Eight Steps to Forecasting

Eight Steps to Forecasting
• Determine the use of the forecast □ What objective are we trying to obtain?
• Select the items to be forecast
• Determine the time horizon of the forecast □ Short time horizon – 1 to 30 days □ Medium time horizon – 1 to 12 months □ Long time horizon – more than 1 year • Select the forecasting model(s)
|Description |Qualitative Approach |Quantitative Approach |
|Applicability |Used when situation is vague & little data exist |Used when situation is stable & historical data |
| |(e.g., new products and technologies) |exist |
| | |(e.g. existing products, current technology) |
|Considerations |Involves intuition and experience |Involves mathematical techniques |
|Techniques |Jury of executive opinion |Time series models |
| |Sales force composite |Causal models |
| |Delphi method | |
| |Consumer market survey | |

Qualitative Forecasting Methods
Your company may wish to try any of the qualitative forecasting methods below if you do not have historical data on your products' sales.
|Qualitative Method |Description |
|Jury of executive opinion |The opinions of a small group of high-level managers are pooled and