We describe a procedure for forecasting demand for all of the semiconductor products of IBM Microelectronics Division (MD). We outline some of the particular problems in forecasting demand in the semiconductor industry, and we give considerable thought to how to define demand and how to measure forecast accuracy. Based on these considerations we develop an approach, called FIT, that uses simple time-series models to forecast demand for individual products; modifications permit intervention by users of the forecasts and ensure consistency of forecasts throughout a hierarchy of products. FIT forecasts have been extensively compared with those obtained from MD's existing forecasting process. We find that for lead time of three months or more, FIT forecasts are significantly more accurate than MD's forecasts, with forecast errors smaller by factors typically in the range 20% to 55%.
By: Aliza R. Heching; J. R. M. Hosking; Ying Tat Leung
Published in: RC23407 in 2004
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