Fin

• Forecast is a statement about the future value of a variable of interest.
• Short-term forecasts pertain to ongoing operations.
• Medium term forecasting tends to be several months up to 2 years into the future and is

  referred to as intermediate term.
• Long-range forecasts can be an important strategic planning tool. Long-term forecasting, as the

  name suggests, involves predicting events, trends, or outcomes over an extended period, typically

  spanning multiple years or even decades.
• Budgeting – is the process whereby business organizations predict its finances for the

  organization
• Planning capacity – is the process whereby the organization predicts its amount or

  content that an organization can produce or sell
• Sales – it is the process of forecasting whereby the organization predicts its total

  number of products to be sold.
• Production and inventory – it is the process of forecasting whereby the organization

  predicts its total number of goods to produce and total number of materials stored.
• Personnel – it is the process of forecasting whereby the organization predicts the

  number of individuals that will work for the organization.
• Purchasing – it is the process of forecasting whereby the organization predicts the total

  number of raw materials to be purchased.
• Qualitative methods consist mainly of subjective inputs, which often defy precise numerical

  description.
• Quantitative methods involve either the projection of historical data or the development of

  associative models that attempt to utilize causal (explanatory) variables to make a forecast.
• Judgmental forecasts rely on analysis of subjective inputs obtained from various sources, such

  as consumer surveys, the sales staff, managers and executives, and panels of experts.
• Time-series forecasts simply attempt to project experience into the future. These techniques

  use historical data with the assumption that the future will be like the past.
• Trend refers to a long-term upward or downward movement in the data. Population

  shifts, changing incomes, and cultural changes often account for such movements.
• Seasonality refers to short-term, fairly regular variations generally related to factors such

  as the calendar or time of day. Restaurants, supermarkets, and theaters experience weekly

  and even daily “seasonal” variations.
• Cycles are wavelike variations of more than one year’s duration. These are often related

  to a variety of economic, political, and even agricultural conditions.
• 4. Irregular variations are due to unusual circumstances such as severe weather conditions,

  strikes, or a major change in a product or service.
• Random variations are residual variations that remain after all other behaviors have

  been accounted for.
• A naive forecast uses a

  single previous value of a time series as the basis of a forecast.
• moving average is a technique that calculates the overall trend in a data set. In operations

  management, the data set is sales volume from historical data of the company.
• weighted average is similar to a moving average, except that it typically assigns more weight

  to the most recent values in a time series.
• Exponential smoothing is a sophisticated weighted averaging method that is still relatively easy

  to use and understand.