chapter 3

• Forecasting- is a technique that uses historical data as inputs to make informed estimates that are predictive in determining the direction of future trends
• Businesses utilize forecasting to determine how to allocate their budgets or plan for anticipated expenses for an upcoming period of time. This is typically based on the projected demand for goods and services offered
• A demand forecast is essential for determining how much supply will be needed to match demand:

  • budget preparation
  • capacity decisions (eg. Staff and equipment)
  • purchasing decisions
• Factors to consider in forecasting techniques:

  • cost
  • accuracy
  • availability of historical data
  • availability of forecasting software
  • time needed to gather and analyze data and prepare a forecast
• Steps in forecasting process

  1. Determine the purpose of the forecast
  2. Establish a time horizon
  3. Availability of forecasting software
  4. Obtain, clean, and analyze appropriate data
  5. Make the forecast
  6. Monitor the forecast
• Forecasting approaches/ techniques

  Qualitative forecasting- include interviews, on-site visits, market research, polls, and surveys that may apply the Delphi method
• Delphi Method- process used to arrive at a group of opinion or decision by surveying a panel of experts
• Forecasting approaches/ techniques

  Quantitative forecasting- exclude expert opinions and utilize statistical data based on quantitative information
• Customer focus and anticipating customer needs- your business should be flexible and should continue to evaluate service and product quality
• customer focus- may require research in the form of questionnaires and surveys to the target population or demographic your future product will reach
• customer needs- it is important to continue to check with consumers to ensure that this focus is on target
• marketing and sales- business that understand the needs of their customer and is dedicated to providing customer focus will be able to market and sell their product or services
• Competitor services- think about how consumers are currently fulfilling their need for the service or product you wish to supply