Introduction to Forecasting and the Master Production Plan (MPP).

Introduction to Forecasting and the Master Production Plan (MPP).

1. DEMAND FORECAST

   • Demand forecasting is estimating the sales of a product during a certain future period. Executives first calculate demand across the industry or market and then predict sales of the company's products in them. Gives rise to various kinds of projections.
   • OBJECTIVE:
     • Reduce the range of uncertainty within which decisions are made that affect the future of the business and with it to all parties involved and prepare for these events.

2. HORIZON PERIOD

   • Typically, a horizon is a period of time during which a specific function or planning concept is available. A horizon can start on the current date or start on a future date. An Enterprise Planning horizon is defined by a figure that indicates a number of working days. The figure represents the beginning or the end of the horizon.

3. BUSINESS TRENDS

   • The trend is a pattern of behavior of the elements of a particular environment over a period of time. In terms of technical analysis, the trend is simply the direction or course of the market. The trend establishes the way a company works, it is reflected in the strategies, structures and systems.
     • Provides us with a simple mechanism to monitor data that we may not see, so that we can make informed decisions.
     • When conducting our trend analysis we must take into account:
       • • Understand the behavior of our consumer
         • • Detect what the consumer needs
           • • Identify the cost of the industry
             • • Analyze market trends
   • ADVANTAGES

4. FORECASTING SEASONABILITY

   • The seasonal, stationary or cyclical variation model allows to determine the forecast when there are periodic fluctuations in the time series, this generally as a result of the influence of phenomena of an economic nature, such as: sales seasons.

5. MASTER PRODUCTION PLAN (MPP)

   • The Master Production Plan (MPP) is a document that lists everything that will be produced by the company, whether it is the quantity of products and when they will be produced. It is crucial for the company's production system, since it is a method that is responsible for defining the delivery dates of the products and then calculating the number of units that can be manufactured in a given time.
     • OBJECTIVE:
       • The main objective of an excellent Master Production Plan is to ensure that production planning has as few surprises as possible.
   • CHARACTERISTICS:
     • It is an essential part of the support structure of the manufacturing business.
     • The master production plan allows maintaining commitments with customers.
     • It is a master plan for a small manufacturing or craft business.
     • The master planner can forecast the relationship between demand and your supply and know when you need to increase or decrease production.
     • Delivery time is a critical variable in calculating the exact amount of inventory that is needed to meet future demand.

6. PRODUCTION CAPACITY

   • The elaboration of the MPS depends on the manufacturing system of the company. However, it roughly takes into account:
     • ✓ The personnel and resources involved in the production. ✓ The volume to be produced, with its deadlines. ✓ Inventory level or quantity of products currently available. ✓ The capacity that will be free for future orders. ✓ This is calculated from the customer's orders, or from the expected demand.

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