term forecasts: this type of forecasting is used in the planning of new investment, launch new products and technological trends of materials, processes and products, as well as in the preparation of projects. The duration time is three years or more.

Name of the company

The name of the company is Corazas, is located in the city of Cali, and has 8 years experience in the market.

Main business área

The company is dedicated to the production and marketing of foodstuffs and cleaning. Its main area of business is focused on processing and preparation of chicken nuggets, as well as the sale of boneless breasts in trays.

Seven steps to make a forecasting system

• Uses  

Corazas uses forecasts to determine the behavior of the demand, and in accordance with such information to implement new product line or remove some of the market; also use the forecasts to know that supplies are needed in certain periods of the year, finally this information is required to implement strategies of improvement within the company.

Corazas has a plant of production and distribution of its products, in accordance with that verifies how much is sold, to where it is distributed, that frequency is made and what are the products of higher turnover. In this way are: personnel and the necessary raw materials, the amount of required vehicles and routes will be to manage.

Based on the above, determine the use of the forecast, according to the demand that there is product, nuggets of chicken, and chicken breasts frozen, supplying raw material to meet orders requested, designing shift work you must do to meet the production, how packaging should be available to store the product and a projection of daily routes orders for deliveries.

•  Items 

  Corazas company, sells food products of mass consumption as they are: chicken cut, packaged and frozen; packaged and frozen fish and seasonings for meat and chicken; It also produces and markets chicken nuggets. At the same time, the company sells cleaning products such as: disinfectant, detergent, limpid and soaps in bar. 
  
  
  Within the cycle of manufacturing processes of the chicken nuggets company is based on forecasts of elements as amount of material raw material to buy according to request of orders and historical sales monthly; Labor; budget to be used; processing times; delivery times and product expiration dates.
  In general terms, are updated daily the results of purchasing, production and sales, later a weekly forecast of requirements, is also will make cuts month-end and year-end evaluates the performance of the company.
  
  
• Time horizon
  In general terms, are updated daily the results of purchasing, production and sales, later a weekly forecast of requirements, is also will make cuts month-end and year-end evaluates the performance of the company.
  
  
  to venture into the market of the chicken nuggets, the prognosis is made in the short term, and with respect to this product, there is great competition; are set .monthly goals; sales according to market demand are forecast and takes into account previous months sales for projection. Prognosis of the frozen chicken breasts is made in the medium term, because product is more poised, are also a standard of average monthly sales that meets, stays, or goes up 10 or 20%.

• Model 

  Corazas used models of descriptive statistics with histograms of frequencies, also uses mathematical models of least squares and absolute to predict increase demand.

• Data gathering

  Corazas employs for each of the five departments a person who is in charge of keep the information in the corresponding software, That is to say, five people in charge of this activity in which basically gather data necessary to make the forecast, through evaluation of rotation and consumption of the product in the points of sale and customers partners, satisfaction and consumption of customer surveys for each Department , monthly sales averages.
  
  
  On the other hand it has an analyst who is in charge of raw material, vehicles and demand predictions based on the collected information.

• Making 

  Having the necessary information regarding purchases, production, stored goods, sales, and returns, the company made the prediction.

• Validation and Implementation

  The forecasts produced by the analyst are undergoing study by the Board of Directors of Corazas, who evaluated the information and give your opinion based on your personal criteria and experience, this activity is carried out monthly, and is evaluated as true is approaching the analyst delivered and where errors occur.
  
  
  It is important to highlight that forecasts with actual data, with clear and accurate information should be, it should work with a margin of error in forecasting that must be weighed to get a more accurate result, forecasts in Corazas are made according to the variations of raw materials and finished product market.
  
  
  It is also necessary to take into account the economic situation of the company, manpower, vehicles, storage, chains of cold, packaging, etc.

Graphical forecast and trends

Below is the table and graph No. 1 with sales forecasting short-term of kilograms of chicken nuggets for the month of July 2015, taking as reference the months of January to June of the same year.

Table 1. Sales forecast of nuggets short term

Source: the authors

Graphic 1. Sales forecast of nuggets short term

Source: the authors

According to the above chart, the trend of demand during the first months of the year was stable at 575 kg, however, this figure rose for the fifth month and continued to rise for the sixth to settle at 625 kg, taking into account these figures was held a projection in the short-term for the month of July of 620 kg using the method of prognosis of Excel.

Below is the table and graph No. 2 with the forecast medium-term, taking as a reference the last 6 months of the year 2015.

Table 2. Sales forecast of nuggets medium-term

Source: the authors

Graph 2. Sales forecast of nuggets medium-term

Source: the authors

According to the above chart, we calculated nuggets medium-term demand to determine sales from the last months of the year 2015, which showed an upward trend.

Below is the sales forecast long-term kilos of nuggets by 2016, with reference to the year 2015.

Table 3. sales forecast of nuggets long-term

Source: the authors

Graphic 3. sales forecast of nuggets long-term

Source: the authors

According to the above graphic, demand long term of chicken nuggets was calculated for the year 2016, on the basis of the data obtained by the year 2015. So, you can see an upward trend with a stable demand, unchanged over the period.

BIBLIOGRAPHY

 SENA study material. Guide No. 7

http://es.wikipedia.org/wiki/Pron%C3%B3stico_%28estad%C3%ADstica%29