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Granularity dependency of forecast accuracy in semiconductor industry

Ott H., C., Heilmayer S., Sng C. S. Y.

Research in Logistics & Production

2013

Vol. 3, No. 1

49--58

Accurate demand forecasting is critical in the semiconductor industry due to high production costs, long lead times, and high market volatility. To remain competitive, companies strive for accurate forecasts to drive their planning cycles and meet customer demand. Although an organisation may not be able to control the accuracy of forecast received due to externalities, they can define the granularity which is most suited to the purpose of the forecasting. Infineon Technologies uses different product granularities for the sales and marketing forecast, for the operational demand forecast and for the monthly volume rolling forecast (VRFC). The latter is the subject of this work. This paper presents the impact of forecast granularity for the VRFC on the accuracy of the plan and checks the dependency of this forecast accuracy on time over the entire planning horizon. Sources of inaccuracies were also identified through discussion with the company experts. The results of this study indicate that granularities and time do have significant impact over the plan accuracy.