Demand Forecasting: A Challenge for Furniture SMEs

Demand Forecasting: A Challenge for Furniture SMEs

Natalie Nicole Mar Hernández (UPAEP University, Mexico), Patricia Cano-Olivos (UPAEP University, Mexico), Diana Sánchez-Partida (UPAEP University, Mexico), José-Luis Martínez-Flores (UPAEP University, Mexico) and Santiago Omar Caballero-Morales (UPAEP University, Mexico)
DOI: 10.4018/978-1-7998-1831-1.ch001

Abstract

This chapter provides a proposal for demand management in furniture SMEs located in the city of Puebla, México. The historical production data reviewed, and the classification of the most critical articles was made using the ABC classification methodology. Subsequently, the literature of SMEs was analyzed as well as the current situation and statistical information was sought. Additionally, it presented an overview of the models to forecast demand and applied to the most relevant articles. Due to the results and previous study, it was decided to implement a forecasting technique which is modelled by artificial neural networks. The ANN model developed with the TANSIGMOID transfer function by using MATLAB software. The appropriate forecasting techniques selected according to the variability of the demand of the articles takes a short-term planning horizon. This research will help the company reduce uncertainty, forecasting sales, and achieve better production planning through ANNs.
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Background

SMEs in the current economy are of great importance due to the generation of employment at the national and regional level that they generate. In recent years these companies are linking with larger industries and provide a regional balance through the distribution of more equitable investments (Taiwo, Ayodeji M, & Yusuf A, 2012). It should consider that the conditions under which SMEs operate are not precisely favourable. Its low level of technological acceptance, insufficiently qualified workers and/or owners, inefficient administration, low productivity, among others (Zeballos, 2003), to minimize competitive advantages. In Mexico, SMEs represent about 4% of the total of economic units, employ 32% of the population, and produce 36% of the GDP (Ministry of Economic, 2012). The classification of the companies is according to the people occupied and the amount of income per year. The criteria recommended by the European Union and OECD are for small companies of 10 to 49 people and annual sales less than 10 million of euros, for medium-sized companies from 50 to 249 people and yearly transactions of less than 50 million euros (National Institute of Statistics and Geography [INEGI], 2014). SMEs means a vital component of the productive network in the region: employ around 67% of the total number of workers and represents approximately 99% of the total number of companies. It should be noted that the contribution to GDP is relatively low, compared to large companies (Economic Commission for Latin America and the Caribbean [CEPAL], 2018).

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