Business Forecasting Assignment Operations Essay

Business imagineing is the act of studying historical doing for the purpose of using the association gained to project future task conditions so that ends can be make today that will aid in the achievement of established goals. Forecasting plays a crucial role in todays uncertain world(a) marketplace. Forecasting is tradition all in ally any(prenominal) soft or vicenary, with each offering specific wagess and disadvantages.Qualitative and denary Forecasting TechniquesForecasting can be classified into qualitative and quantitative. Qualitative proficiencys ar subjective or judgmental and be based on estimates and feels. The Delphi technique, a common unionize of qualitative prognostic, allows experts to create an effective forecast infra conditions of thoroughgoing uncertainty. dates serial publication prophecy, a quantitative technique, uses a statistical analysis of bygone sales in stage to effectively visit future outcomes, but can be limited under(a) co nditions of uncertainty (Chase, 2003, p.364).Business forecasting can be apply in a wide strain of contexts, and by a wide variety of linees. For example, effective forecasting can examine sales based on attendance at a trade show, or the customer admit for products and services (Business and Economic Forecasting, p.1). superstar of the most important assumptions of business forecasters is that the recent acts as an important guide for the future. It is important to note that forecasters must work out a make sense of new information, including quickly changing economic conditions and globalization, when creating business forecasts based on past sales. Globalization and economic slowdown has made businesses subject to a slap-up deal of uncertainty. In this time of rapid change, economies worldwide change rapidly, new markets open up and old ones change, and get for products is ofttimes uncertain. As such, businesses must be flexible and adaptable in the types of methods th at they use to forecast future sales (Chase, 2003, p.472).In an ever-changing global marketplace, organizations are constantly coming up against unusual and novel situations. It is in these situations that modern methods of business forecasting can be especially useful. red-brickforecasting methods are usually themeed into 2 main categories qualitative methods, and quantitative methods. Qualitative analysis includes the intuitive and knowledge-based approach as discussed earlier. The decision maker reviews all of the information available, and then makes an estimated forecast. Quantitative techniques are utilize mostly when qualitative information is not available. In contrast, qualitative techniques are based on an analysis of data (Namvar, 2000, p.8).Delphi Forecasting ruleQualitative forecasting techniques are executive committee, the Delphi method, and surveys of the sales force, surveys of customers, historical analogy, and market research. The objective of most Delphi app lications is the trusty and creative exploration of ideas or the production of suitable information for decision-making. The Delphi Method is based on a structured process for collecting and distilling knowledge from a convocation of experts by means of a serial of questionnaires interspersed with controlled opinion feedback (Chase, 2003, P471).The Delphi method is a variation of the executive committee approach. But the fundamental interaction is indirect, iterative and structured. The basic premise of Delphi method is to identify a group of experts and each of them are habituated a set of questions or issues, and asked to respond. subsequently a given amount of time, the responses are sent to a coordinator or monitoring group that does not participate in the earlier stages of the Delphi processes. This group then feeds back the responses to other members of the group, while never giving onward the identity of the response. The experts are then asked to respond again, after r eviewing the responses of other respondents. This process may continue until a consensus is reached among the group. The group may be fall in to form a final consensus (Namvar, 2000, p.8).Time Series Forecasting MethodTime series techniques are the most popular quantitative method. These techniques use statistical methods for intercommunicate from historical data. Quantitative techniques are preferred when appropriate data are available. The main assumption is that the historical pattern will continue into the future. The two main types of time series forecasting are fairish smoothing and exponential function smoothing. The go average is simply aseries of arithmetic averages. Predicting sales for next year is simple. The genuine sales for a certain number of years is added, and then divided by the number of years used to get the moving average. A weighted moving average is obtained by assigning a specific weight to previous years. The sum of all weights must equal one. Recent y ears are given a exalteder weight (Namvar, 2000, p.13).Exponential smoothing is simply a subtype of the weighted moving average. A new forecast is a weighted sum of actual variables (usually sales) in the current year and the weighted forecast of the variable for that period. It has the advantage of being relatively easy to compute. In contrast the moving average method is quick, cheap, and easy to use, but does not easily take into news report variations based on seasonal effects and cycles (Namvar, 2000, p.14).Both the Delphi technique and Time series forecasting are valuable forecasting mechanisms in the dear circumstance. The Delphi technique is useful for short-term forecasts. This ability is contingent upon the familiarity of experts with specific issues (Namvar, 2000, p.8). One of the major problems with the Delphi technique, as with all other qualitative techniques, is identifying good employees to form expert opinions and judgments, and then getting these experts to agr ee on a forecast (Namvar, 2000, p.9).Given the limitations of qualitative techniques, quantitative forecasting is usually preferred where in that respect is enough past data (Namvar, 2000, p.12). In conditions of uncertainty, the Delphi technique offers a great deal flexibility. Using the Delphi technique, experts in a field can often come to a creative and insightful consensus. In contrast, time series forecasting may be less useful under conditions of extreme uncertainty because of its qualitative nature. When new conditions arise, it may be arduous to predict future sales based on past sales when conditions were more certain. Therefore, the Delphi technique is often a more valuable tool for business forecasting during conditions of uncertainty.Firstlogic Inc., The Company manufactures information quality and postal automation parcel that helps companies ensure the data they are storingand adding to their corporate databases is clean, accurate and reliable. More than 6,000 cus tomers or so the world use Firstlogic products. (www.firstlogic.com). The recent global economic slowdown and increase uncertainty in many facets of business, have caused organizations to rethink their priorities and strategies. Like any other companies, My fellowship was forced to look well ahead in order to plan their investments, launch new products and services, devise new slipway to develop and leverage human capital and so on. All happen upon decisions related to these activities are derived from a sales forecast, which is the most critical and difficult area of the management.Forecasting can allow businesses to predict sales, and thus determine a wide variety of business expenses. Firstlogic heavily relies on quantitative methods for business forecasting based on several factors like arcdegree of accuracy, investment decisions, time horizon to forecast, capital investment decision, product changes, style, quality, charge changes, labor problems, available data and infor mation and position of products in its behavior cycle to forecast the future sales.Firstlogic use information on past sales and times to help determine demand for products and services, effectively forecasting the specific products/services that would release to market at a given point in time. Despite the effectiveness of quantitative forecasting tools, the company has had less success with these methods in short term forecasts. Given the high degree of uncertainty in todays marketplace, qualitative forecasting techniques like the Delphi technique may help Firstlogic to better-forecast future sales.ConclusionIn conclusion, business forecasting methods must be used in order to fit current conditions of uncertainty. Delphi technique and time series forecasting some(prenominal) are valuable forecasting tools when used in the right circumstance. The Delphi technique is useful for short-term forecasts therefore, it is often a more valuable tool for business forecasting during conditio ns of uncertainty.ReferencesBusiness and Economic Forecasting. Retrieved November 4, 2005, fromhttp//www.sbeusers.csuhayward.edu/acassuto/econ3551/summary/chapter6.ht