Forecasts cover three distinct periods of time: short range, medium-range, and long range. Short-range
forecasts span up to one year, but generally last less than three months. These help plan purchasing, job
scheduling, workforce levels, job assignments, and production levels. Medium-range forecasts are
intermediate in nature and anticipate activity generally from three months to three years. Medium-range
forecasts assist with sales planning, production planning and budgeting, cash budgeting, and analysis of
various operating plans. A long-range forecast generally extends beyond three years. These guide
planning for new products, capital expenditures, facility location and expansion, and research and
Three features distinguish medium and long-range forecasts from short-range forecasts:
Intermediate and long-range forecasts provide information for more comprehensive issues and
support management decisions regarding planning and products, plants, and processes. While
some forecasts of demand should extend over multiple planning horizons, intermediate and long-
term forecasts will also include information obtained from economic and technological forecasts.
Short-term forecasts usually employ different methodological techniques than those used for
longer-term forecasting. Many of these techniques are quantitative. In contrast, medium to long-
range forecasting generally may employ qualitative, broader approaches.
Short-range forecasts tend to be more accurate than longer-range forecasts. As one attempts to
look further in the future, forecast accuracy is likely to diminish. When forecasting sales,
therefore, updates are needed frequently in order to review and revise plans as needed.
Forecasts rely on either quantitative or qualitative methods. Qualitative forecasts primarily use data
gathered from interviews, observation, and documents to assess decision-maker intuition, expressions of
emotions, personal experience, and value systems. The four qualitative approaches to forecasting
discussed here are jury of executive opinion, Delphi method, sales force composites, and consumer
Jury of executive
opinion is an analysis of the opinion of a small group of high-level managers within the
organization. The analyst synthesizes the results into a group estimate of demand. Under this method, the
opinions of a group of high-level experts or managers, often in combination with statistical models,
combine to arrive at a demand estimate. Jury of executive opinion tends to help grasp overall trends
within an industry.
also requires a group process, decision makers and poll experts (people whose
judgment is valued and not necessarily employed by the organization), to make forecasts. Decision
makers usually consist of a group of five to 10 experts who will make the actual forecast. Staff personnel
assist the decision-makers by preparing, distributing, collecting, and summarizing a series of
questionnaires and survey results. The Delphi method can be effective in developing long-range economic