FEBRUARY 03, 2014
BUSINESS FORECASTING AND ITS USES
• WHAT IS FORECASTING?
• WHAT BENEFITS DOES IT HAVE?
• WHY IS IT IMPORTANT TO BUSINESSES?
REASONS FOR FORECASTING
• It helps to answer various business questions like
-How much profit will be made?
-How much demand will there be for a product?
-How much will the product cost to produce and sell?
-Will there need to be a financing activity to produce this product? (How soon will this be paid off?)
(Maximizing intrinsic value must be an objective)
TYPES OF FORECASTING METHODS
-Least Squares Regression analysis
-Grass Roots Forecasting
2 GOOD FORECASTING CRITERIA
• Determine use of forecast
• Select Items or quantities to be forecasted
• Choose time series (i.e short-term, medium-term, long-term) • Select Model
• Collect data needed for forecasting model
• Validate the forecasting model
• Make the forecast
• Implement the results
TREND FORECASTING GRAPH
MOVING AVERAGE GRAPHS
PROPONENTS FOR FORECASTING
• Advantages to Forecasting
-Helps Predict the Future
-Production can run smoothly
OPPONENTS OF FORECASTING
• Forecasting should not be too complex.
• There are no real ways to predict future with complete certainty. • “When providing forecasts, it helps policy makers make social policy, this in turn changes accuracies in forecasts”. (statpac)
• Business forecasting has various methods and reasoning for each of those methods. To each business entity forecasting models provide different uses in information and therefore are sometimes only useful to them. For what works in one business...
References: 4. Goodwin, P. (2011, October 1). Journal Foresight: The International Journal of Applied Forecasting.
7. Walonick, D. S. (1993). "An Overview of Forecasting Methodology" . Retrieved from www.statpac.org
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