FORECASTING TECHNIQUES

Forecasting techniques

Forecasting techniques

The target of this allotment is to investigate different business forecasting procedures, and illustrate the advantages of their use for a exact organization. We have wise that demand forecasting invokes the processes of working out exactly what service/products are required, in what amount, and in what allowance of time. Organizations that are adept to implement productive forecasting will be better equipped to find the balance between organising demand for a product/service and the capability to meet this demand. The proficiency of optimizing this exclusive balance enables an organization to use this as a comparable benefit over their competitors

Qualitative Models

The qualitative forecasting technique is highly subjective in that it is readily influenced by opinions and estimates primarily utilized for long-range corporate strategies. The unique distinction between this method and the other three forecasting families is that those tend to be more quantitative in nature, relying heavily on the process of gathering and analyzing hard data. There are no formal mathematical models utilized in this forecasting family.

Time Series Analysis

This forecasting technique is assumption-based in that it compares existing past demand data in order to predict future demand. An example of this technique is the simple moving average which allows the casual observer to visually witness trends and determine trends by changing period length which in turn affects visual trend lines.

The Causal Family

The causal method predicts demand by assuming events are related to one another through some independent variable as its leading indicator, and relies upon fitting a mathematical trend line to acquired data points on this causal relationship to predict future demand. The multiple regression analysis is a subset of causal demand forecasting technique because it links two or more independent variables to demand of a product or service. This forecasting model is useful in calculating several factors ...