FORECASTING Data Impact

- a software developer, recently

overestimated the demand for one of
Forecasting
its new products. Because the sales of
- is the process of making predictions of the product didn’t meet projections,
the future based on past and present Data Impact lacked the cash available to
data. This is most commonly by analysis pay its vendors, utility providers, and
of trends. others. Employees had to be terminated
in many areas of the firm to trim costs
“forecast” and “forecasting” - are sometimes
reserved for estimates of values at certain
specific future times,
Budget
“prediction” - is used for more general
- is a spending plan based on income
estimates, such as the no. of times floods will
and expenses. In other words, it’s an
occur over a long period.
estimate of how much money you’ll
make and spend over a certain period of
time, such as a month or year.
Risk and uncertainty
Forecast Horizon
- are central to forecasting and
prediction; it is generally considered - is the length of time into the future for
good practice to indicate the degree of which forecasts are to be prepared.
uncertainty attached to specific - short-term forecasting horizons (less
forecasts. than 3 months)
- long-term horizons (more than 2 years)

Sales Forecast
Long term forecasting
- which is the estimate of how much the
company will actually sell. - Tends to be completed at high levels in
the organization. The time frame is
generally considered longer than 2
Accuracy years into the future.
- Detailed knowledge about the
- is important when it comes to products and markets are required due
forecasts. If executives overestimate the to the high degree of uncertainty. This
demand for a product, the company is commonly the case with new
could end up spending money on products entering the market, emerging
manufacturing, distribution, and new technologies and opening new
servicing activities it won’t need. facilities. Often no historical data is
available.
Medium term forecasting Sales Force Opinions (Bottom Up)

- Tends to be several months up to 2 - The sales force in a business are those

years into the future and is referred to persons most close to the customers.
as intermediate term. Both Their opinions are of high value. Often
quantitative and qualitative forecasting the sales force personnel are asked to
may be used in this time frame. give their future projections for their
area or territory. Once all of those are
Short term forecasting
reviewed, they may be combined to
- Is daily up to months in the future. form an overall forecast for district or
These forecasts are used for operational region.
decision making such as inventory
planning, ordering and scheduling of
the workforce. Usually quantitative Delphi Method
methods such as time series analysis
- This method was created by the Rand
are used in this time frame.
Corporation in the 1950s. A group of
experts are recruited to participate in a
forecast.
Qualitative forecasting
- The administrator of the forecast will
- Techniques are subjective, based on the send out a series of questionnaires and
opinion and judgment of consumers ask for inputs and justifications. These
and experts; they are appropriate when responses will be collated and sent out
past data are not available. They are again to allow respondents to evaluate
usually applied to intermediate- or long- and adjust their answers.
range decisions. - A key aspect of the Delphi method is
that the responses are anonymous,
Examples: respondents do not have any
1. Executive Judgement (Top Down) knowledge about what information has
2. Sales Force Opinions (Bottom up) come from which sources. That permits
3. Delphi Method all of the opinions to be given equal
4. Market Surveys consideration. The set of questionnaires
will go back and forth multiple times
until a forecast is agreed upon.
Executive Judgment (Top Down)

- Groups of high-level executives will Market Surveys

often assume responsibility for the
forecast. They will collaborate to - Some organizations will employ market
examine market data and look at research firms to solicit information
future trends for the business. Often, from consumers regarding opinions on
they will use statistical models as well as products and future purchasing plans.
market experts to arrive at a forecast.
 - A Market Survey, also known as a simple exponential smoothing, which
market research survey, is a method of are categorizes as time-series methods.
collecting information and data from a - Quantitative forecasting models are
specific group of people or often judged against each other by
organizations to gain insights into comparing their accuracy performance
various aspects of a market, industry, measures.
product, or service. Market surveys are
Some of these measures include:
commonly used by businesses,
government agencies, NGO’s, and 1. Mean Absolute Deviation (MAD),
researchers to make informed decisions, 2. Mean Squared Error (MSE), and
develop marketing strategies, and 3. Mean Absolute Percentage Error
understand market trends. (MAPE).

Key Characteristics and Purposes of Market MAD

Surveys
= ∑Abs(et) ÷ n
- Data Collection
- Question Design
- Data Analysis MSE
- Market Assessment
- Customer Feedback = ∑et² ÷ n
- Product Development
- Competitor Analysis
- Pricing Strategy MAPE
- Marketing Strategy
= [Abs(et) ÷ Demand] x 100
- Industry Trends
= ∑% ÷ n

Quantitative Forecasting
FT = (constant)(At) + (1-constant) (Ft)
- are used to forecast future data as a
function of past data. They are
appropriate to use when past numerical
Tracking Signal
data is available and when it is
reasonable to assume that some of the = ∑(Actual – Forecast) ÷ MAD
patterns in the data are expected to
continue into the future.
- These methods are usually applied to y = a + bx
short- or intermediate-range decisions.
Some examples of quantitative a = ∑x²∑y² - ∑x∑xy ÷ n∑x² - (∑x)²
forecasting methods are causal b = n∑xy - ∑x∑y ÷ n∑x² - (∑x)²
(econometric) forecasting methods, last
period demand (naïve), simple and
weighted N-Period moving averages and
SERVICE DESIGN service interaction. The provider role is
regarded as a serving activity, and the
client role is, likewise, regarded as a
Service receiving activity.

