Demand Management

Chapter 7: Demand Management, Order Management, and Customer Service

Discussion Questions 1-5

1. What is the relationship between demand management, order management, and customer service?

Demand management

There is a key link between order management and demand forecasting, in that a firm does not simply wait for orders to arrive in order to learn what is happening. Forecasts are made of sales and of the inventories that must be stocked so that the firm can fill orders in a satisfactory manner. There is also a key link between order management and customer service because many organizations analyze customer service standards in terms of the four stages of the order cycle.

2. Discuss the three basic demand forecasting models.

There are three basic types of demand forecasting models: Judgmental, time series, and cause and effect. Judgmental forecasting involves using judgment or intuition and is preferred in situations where there are limited or no historical data, such as with a new product introduction. There is the use of survey forecasting that contains statistical information that helps with judgmental forecasting. Time series forecasting involves a group of forecasting techniques that is based on the idea that future demand is solely dependent on past demand.

3. Discuss several demand forecasting issues.

Demand forecasting issues include the situation at hand, forecasting costs in terms of time and money, and the accuracy of various forecasting techniques. With respect to the situation at hand, judgmental forecasting is appropriate when there is little or no historical data. As for time and money, survey research, for example, can cost a great deal of money and/or also take a great deal of time depending on the media. Forecasting accuracy refers to the relationship between actual and forecasted demand, and accurate forecasts have allowed some companies to reduce transportation costs because fewer shipments need to be expedited.

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