Product Life Cycle
Pharos University
Faculty of Financial & Administrative Sciences
O PERATIONS
M ANAGEMENT
B y: Dr. Ola E lgeuoshy
S pring 2013
C hapter (3)
F orecasting
F ORECASTING
“ a Statement about the future value of a variable of i nterest .”
U ses of Forecasting:
Accounting
Cost/profit estimates
Finance
Cash flow and funding
Human Resources
Hiring/recruiting/training
Marketing
Pricing, promotion, strategy
MIS
IT/IS systems, services
Operations
Schedules, MRP, workloads
Product/service design
New products and services
F EATURES COMMON TO ALL FORECASTS
Assumes causal system p ast ==> future
Forecasts rarely perfect because of r andomness
Forecasts more accurate for g roups vs. individuals
Forecast accuracy decreases a s time horizon increases
I see that you will get an A this semester.
E LEMENTS OF A GOOD FORECAST
Timely
Reliable
Accurate
Written
S TEPS IN THE FORECASTING PROCESS
“The forecast”
Step 6 Monitor the forecast
Step 5 Prepare the forecast
Step 4 Gather and analyze data
Step 3 Select a forecasting technique
Step 2 Establish a time horizon
Step 1 Determine purpose of forecast
A PPROACHES TO FORECASTING
Q ualitative methods: c onsist mainly of s ubjective i nputs, which often d efy p recise numerical description .
Quantitative methods:
I nvolve either the projection of h istorical data o r the d evelopment of a ssociative models t hat attempt to u tilize c asual (explanatory ) variables to make a forecast. Quantitative techniques p ermit inclusion of soft i nformation ( e.g.: human factors, personal opinions, h unches) in the forecasting process.
F ORECASTING TECHNIQUES
C LASSIFICATIONS
Judgmental forecasts:
F orecasts that use s ubjective inputs s uch as opinions f rom consumer surveys, sales staff, managers, e xecutives and experts.
T ime series forecasts:
F orecasts that p roject patterns i dentified in recent
t
Faculty of Financial & Administrative Sciences
O PERATIONS
M ANAGEMENT
B y: Dr. Ola E lgeuoshy
S pring 2013
C hapter (3)
F orecasting
F ORECASTING
“ a Statement about the future value of a variable of i nterest .”
U ses of Forecasting:
Accounting
Cost/profit estimates
Finance
Cash flow and funding
Human Resources
Hiring/recruiting/training
Marketing
Pricing, promotion, strategy
MIS
IT/IS systems, services
Operations
Schedules, MRP, workloads
Product/service design
New products and services
F EATURES COMMON TO ALL FORECASTS
Assumes causal system p ast ==> future
Forecasts rarely perfect because of r andomness
Forecasts more accurate for g roups vs. individuals
Forecast accuracy decreases a s time horizon increases
I see that you will get an A this semester.
E LEMENTS OF A GOOD FORECAST
Timely
Reliable
Accurate
Written
S TEPS IN THE FORECASTING PROCESS
“The forecast”
Step 6 Monitor the forecast
Step 5 Prepare the forecast
Step 4 Gather and analyze data
Step 3 Select a forecasting technique
Step 2 Establish a time horizon
Step 1 Determine purpose of forecast
A PPROACHES TO FORECASTING
Q ualitative methods: c onsist mainly of s ubjective i nputs, which often d efy p recise numerical description .
Quantitative methods:
I nvolve either the projection of h istorical data o r the d evelopment of a ssociative models t hat attempt to u tilize c asual (explanatory ) variables to make a forecast. Quantitative techniques p ermit inclusion of soft i nformation ( e.g.: human factors, personal opinions, h unches) in the forecasting process.
F ORECASTING TECHNIQUES
C LASSIFICATIONS
Judgmental forecasts:
F orecasts that use s ubjective inputs s uch as opinions f rom consumer surveys, sales staff, managers, e xecutives and experts.
T ime series forecasts:
F orecasts that p roject patterns i dentified in recent
t