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You are hereBasics of Supply Chain Management / Demand Management

Demand Management

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Demand management in MPC system

The position of the demand management in the MPC is shown in the above fig.
It is the key connection to the market place in the front end of the MPC system.

The Demand management is a gateway module in MPC system, providing the link to the market place, SOP & MPS. The communication between DM & market place are two way communications - gathering information from the customer & informing customer the status of the order.

Forecasting Inaccuracy & Accuracy

Reasons for forecasting Inaccuracy
Lack of participation by functional managers in the development of & the execution of a forecast system.Forecast requires alignment with one another to ve effective.
Too difficult to understand. If a forecasting tool is too difficult to understand it will most likely fail.
The more complex is the forecasting tool, the more isolated users are from the process& the more work is required to maintain it. Such a tool is also likely to be more costly to run & maintain.


Many products have a seasonal or periodic demand pattern: skis, lawnmowers, bathing suits, and Christmas tree lights are examples. Less obvious are products whose demand varies by the time of day, week, or month. Examples of these might be electric power usage during the day or grocery shopping during the week. Power usage peaks between 4 and 7 p.m., and supermarkets are most busy toward the end of the week or before certain holidays.

Exponential Smoothing

It is not necessary to keep months of history to get a moving average. Therefore, the forecast can be based on the old calculated forecast and the new data. This formula puts as much weight on the most recent month as on the old average. If this does not seem suitable, less weight could be put on the latest actual demand and more weight on the old forecast. One advantage to exponential smoothing is that the

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