Forecasting

Better Essays
Topics: Forecasting
Forecasting 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.
What is Forecasting Forecasting is the art and science of predicting future events. Forecasting is a statement about the future. “Operations management is designed to support forecasted performances and events. Specifically, operations managers allocate personnel, time, and resources in order to meet the demands of forecasts. The most successful companies achieve their results by assuming just such a proactive vice reactive posture.” (Forecasting) While forecasting is widely used, it does not fit into one model; multiple methods and models exist. Forecasting Future Time Horizons According to Heizer & Render, a forecast is usually classified by the future time horizon that it covers. Time horizons fall into three different categories: short-range forecast, medium-range forecast, and long-range forecast. Short-range forecast is from three months to one year. It is used for planning purchasing, job assignments, job scheduling, workforce levels, and production levels. Medium-range forecast ranges from three months to three years. It is used for planning, budgeting and production planning, cash budgeting, and analysis of various operating plans. Long-range forecast is generally three or more years in time. It is used in planning new products, capital expenditures, facility location or expansion, and research and development.
Types of Forecasting Most organizations use three types of forecasts in planning operations for



References: Delphi Method. (n.d) Retrieved May 30, 2008, from http://www.fratfiles.com.essays.94348.html Heizer, J. & Render, B. (2008). Operations Management. Upper Saddle, NJ: Prentice Hall Forecasting. (2006). Retrieved May 27, 2008, from http://www.oppapers.com.essay.ForecastingPaper.76591 MarketingProfs. Smart thinking…pass it on. (n.d.) Retrieved May 30, 2008, from http://www.marketingprofs.com/Tutorials/Forecast/judgementmodels1.asp Sales Forecasting. (n.d.) Retrieved May 30, 2008, from www.westga.edu/~brutherf/Sales%20Forecasting.ppt Sales Force Composite. (n.d.) Retrieved May 30, 2008, from http://en.mimi.hu/marketingweb/sales_force_composite.html

You May Also Find These Documents Helpful

  • Satisfactory Essays

    Forecasting

    • 492 Words
    • 2 Pages

    Forecasting Cassandra Harris HSM/260 5/3/2015 Cynthia Cucuzza Forecasting Exercise 9.1 The following data represent total personnel expenses for the Palmdale Human Service Agency for past four fiscal years: 20 X 1 = $5,250,000 20 X 2 = $5,500,000 20 X 3 = $6,000,000 20 X 4 = $6,750,000 Forecast personnel expenses for fiscal year 20X5 using moving averages weighted moving averages, exponential smoothing, and time series regression. For moving averages and weighted moving averages, use only the data…

    • 492 Words
    • 2 Pages
    Satisfactory Essays
  • Satisfactory Essays

    Forecasting

    • 881 Words
    • 4 Pages

    Forecasting BUS446: Production Control (CFM1316A) Monday, April 29, 2013 Forecasting In the business world today, companies use forecasting methods to implement processes and strategies in order to meet organizational goals. Forecasting will allow a company to plan for possible outcomes, making adjustments to inventory levels and staff. Through forecasting, companies will attempt to keep operating costs at a manageable level without sacrificing production and quality.…

    • 881 Words
    • 4 Pages
    Satisfactory Essays
  • Good Essays

    Forecasting

    • 794 Words
    • 4 Pages

    Forecasting is the process of making statements about events whose actual outcomes (typically) have not yet been observed. A commonplace example might be estimation of some variable of interest at some specified future date. Prediction is a similar, but more general term. Both might refer to formal statistical methods employing time series, cross-sectional or longitudinal data, or alternatively to less formal judgemental methods. Usage can differ between areas of application: for example, in hydrology…

    • 794 Words
    • 4 Pages
    Good Essays
  • Satisfactory Essays

    Forecasting

    • 270 Words
    • 2 Pages

    Demand Forecasting Importance Demand forecasts form the basis of all supply chain planning. Forecast of future demand are essential for making accurate supply chain decisions and ensuring the company’s success. Examples of such decisions include how much of the product to make, how much to inventory, how much to replenish and how much to order. Ease of Forecasting Beverages are a push product. Forecasting is not easy in the beverage industry as there are possible serious fluctuations in demand…

    • 270 Words
    • 2 Pages
    Satisfactory Essays
  • Satisfactory Essays

    Forecasting

    • 250 Words
    • 1 Page

    What is forecasting? What information is forecasted at your organization? Which forecasting methods are used at your organization? What information at your organization is not currently being forecasted that could be forecasted to increase productivity or decrease waste? Forecasting is the process of making statment's about future events whose actual outcomes have not yet been observed. Risk and uncertainty are central to forecasting and it is good practice to indicate the degree of uncertainty…

    • 250 Words
    • 1 Page
    Satisfactory Essays
  • Good Essays

    Forecasting

    • 1337 Words
    • 6 Pages

    Businesses use forecasting to predict future, trends, patterns, and business with data to develop a forecast. This data is used to predict future sales. In forecasting we use testing and reasonableness to predict future events. Companies use this method to compare their sales with other companies. Forecasting has many benefits to include; what is the popular product customers are purchasing, and it enhances cash flow, and identifies patterns and trends inside a corporation. Using this method…

    • 1337 Words
    • 6 Pages
    Good Essays
  • Good Essays

    Forecasting

    • 986 Words
    • 4 Pages

    Forecasting Forecasting is a prediction of what will occur in the future. It is an uncertain process that is vital to survival in today’s international business environment. Rapid technological advances have given consumers greater product diversity as well as more information on which they make their product choices. Managers try to forecast with as much accuracy as possible, but that is becoming increasingly difficult in today’s fast-paced business world. Forecast Methods There are two…

    • 986 Words
    • 4 Pages
    Good Essays
  • Powerful Essays

    forecasting

    • 6310 Words
    • 86 Pages

    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…

    • 6310 Words
    • 86 Pages
    Powerful Essays
  • Powerful Essays

    Forecasting

    • 1133 Words
    • 5 Pages

    Forecasting Why forecast? Features Common to all Forecasts • Conditions in the past will continue in the future • Rarely perfect • Forecasts for groups tend to be more accurate than forecasts for individuals • Forecast accuracy declines as time horizon increases Elements of a Good Forecast • Timely • Accurate • Reliable (should work consistently) • Forecast expressed in meaningful units • Communicated in writing • Simple to understand and use Steps in Forecasting Process…

    • 1133 Words
    • 5 Pages
    Powerful Essays
  • Satisfactory Essays

    Forecasting

    • 623 Words
    • 17 Pages

    FORECASTING Q1: Moving averages are often used to identify movements of stock prices. Weekly closing prices (in $ per share) for Toys Я Us for 22 September, 1997, through December 8, 1997, are as follows (Prudential Securities Inc); Month Sept 22 Sept 29 Oct 6 Oct 13 Oct 20 Oct 27 Nov 3 Nov 10 Nov 17 Nov 24 Dec 1 Dec 8 Fund Price 37.8750 35.6250 34.6875 33.5625 32.6250 34.0000 33.6250 35.0625 34.0625 34.1250 33.2500 32.0625 a. Use a 3-month simple moving average…

    • 623 Words
    • 17 Pages
    Satisfactory Essays