Basic Types Of Forecasting Methods

* Judgmental- using judgment or intuition and is preferred where there is limited or no historical data, such as with a new product introduction.

Forecasting should include the use of both quantitative and qualitative approaches to forecast demand for its products.

The current demand forecasting method is based on qualitative techniques more than quantitative ones. If the forecast is not accurate, the company would carry both inventory and stock out costs. It might lose customers due to shortage of supply or carry additional holding costs due to excess production. If the actual demand doesn’t match the forecast ones, and the forecast was too high, this will result in high inventories, obsolescence, asset disposals, and increased carrying costs. When a forecast is too low, the customer resorts to a competitive product or retailer. A supplier could lose both sales and shelf space at that retail location forever if their predictions continue to be inaccurate. The tolerance level of the average consumer

* Now, assume you have acquired some time series data that would enable you to make short, medium, and long term forecasts. Ascertain the quantitative technique that will provide you with the most accurate forecast. Provide a rationale for your responses

* Forecasting is an impartial strategic ingredient that will ensure apt base for reputable planning. Our forecast is always the first step in developing plans in running the business along with our future plans of growth strategies. With this tool, we are able to anticipate our sales within reason that then can allow for us to control our costs in conjunction with inventory which will then help us to enhance our customer service. Sales forecasting is a vital strategic tactic in our company’s methodology.

3. Market Share: forecasting will help in identifying the size of the market share and market potential will aid in the manufacturing and distribution process. Will also aid in proper utilization and eliminate waste.

Forecasting: It is an important step required to anticipate the future events that might occur with the mentioned changes. There may be a possible need for expansion of services to compete with the technological advances; continued mergers; increased spending on operations as well as research and development.

Notably, though qualitative techniques employ intuition, they also incorporate judgment (Chindia, 2016). Relevant opinion is taken from experts and evaluated to determine their feasibility. Since sales persons interact more often with consumers then the likelihood of providing an accurate form of speculation is high. Therefore, when short term Company arrangements need to be made then sales persons will be involved in the exercise. Qualitative techniques also include surveys regarding the needs and preferences of consumers (Chindia, 2016). Thus, a qualitative survey will help in identifying how profitable it will be for a company to produce a certain product. Notably, the Delphi method is also applied in qualitative techniques where experts make initial

Forecasting is the methodology utilized in the translation of past experiences in an estimation of the future. The German market presents challenges for forecasting techniques especially for its retail segment. Commercially oriented organizations are used to help during forecasting as general works done by academic scientists are not easy to come across (Bonner, 2009).

M&L Manufacturing Company is an example of a company that could benefit from forecasting. In the past the company has made an educated guess to determine necessary production for

But even this is not possible in case of a new product or innovation. A forecast of sales, demand, cash, requirements and several such business valuables are extremely essential for a business in order to be able to appropriately plan and conduct its operations in an effective and efficient manner. Yet, forecasts cannot be made accurately as there are several factors and changes in the current environment that leads to variations in forecasts and impacts or causes a manager to make changes in the forecasts.

The company understands that in a fast changing business environment it is essential to forecast the future trends and bottlenecks thus helping them prepare for any circumstances that may come up. The 2020

Forecasting involves using past data to generate a number, set of numbers, or scenario that corresponds to a future occurrence. It is absolutely essential to short-range and long-range planning.

Business forecasting is the process of studying historical performance for the purpose of using the information gained to project future business conditions so that decisions can be made today that will assist in the achievement of certain goals. Forecasting involves taking historical date and using it to project future data with a mathematical model. Forecasts are extensively used to support business decisions and direct the work of operations managers. In this paper I will introduce different types of forecasting techniques.

Forecasting demand is the art and science of predicting future demand. There are several different techniques that can be employed alone or in combination with each other, depending upon the firm’s particular situation and the point in the product’s life cycle, and they are further classified as to the time horizon they represent. Forecasts are generally quantitative (relying on historical data) or qualitative (such as variable personal experiences).