Operations Management Essay

786 Words4 Pages
Journal 2
1. It has been said that forecasting using exponential smoothing is like driving a car by looking in the rear-view mirror. What are the conditions that would have to exist for driving a car that are analogous to the assumptions made when using exponential smoothing?
When driving a car, everyone knows where one should be looking. Straight ahead most of the time and with some side glances from time to time. An occasional glance into the rear-view mirror is recommended. Any quantitative forecasting method always uses historical data to make forecasts. Exponential smoothing is a method used in forecasting to eliminate the effect of any random deviations in the data trend. Also, like any forecasting method, it assumes that the
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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.
3. When a new business is started, or a patent idea needs funding, venture capitalists or investment bankers will want to see a business plan that includes forecast information related to a profit and loss statement. What type of forecasting information do you suppose would be required?
Whenever a business plan is made for funding, the purpose is to sell a product or service that already exists in the market and is different from that trying to market an invention. In any profit and loss statement, the difficult part is the profit part or actual revenue stream. The costs part is easy to estimate in both cases. In the first case, there will be historical data available from the existing market players while in the second case, the investor should be able to estimate what share of the market that one expects to capture. This would be either from the existing market players, or from the excess unfulfilled demand that may exist in the market. If grabbing the market

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