Qualitative Forecasting - 1405 Words

Common Features and Assumptions Inherent in Forecasting Forecasting techniques are quite different from each other. But four features and assumptions underlie the business of forecasting. They are: * Forecasting techniques generally assume that the same underlying causal relationship that existed in the past will continue to prevail in the future. In other words, most of the techniques are based on historical data. * Forecasts are rarely perfect. Therefore, for planning purposes, allowances should be made for inaccuracies. For example, the company should always maintain a safety stock in anticipation of a sudden depletion of inventory. * Forecast accuracy decreases as the time period covered by the forecast increases. Generally†¦show more content†¦For example, a restaurant owner may decide to ignore the entry of big-box retailers and grocery stores into his forecasts, assuming that their in-house restaurants and ready-to-cook meals will have no impact on future sales. Qualitative Forecasting Methods Qualitative forecasting techniques generally employ the judgment of experts to generate forecasts. A key advantage of these procedures is that they can be applied in situations where historical data are simply not available. Moreover, even when historical data are available, significant changes in environmental conditions affecting the relevant time series may make the use of past data irrelevant and questionable in forecasting future values of the time series. For example, historical data on petrol prices would likely be of questionable value in determining future petrol prices if other factors (oil boycotts, gasoline rationing programs, scientific breakthroughs in alternative energy use, etc.) suddenly assumed increased importance. Qualitative forecasting methods offer a way to generate forecasts in such cases. Four of the better-known qualitative forecasting methods are executive opinions, the Delphi method, sales-force polling, and consumer surveys: 1. Executive Opinions The subjective views of executives or experts from sales, production, finance, purchasing, and administration are averaged to generate a forecast about future sales. Usually thisShow MoreRelatedQualitative Forecasting1779 Words   |  8 PagesQUALITATIVE FORECASTING METHODS Qualitative forecasting methods are  based on educated opinions  of appropriate persons 1.  Delphi method:  forecast is developed by a  panel of experts  who anonymously answer a series of questions; responses are fed back to panel members who then may change their original responses a- very time consuming and expensive b- new groupware makes this process much more feasible 2.  Market research:  panels, questionnaires, test markets, surveys, etc. 3.  Product life-cycleRead MoreForecasting1330 Words   |  6 PagesForecasting Business forecasting is the process of studying historical performance for the purpose of using the information gained to project future business conditions so that decisions can be made today that will assist in the achievement of certain goals. Forecasting involves taking historical date and using it to project future data with a mathematical model. Forecasts are extensively used to support business decisions and direct the work of operations managers. In this paper I will introduceRead MoreBasic Types Of Forecasting Methods1065 Words   |  5 Pages There are three basic types of forecasting methods that are commonly used. These methods are qualitative research, time series and projection, causal models. Qualitative research involves targeting specific audiences, focus groups through interviewing. This method takes into account information received from surveys or interviews that has being carried out. This method does not take into account past behaviors, derives their conclusion from the general data collected during the interview processRead MoreNichols Company Casae Study994 Words   |  4 Pagesproducts and has over 355 employees. In addition, NCO has been having some issues with their supply chain in the past few months and it has affected their customer service. This paper will summarize the case study, determine NCO s appropriate forecasting technique, discuss the impact of aggregate planning, weigh NCO s various cost factors associated with carrying inventory, and make recommendations for improvement. Mr. Williams was approached by his Director of Marketing, Mr. Barney ThompsonRead MoreForecasting Paper1450 Words   |  6 Pagesmajor types of forecasts are qualitative and quantitative. Within each of these types are multiple methods and models. Qualitative forecasts are based upon subjective data. Quantitative forecasts are derived from objective data. Both methods are not suitable for all situations and circumstances. Each has inherent strengths and weaknesses. The forecaster must understand the strengths and shortcomings of each method and choose appropriately. One example of forecasting is the United States MarineRead MoreForecasting Methods And Techniques For Planning For Upcoming Business Events Essay946 Words   |  4 PagesOrganizations incorporate forecasting methods and techniques to plan for upcoming business events and predict what is most likely going to happen in the future. They study, analyze, and interpret data and recent trends to help support their futu re predictions. Organizations have the decision to either participate in qualitative forecasting or quantitative forecasting. Some firms are unable to access past data and can solely rely on opinions and judgment, so they pursue qualitative forecasting methods. SurveyRead MoreSupply Chain Management : Chapter 10999 Words   |  4 Pagesthe time between the initiation and completion of a process. It affects supply chain performance because the longer the lead time the longer it will take for materials to move through the supply chain. Forecasting errors affect the supply chain because the calculations formulated in forecasting are not exact science, but it is only an approximation that can be almost on target or the figures can be way off target. Lead times and forecast errors can both cause the bullwhip effect which is when thereRead MoreEXECUTIVE SUMMARY: the purpose of this report is to explore about forecasting and its techniques600 Words   |  3 Pagesof this report is to explore about forecasting and its techniques and its implementation in the real world it means that we will put a company present and past data into different forecasting mathematical formulas and will analyze it results. In today’s era Forecasting is a key factor to run a long term business as it is related with the upcoming future events, with the help of forecasting we actually estimates or predict the future. We people also do forecasting in our daily life form the early morningRead MoreForecasting Is A Planning Tool1355 Words   |  6 Pagessituations in the marketplace demand stronger forecasting techniques (MaaÃŽ ² et al, 2014). According to the Business Dictionary, forecasting is 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. These estimates are projected into coming years by using techniques such as exponential smoothing, moving averages and the Delphi method (Forecasting, n.d.). â€Å"Several operations decisions areRead MoreBusiness Operational Forecasting : An Overview1080 Words   |  5 PagesBusiness operational forecasting entails estimation or prediction of future states in business operations such as sales, profits and expenditures. Forecasting techniques have evolved to be invaluable tools used in corporate planning and predictions as business businesspeople are able to anticipate future economic trends from a knowledgeable standing point. In this regards for instance, if predictions show a dim future, business can cut down on its productions quotas, inventories and so fort h. However