Podcast
Questions and Answers
What is the primary requirement for applying quantitative forecasting techniques?
What is the primary requirement for applying quantitative forecasting techniques?
Why may a qualitative forecasting technique be preferred?
Why may a qualitative forecasting technique be preferred?
What is a key consideration in selecting a forecasting technique?
What is a key consideration in selecting a forecasting technique?
What are the two main approaches to forecasting?
What are the two main approaches to forecasting?
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What is an important consideration when defining the scope of a forecasting project?
What is an important consideration when defining the scope of a forecasting project?
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What is a key difference between qualitative and quantitative forecasting models?
What is a key difference between qualitative and quantitative forecasting models?
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What is a common characteristic of all forecasting models?
What is a common characteristic of all forecasting models?
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What is an important factor to consider when choosing a forecasting model?
What is an important factor to consider when choosing a forecasting model?
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What should a forecasting model be matched to?
What should a forecasting model be matched to?
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Why do managers often prefer simpler forecasting techniques?
Why do managers often prefer simpler forecasting techniques?
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What is a limitation of many forecasting models?
What is a limitation of many forecasting models?
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Why might a specific forecasting model be indicated?
Why might a specific forecasting model be indicated?
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What should be considered when evaluating different forecasting models?
What should be considered when evaluating different forecasting models?
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Study Notes
Forecasting Models
- Forecasting models can be classified in various ways, including qualitative or quantitative, formal or informal, intrinsic or extrinsic, statistical or non-statistical, and descriptive or explanatory.
- Qualitative models rely on opinion, judgment, experience, and expertise.
- Quantitative models rely on the use of historical data or associations among variables to develop forecasts.
Characteristics of Forecasting Models
- Some techniques are simple, while others are complex.
- No single technique works all the time, and all forecasts include a degree of inaccuracy.
- Allowances should be made for the inaccuracy.
Factors Influencing Forecasting Model Choice
- The desired outputs and significant inputs (variables) should be considered when selecting a forecasting model.
- Factors such as cost, data availability, staff skills, hardware and software availability, desired accuracy, and time horizon under consideration influence the choice of forecasting model.
Matching Forecasting Models to Users
- The forecasting model should be matched to the knowledge and sophistication of the user.
- Managers are reluctant to use results from techniques they do not understand, and therefore, fairly crude techniques may be more popular.
Data Requirements
- Many models require a substantial amount of historical data.
- The existence of adequate and accurate historical data is essential for quantitative forecasting techniques.
- Poor data cannot yield good forecasts, even with elegant forecasting techniques.
Demand Pattern and Forecasting Techniques
- The demand pattern affects the type of forecasting technique selected.
- If several components (trend, seasonal, cyclic) are apparent, more advanced techniques are needed.
- If the demand pattern is unstable over time, a qualitative technique may be needed.
Forecasting Considerations
- Forecasting involves considering items to be forecast, such as products, product groups, or assemblies.
- Top-down or bottom-up forecasting approaches can be used.
- Forecasting techniques, units of measure, time interval, and forecast horizon must be considered.
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Description
Learn about different forecasting models, including qualitative and quantitative models, and their implementation techniques. Understand the classification of forecasting models based on techniques, effort, and cost.
