Business Operational Forecasting : An Overview

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Business operational forecasting entails estimation or prediction of future states in business operations such as sales, profits and expenditures. Forecasting techniques have evolved to be invaluable tools used in corporate planning and predictions as business businesspeople are able to anticipate future economic trends from a knowledgeable standing point. In this regards for instance, if predictions show a dim future, business can cut down on its productions quotas, inventories and so forth. However, if the predictions show an economic boom, businesses can reposition themselves by putting necessary measures in place to gain maximum returns from it. Operational forecasts therefore aid business organizations and people in adapting to…show more content…
In this case, the number of customer turnover is the independent variable (X) while the sales are the dependent variable (Y). The linear regression entails indentifying the best fitting line through the data points in a scatter plot which of the form, Y(x)=b_0+b_1 x, where Y is the predicted value, b0 is the regression constant, b1 is the regression coefficient and x is the independent or predictor variable . The linear regression equation is then used to predict year two sale results using year two customer data for any given month. Using excel, the following regression line and equation were obtained for the dataset;

The above scatter plot shows a positive correlation between the independent and dependent variable. From the above, the regression equation for the dataset is y = 0.648x + 111.6. The R squared value determines how close the data variables fit in the regression line. A value of 1 shows a perfect correlation between the variable while a zero shows no correlation. However, the above R-squared value is close to one indicating a good fit.
Polynomial regression analysis – unlike simple linear regression, polynomial regression assumes
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