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Accurate Response

Accurate Response. Technique that allows companies to match supply and supply in a uncertain environment. Planning Environment. Speculative Predictable demand Low-risk products Reactive Unpredictable demand High-risk products. Accurate Response Approach.

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Accurate Response

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  1. Accurate Response Technique that allows companies to match supply and supply in a uncertain environment

  2. Planning Environment • Speculative • Predictable demand • Low-risk products • Reactive • Unpredictable demand • High-risk products

  3. Accurate Response Approach • Get as much as early market signals as you possibly can • Slash order processing time through computerized ordering/processing system • Reduce manufacturing lead time by pre-positioning raw material and components • Utilize air freight, especially in the unpredictable demand during the reactive period

  4. Measure of Risk • Mean of forecast • Standard Deviation of forecast • Range of forecast • Forecasting error

  5. Why Inaccuracies in Forecast • Increasing product variety • Leads to higher forecast errors • Shorter product life cycle • Less demand history to base forecast • Longer supply chains • Could imply production commitments have to be made earlier

  6. Difficulty in matching supply with demand • No problem if we had perfect forecasts or perfect response, i. e we could make everything to order • Scenarios at most companies: • “Reactive Capacity” decreases with time • Forecast improves with time • Options: Forecast better, plan better, or “react to demand signals better. time

  7. Ingredients of Accurate Response • Flexible manufacturing systems • Reduced cycle time • Be more resourceful in using demand indicators to improve forecast • Institute a system of tracking forecast errors

  8. Ways to increase reactive capacity • Reduce lead time • Transportation: use of air freight • Factory throughput: cellular/flexible manufacturing • Material: hold raw material inventory • Obtain market information earlier • Use information technology • Identify demand indicators (i. e early write at Sports Obermeyer)

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