16 Questions
What is forecasting?
Projecting future events based on past data
Why is forecasting important?
It provides a rational basis for decision-making
On a specific day that you need to go out to buy something in the market, what makes you decide to bring an umbrella?
TV/radio weather forecast
Do you think TV/radio weather forecast is a reliable basis for decision-making?
Yes, because it provides accurate predictions
What helps make management make good decisions?
Rational and logical thinking
Before anything is planned and put into action, most organizations perform forecasting. What is forecasting?
Projecting future events based on past data
What is the primary objective of forecasting in a firm's operations?
To reduce the risk or uncertainty in decision-making
Who uses the forecast as a tool for long-range planning and performance targets?
Top Management
How do purchasing departments use forecasting?
To estimate raw materials needed for production
Which method of qualitative forecasting incorporates factors like personal experiences and intuition?
Delphi Method
What is the main characteristic of the Delphi Method for qualitative forecasting?
Synthesizing views of managers with statistical models
What is the Sales Force Polling method used for in qualitative forecasting?
Every sales person estimates sales in their region
How do consumer market surveys contribute to qualitative forecasting?
Helping in preparing a forecast and improving product design
What is the main characteristic of Program Evaluation and Review Technique (PERT)-derived Forecasts for qualitative forecasting?
Useful for long-range forecasting with results not governed by the group or strong leadership
What is the main purpose of Surveys in qualitative forecasting?
Accumulating information regarding future purchasing plans
What type of forecasts are useful in formulating short-term forecasts?
Expert Opinions
Study Notes
Forecasting Overview
- Forecasting is the process of making predictions or estimates about future events or outcomes.
Importance of Forecasting
- Forecasting is important because it helps individuals and organizations make informed decisions about the future.
Real-World Example of Forecasting
- Checking the weather forecast (e.g., TV/radio) to decide whether to bring an umbrella when going out to buy something in the market.
Role of Forecasting in Management
- Forecasting helps management make good decisions by providing insights into future events or outcomes.
- Forecasts are used as a tool for long-range planning and performance targets.
- Top-level management uses forecasts to set performance targets and make strategic decisions.
Forecasting in Operations
- Most organizations perform forecasting before planning and taking action.
- The primary objective of forecasting in a firm's operations is to make predictions or estimates about future events or outcomes.
Qualitative Forecasting Methods
- Judgmental method incorporates factors like personal experiences and intuition.
- The Delphi Method is a qualitative forecasting method characterized by anonymity and iteration among panel members.
- Sales Force Polling is used to collect opinions and insights from sales teams to make predictions about future sales.
- Consumer market surveys contribute to qualitative forecasting by providing insights into consumer behavior and preferences.
- Program Evaluation and Review Technique (PERT)-derived Forecasts are characterized by a network-based approach to forecasting.
- Surveys are used in qualitative forecasting to gather information and opinions from a sample of individuals or groups.
Short-Term Forecasting
- Time series forecasts are useful in formulating short-term forecasts.
Test your knowledge about forecasting by answering questions related to defining forecasting, its different users, and the qualitative approach to forecasting.
Make Your Own Quizzes and Flashcards
Convert your notes into interactive study material.
Get started for free
