Topic

Forecasting

Topics •What is forecast•Elements of the forecasting •Steps in the forecasting•Approaches to the forecasting

What is Forecasting

• Forecasting is the future prediction on the behalf of situation.

• Forecasting is the basis process of the business planning, planning is the integral part of any business.

Basis of Forecasting

• Current Situation/Current Factors• Past Experiences/Past Factors

Common Feature’s

• Experience• The same will be done• Prediction about the future

Common Features CONT…• Group of item may be more accurate into the

individual items• Forecasting accuracy: high accuracy to

produced good and services in low time that use more forecasting.

Elements of the Forecasting

• Timely Forecasting• Accurate Forecasting• Measureable Forecasting

Elements of the Forecasting

CONT…• Reliable Forecasting• Easy to use• Cost Effectiveness

Steps in Forecasting

• Purpose of forecasting• Established time horizon• Select of forecasting technique

Steps in Forecasting

CONT…• Prepared of forecasting• Monitor of the forecasting• Gather & Analysis data

Approaches of the Forecasting

Quantitative Technique: Use more data & more time.

Judgmental Technique: A subjective analysis of subjective input.

Approaches of the Forecasting

CONT… Associate Model: Use explanatory variables to

predict the future analysis. Time Series Technique: Historical data use for

the future forecasting.

Quantitative Technique

• Qualitative Technique• Subjective Impact

Judgemental Forecasting

Judgemental forecasting is uses subjective inputs, to Implement a systematic approach & justify the data. A separate forecaster and user.

Judgemental Forecasting

Executive Opinion: Decision will take upper level of managers.

Sale force Opinion: Upgrade the level of sales. Consumer Survey: To survey the consumer need &

what they want.

Judgemental Forecasting

CONT… Delphi Method: The method relies on the key

assumption that forecast from a group are generally more accurate then those from individual.

Outside Opinion: Financial & consulting gurus & companies.

Judgemental Forecasting

CONT… Opinion of manager & staff: A series of

Questionnaires developed sequentially.

Associative ModelThe technique is use for exploratory series for forecast for future predict demand.• Predictor Variable: Is independent variable.• Predicted Variable: Is dependent variable.• Regression: It’s a technique.

Forecast based on time series

The time series forecasting on the behalf of past basic behaviours, “There are some variations”:•Trend Variation•Seasonal Variation•cyclical Variation•Irregular Variation•Random Variation

Trend Variation•Trend Variation are basically long term variation .•Movement of trend depend on time .

Trend Variation

Seasonal Variation

Seasonal Variation is basically short term, depend on business type.

Seasonal Variation

Cyclical Variation

•The variation is realistic more then one (1) year.•Variation as like wives,(ups & down)

Irregular Variation

•Unexpected reason, reason was not observed.•Unexpected reasons that is directly effected on the business.

Random Variation

Slowly change with the passage of the time, very little change in the variation.

Native Method•In this method predict the past

observations & behavior.•Previous time, previous observation is the

actual value of the time.

Technique for Averaging

Up’s & down is the part of the business time but consider only real variation.Example:In the last working on top.

Technique for Averaging CONT…

•Moving Average•Weighted Average•Exponential Smooth

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