forecasting
FORECASTING
FORECASTING
The Role of the Manager
Planning
Organizing
Staffing
Leading
Controlling
Future ?
Data
Information
•
Short-range
•
Medium-range
•
Long-range
Features Common to All Forecasts
Forecasting techniques generally assume that same underlying causal system that existed in the past will continue to exist in the future.
Forecasts are rarely perfect.
Forecasts for groups of items tend to be more accurate than forecasts for individual items.
Forecast accuracy decreases as the time period covered by the forecast – the time horizon- increases
Marvin I. Norona
7 Steps in the Forecasting System
1)
2)
3)
4)
5)
6)
7)
Determine the use of the forecast.
Select the items to be forecasted.
Determine the time horizon of the forecast.
Select the forecasting model(s).
Gather the data needed to make the forecast.
Make the forecast.
Validate and implement the results (Monitor the forecast and check if the forecast is performing in a satisfactory manner).
Marvin I. Norona
Forecast is a statement about the future takes into account 2 kinds of information
Current factors or conditions
Past experience in similar situations
Forecast
Forecasting Time
Horizons
Marvin I. Norona
The art and science of predicting future events
Uses of Forecasts
Plan the System
-
long-range plans re new products and services
Plan the Use of the System
-
short-term and intermediate planning
Marvin I. Norona
Elements of a Good Forecast
It should be timely.
It should be accurate and the degree of accuracy should be stated.
It should be reliable; it should work consistently. It should be in writing.
The forecasting technique should be simple to understand and use.
Marvin I. Norona
Forecasting Approaches
Qualitative Methods
- consist mainly of subjective inputs
Quantitative Techniques
- involve either the extension of historical data or the development of associative
models
FORECASTING
The Role of the Manager
Planning
Organizing
Staffing
Leading
Controlling
Future ?
Data
Information
•
Short-range
•
Medium-range
•
Long-range
Features Common to All Forecasts
Forecasting techniques generally assume that same underlying causal system that existed in the past will continue to exist in the future.
Forecasts are rarely perfect.
Forecasts for groups of items tend to be more accurate than forecasts for individual items.
Forecast accuracy decreases as the time period covered by the forecast – the time horizon- increases
Marvin I. Norona
7 Steps in the Forecasting System
1)
2)
3)
4)
5)
6)
7)
Determine the use of the forecast.
Select the items to be forecasted.
Determine the time horizon of the forecast.
Select the forecasting model(s).
Gather the data needed to make the forecast.
Make the forecast.
Validate and implement the results (Monitor the forecast and check if the forecast is performing in a satisfactory manner).
Marvin I. Norona
Forecast is a statement about the future takes into account 2 kinds of information
Current factors or conditions
Past experience in similar situations
Forecast
Forecasting Time
Horizons
Marvin I. Norona
The art and science of predicting future events
Uses of Forecasts
Plan the System
-
long-range plans re new products and services
Plan the Use of the System
-
short-term and intermediate planning
Marvin I. Norona
Elements of a Good Forecast
It should be timely.
It should be accurate and the degree of accuracy should be stated.
It should be reliable; it should work consistently. It should be in writing.
The forecasting technique should be simple to understand and use.
Marvin I. Norona
Forecasting Approaches
Qualitative Methods
- consist mainly of subjective inputs
Quantitative Techniques
- involve either the extension of historical data or the development of associative
models