Forecasting in Business

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Questions and Answers

What are the two important aspects of forecasts?

Expected level of demand and the degree of accuracy that can be assigned to a forecast

What is the difference between short-range and long-range forecasts?

Short-range forecasts cover a shorter time period (e.g., an hour, day, week, or month), while long-range forecasts cover a longer time period (e.g., the next six months, the next year, or the life of a product or service).

What is the time horizon of a medium-range forecast?

Generally three months to three years

What is the purpose of a short-range forecast?

Used for planning purchases, hiring, job assignments, production levels, and similar short-term decisions Signup and view all the answers

How are most forecasts and end decisions made?

A combination of mathematical methods and intuition of the operations manager Signup and view all the answers

What is the main difference between short-term and medium/long-term forecasts?

Short-term forecasts are more quantitative and use existing data, while medium and long-term forecasts are more comprehensive and support management decisions in planning products, processes, and plants. Signup and view all the answers

What is the strategic importance of forecasting for a company?

Forecasting is crucial for managing capacity, workforce, and supply chain to avoid issues like excess capacity, undependable delivery, loss of customers, and operating at a loss. Signup and view all the answers

What are the three main types of forecasts mentioned in the passage?

The three main types of forecasts mentioned are: economic forecasts, technological forecasts, and demand forecasts. Signup and view all the answers

How long can it take to build a new plant from the initial planning stage?

A new plant can take seven or eight years from the time it is thought of, until it is ready to move into and become functional. Signup and view all the answers

Why do short-term forecasts need to be updated regularly?

Short-term forecasts need to be updated regularly because a lot can change in three months, a year, three years, and longer, and the factors that could influence those forecasts change every day. Signup and view all the answers

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