- is an interaction between entities that

co-creates value, where the entities
Service commitment
involved may be persons or nonpersons,
such as government offices, educational - refers to the formal agreement to
institutions, and possibly some form of provide a class of services to a service
automation. A service interaction is audience by a principal or trustee with
ordinarily construed to be a process the proper administrative control over
consisting of several steps organized to the service environment. The
achieve an identifiable purpose. agreement to provide fire service by a
municipality and the founding of a
health clinic are common examples. It
Service Design incorporates a process for identifying
where, when, and how an organization
- is the activity of planning and can make service more valuable to
organizing people, infrastructure, their clients and to themselves. A
communication and material service principle commits to content
components of a service in order to and not to process
improve its quality and the interaction
between the service provider and its Service production
users
- pertains to service provisioning,
infrastructure, availability, quality
management, and back-office
Point of View of Service Design processing. The producer is the agent of
Global view the principal in a prototypical principal-
agent scenario. The principal and agent
- refers to the notion of a system may be the same economic entity or
comprised of interacting and different economic entities depending
complementary services. One could upon the scope of the service domain.
consider the global view as an external The manager of a chain of restaurants
service description, useful for and the medical director of a clinic are
determining how a collection of services examples. It is prototypically concerned
functions in order to benefit various with client retention and acquisition.
people, organizations, and business The principle element in service
processes. production is maintenance of the
Local view service infrastructure, consisting of
physical facilities, operational
- describes and delineates the steps in a procedures, satisfaction of legal
distinct service process, emphasizing requirements, competent provider
the service participants and the provisioning, and dependable auxiliary
complementary roles they play in a service provisioning. The establishing
 hours-of-operation is a simple task of analysis involves responsiveness,
service product timeliness, and completeness

Service availability

- relates to the time during which a Service termination

service is available. Commitment does
- reflects the inevitable consequence of a
not necessarily imply availability,
dynamic and evolving economic
because of a variety of spatiotemporal
environment where a total service
events that invariably occur when
operation has been completed or has to
implementing a service. The service
be retired, because of insufficient
principal is concerned with scheduling,
activity or realigned opportunities. The
and other operational considerations.
global lifecycle represents a provisioning
Service delivery perspective of service systems.

- is the class of actions usually regarded

as the service and is the layer where the
Design thinking
service client comes into the picture.
The doctor/patient relationship is a - involves people and culture
good elementary example of this layer, - is a discipline that combines the
but service design usually is associated designer’s knowledge, sensitivity, and
with more complex processes such as a design perspective with technical
medical provisioning that consists of feasibility and design methods to assist
several steps. The service provider, who a client in resolving a perceived need so
could have a dual role as producer, is an as to provide value for the client and
agent of the producer as the primary the designer. Recall that the designer
source of service revenue and the will be working with the client to design
primary provider of service. services and products that the client will
put into place when dealing with its
Service analysis
customers.
- refers to measurement activities and
the determination of value
propositions needed to sustain service 5 Principles of Service Design
operations. To some extent, all services
consist of the application of resources, User-centered
and the success of those services is - The objective of service, by definition,
dependent upon how efficiently and is to satisfy customer needs.
effectively those resources are applied
in a normative manner to a specific Co-creative
problem domain. It is normally - The focus of service design involves the
associated with reducing costs and considerations of the stakeholders who
customer satisfaction; it is an ongoing should cooperate in the process of
activity in service delivery. Where service design. (There are two
implicit agreements exist, service processes: the design process and the
service process.)
 - It is important to recognize whether the
service is continuous as with insurance
and banking or whether it is discrete, as
Sequencing with complex medical provisioning, and
the judiciary and the law.
- Any service design, other than trivial
service endeavors, should have a Generic Lifecycle
timeline reflecting the service design
Service acquisition
process, and the state of the
participants at that point in time. - refers to the process of identifying a
service provider with the requisite
Evidencing
infrastructure, and its corollary, the
- A well-designed service should have a process of attracting clients.
foot-print of front stage and back stage
Service invocation
processes (covered later). The value of
both tangible and intangible services - involves the scheduling and logistics
should be clearly evidenced, as part of part of the service process.
the service design experience.
Service execution
Holistic
- entails the actual steps in the service
- Service, of any type, resides in a process including supplementary
culture. In many instances, the service services.
designer collaborate with the client in
Service termination
its culture to establish service for
customers, who may have a unique a - incorporates referral, warranty, and
culture. archiving activities. The requisite
infrastructure for sustaining the service
process lifecycle is referred to as the
3 Dimensions service platform and is related to the
activities of the producer, covered
Service process
previously.
- The service should provide a
reasonable level of provider judgment,
customer customization, customer Kano Model
interaction, and labor intensity.
- is a framework designed to prioritize
Service nature features based on the degree to which
they will satisfy the users. In other
- There should be a precise specification
words, a Kano model helps prioritize
of whether the service is people
features based on how much the
processing, possession processing, or
feature will aid the users. Noriaki Kano
information processing.
first introduced the Kano model in
Service mode Japan in 1984. After carefully
researching customer loyalty and
 satisfaction, he developed the model to exists or not. In other words, the
focus on these customer factors customer doesn’t care about whether
they are present or absent. These
unnecessarily add to cost and risk.

5 Categories of Kano Model

Reverse
Dissatisfiers
- The presence of a feature that
- is also called “must be” or the expected dissatisfies the customer. In other
basic feature. These are the basic words, enhance customer satisfaction
requirements that customer expects as with the absence of this feature.
part of a product or service. If these
features existed in the product or
service, customers would not be happy,
but at the same time, if these are not
present, then the customer will be
disappointed.

Performance

- is also called a one-dimensional and

desired quality feature. These increase
customer satisfaction with the
investment. In other words, more of the
performance feature will increase
customer happiness.

Delighters

- also called latent requirements, that is

not basic and expected but desirable
and unexpected. Customers will not be
unhappy if they are missing. Particularly,
a feature like this goes beyond the
consumer’s immediate needs. What is
considered a delighter today may be a
requirement tomorrow. Cameras on cell
phones are a feature that was a
delighter at one point but now is a basic
requirement.

Indifferent

- This includes when a customer is

indifferent to whether the feature