BUS446: Production Control (CFM1316A)
Monday, April 29, 2013
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. The are several different types of forecasting available to companies today, each with advantages and disadvantages. The goal of any organization is to implement the forecasting method which best fits the needs of that organization. The forecasting needs and processes are different for each individual organization. Some companies will chose to maintain low inventory levels, opting for forecasting which focuses on shorter time periods; while other companies will need longer range forecasting due to maintaining higher inventory levels. Regardless of the needs, forecasting can be a useful tool for any company. We will look at objective and subjective forecasting methods, how these methods are implemented, and their effectiveness.
Objective forecasting is commonly used for short term forecasting needs, using historical data in order to plan for upcoming periods. Objective forecasting uses a quantitative approach as opposed to a qualitative approach and fits well with companies that have plenty of historical data about their products. One approach many companies use is the Time Series method. Time Series methods use historical data to predict what the market will look like in the future, and in many cases this can be useful. If we look at retail for example, we know that there are seasonal trends which exist. We have all been to a clothing store when summer is fast approaching and racks of sweaters are replaced with shorts and tank tops. This is an example of the...
Please join StudyMode to read the full document