Forecasting in Operations Management

5 Questions

What are the types of forecasting models?

Qualitative methods and quantitative methods

What are the steps in the forecasting process?

Decide what needs to be forecast, evaluate and analyze appropriate data, select and test the forecasting model, generate the forecast, monitor forecast accuracy over time

What is the underlying basis of all business decisions according to the text?

Forecasting

What are qualitative methods in forecasting?

Methods in which the forecast is made subjectively by the forecaster based on intuition, knowledge, and experience

Which statement best describes the principles of forecasting?

Forecasts are rarely perfect and more accurate for groups than for individual items

Study Notes

Forecasting Models

There are two main types of forecasting models: qualitative and quantitative models
Qualitative models are based on judgment, intuition, and expert opinion
Quantitative models rely on mathematical and statistical techniques to forecast future outcomes

Forecasting Process

The forecasting process involves: problem definition, data collection, model selection, model building, model evaluation, and implementation
Each step is crucial in developing an accurate and reliable forecast

Basis of Business Decisions

The underlying basis of all business decisions is forecasting, as it provides the necessary input for decision-making

Qualitative Methods

Qualitative methods in forecasting include: executive opinion, sales force opinion, customer surveys, Delphi technique, and market research
These methods are subjective and rely on human judgment and expertise

Principles of Forecasting

The principles of forecasting include: accuracy, reliability, precision, and consistency
A good forecast should be unbiased, accurate, and reliable, and should provide a clear direction for business decisions