Forecasting and Time Series
As the operations manager of Colsam Company Limited, I have been tasked to make a presentation to management on the importance of forecasting. The presentation would be done along the following lines.
* THE MEANING OF FORECASTING * STEPS USED TO DEVELOP A FORECASTING SYSTEM * QUALITATIVE FORECASTING * QUANTITATIVE FORECASTING * BENEFITS OF FORECASTING
THE MEANING OF FORECASTING
A planning tool that helps management in its attempts to cope with the uncertainty of the future, relying mainly on data from the past and present and analysis of trends. Forecasting entails the use of historic data to determine the direction of future trends. Forecasting is used by companies to determine how to allocate their budgets for an upcoming period of time. This is typically based on demand for the goods and service it offers compared to the cost of producing them.
Investors utilize forecasting to determine if events affecting a company, such as sales expectations will increase or decrease the price of shares in that company.
Forecasting also provides an important benchmark for firms which have a long –term perspective of operations.
Forecasting starts with certain assumptions based on the management’s experience, knowledge and judgment.
These estimates are projected into the coming months or years, using one or more techniques such as exponential smoothing, weighted moving averages trend projection, regressing analysis and trend projection.
Forecasting is used to answer important questions, such as how much demand will there be for a product or services, how much will it cost to produce the product or offer the services, how much money will the company need to borrow and when and how will borrowed funds be repaid.
Businesses must understand and use forecasting in order to answer these important questions. This helps the company prepare for the future. It also helps the organization make plans that will lead to becoming a financially successful
* THE MEANING OF FORECASTING * STEPS USED TO DEVELOP A FORECASTING SYSTEM * QUALITATIVE FORECASTING * QUANTITATIVE FORECASTING * BENEFITS OF FORECASTING
THE MEANING OF FORECASTING
A planning tool that helps management in its attempts to cope with the uncertainty of the future, relying mainly on data from the past and present and analysis of trends. Forecasting entails the use of historic data to determine the direction of future trends. Forecasting is used by companies to determine how to allocate their budgets for an upcoming period of time. This is typically based on demand for the goods and service it offers compared to the cost of producing them.
Investors utilize forecasting to determine if events affecting a company, such as sales expectations will increase or decrease the price of shares in that company.
Forecasting also provides an important benchmark for firms which have a long –term perspective of operations.
Forecasting starts with certain assumptions based on the management’s experience, knowledge and judgment.
These estimates are projected into the coming months or years, using one or more techniques such as exponential smoothing, weighted moving averages trend projection, regressing analysis and trend projection.
Forecasting is used to answer important questions, such as how much demand will there be for a product or services, how much will it cost to produce the product or offer the services, how much money will the company need to borrow and when and how will borrowed funds be repaid.
Businesses must understand and use forecasting in order to answer these important questions. This helps the company prepare for the future. It also helps the organization make plans that will lead to becoming a financially successful
References: * New Business Dictionary.com * Statistics of Business Economics 7th ed. Cinannati South Western College Publishing 1999 * Encyclopedia of Business * Bovas Abraham, Johannes Ledolte , statistical methods for Forecasting * Anderson, David R., Dennis J. Sweeney, and Thomas A. Williams ( An Introduction to Management Science; Quantitative Approaches to Decision Making 8th ed. Minneapolis/ St Paul West Publishing 1997