MAT500 Assignment 2 - Running Head: FORECASTING FORECASTING...

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FORECASTING METHODS Strayer University MAT540 – Quantitative Methods July 22, 2011 1 Running Head: FORECASTING Running Head: FORECASTING
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OUTLINE OUTLINE Introduction Uses of Forecasting Type of forecasting Methods Qualitative Forecasting Methods Quantitative Forecasting Methods References 2
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INTRODUCTION INTRODUCTION What is Forecasting? Forecasting is the process of predicting the future 3
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USES OF FORECASTING USES OF FORECASTING Where do we apply forecasting? Business  - Supply Chain management Forecasting is the basis for all strategic  and planning decisions in a supply chain, including o Production: scheduling, inventory, aggregate planning o Marketing: sales force allocation, promotions, new  production introduction o Finance: plant/equipment investment, budgetary  planning o Personnel: workforce planning, hiring, layoffs 4
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USES OF FORECASTING USES OF FORECASTING (CONTINUED) (CONTINUED) Other examples: Weather forecasting Sports forecasting Government budgeting forecasting Economic forecasting Demographic forecasting 5
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TYPES OF FORECASTING TYPES OF FORECASTING METHODS METHODS Forecasting methods are classified into two groups : Qualitative Methods-   based on judgmental methods Qualitative forecasting methods uses experience and judgment to  establish future behaviours, including:         Executive Opinion        Market Research        Delphi method          Quantitative Methods-  based on mathematical modeling . Quantitative forecasting uses historical data to establish  relationships and trends which can be projected into the future,  including:        Time Series       Casual Models 6
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TYPES OF FORECASTING METHODS TYPES OF FORECASTING METHODS (CONTINUED) (CONTINUED) 7 The Comparison  between Qualitative Methods and Quantitative Methods
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QUALITATIVE FORECASTING QUALITATIVE FORECASTING METHODS METHODS Major Qualitative Forecasting Methods include:   o Executive Opinion .   A forecasting method that are  based on the judgment and experience of managers. o Market Research.    This method tests hypothesis about  new products or services or new markets for  existing products or services. o Delphi Method.   A forecasting technique using a group  process that allows experts to make forecasts. 8
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QUALITATIVE FORECASTING QUALITATIVE FORECASTING METHODS (CONTINUED) METHODS (CONTINUED) Type Characteristics Strengths Weaknesses Executive opinion A group of managers meet & come up with a forecast Good for strategic or new-product forecasting One person's opinion can dominate the forecast Market research Uses surveys & interviews to identify customer preferences Good determinant of customer preferences It can be difficult to develop a good questionnaire Delphi method
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This note was uploaded on 11/15/2011 for the course ACCOUNTING MAT540 taught by Professor Georgemaruschock during the Summer '11 term at Strayer.

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MAT500 Assignment 2 - Running Head: FORECASTING FORECASTING...

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