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 is popular and is quite achieving when done effectively. Forecasting can result in decrease in product cost, increase company efficiency, and increase revenue. This method has to be administered at it entirely to reap the best benefits. Forecasting also requires a company to keep record of inventory, sales, and customer satisfaction. Many items are needed such as; financial statements, accounting records. In order to be successful you have to know what the customers want and why they want it. Something’s that can affect the benefits of forecasting is weather, consumer income for example a recession, changes in population, and product changes. I have notice with some businesses, for example Chik Fila years ago changed their chicken. Something like this could cause changes in forecasting and profits. Eight Steps to Forecasting
Determine the use of the forecast- what objective are we trying to obtain? Select the items or quantities that are to be forecasted.
Determine the time horizon of the forecast is it 1 to 30 days (short term), 1 month to 1 year (medium term), or more than 1 year (long term)? Select the forecasting model or models.
Gather the data or information needed to make the forecast. Validate the forecasting model.
Make the forecast.
Implement the results
In forecasting there are many types. The type that my group and I chose is time-series model and qualitative models. The time series model predicts the future through using historical data. This would include things like previous data over a period of time from sales and quality assessments. This means time series is a sequence of numbers collected regularly at different intervals over a period of time. There is many ways to identify time series model. Two things that set time series apart and that is trend and seasonality. This is normally the factors that affect the analysis. This will either plateau or show exponential growth. Example of diagrams that is used in time series scenarios is scattered diagram. “On a scattered diagram time series maybe plotted on a two dimensional graph with horizontal axis representing the time period. The variables forecast are placed on the vertical axis. Below is a scatter diagram of the sales for iPhone sales 2007-2015 by quarter.
The other forecasting method that we can use to predict future Apple iPhone sales is the qualitative model. Unlike the time-series model the qualitative model is not based on quantitative data. According to Hanna, Render & Stair (2012), “qualitative models attempt to incorporate judgmental or subjective factors into the forecasting model” (p.155). According to Hanna, Render & Stair (2012), the qualitative forecasting model is open to expert opinion, individual experiences, and other subjective analysis. It is also used when there is not much quantifiable data available or when it is simply important to have subjective data due to the nature of the product (Hanna, Render & Stair, 2012, p.155). The reason why we chose as a group to use this forecasting method is because we felt like the iPhone is constantly analyzed by different expert groups whether it is by the news media, technology gurus, general iPhone enthusiasts, or their competition. There is always a certain pandemonium associated with the release of a new iPhone and this intangible quality that the Apple iPhone possesses is simply unquantifiable. About half of our group consists of iPhone owners so they...
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