OPERATION FORECASTING METHODS
OPERATION FORECASTING METHODS
All business and industrial activities
revolve around demand and sales and their future planning. Forecasting refers
to the act of making a statement about the future. It is estimating the future
event by casting forward past data.
Method
and type of forecasting
1)
Demand
forecasting
2)
Sales
forecasting
DEMAND FORECASTING
The demand is uncertain, production, cost, revenue, profit etc. are also
uncertain. Through forecasting it is possible to minimize the uncertainties.
Forecasting simply refers to estimating or anticipating future events. It is an
attempt to foresee the future by examining the past. Thus demand forecasting
means estimating or anticipating future demand on the basis of past data.
Type
of demand forecasting
1) Collective opinion method:
Under this
method the salesmen estimate the expected sales in their respective territories
on the basis of previous experience. Then demand is estimated after combining
the individual forecasts (sales estimates) of the salesmen. This method is also
known as sales force opinion method
2) Delphi method:
Under this method, demand is
estimated on the basis of opinions of experts and distributors other than
salesmen and ordinary consumers. This method is also known as Experts' opinion
method.
3) Trend projection method: Future sales
are based on the past sales, because future is the grand-child of the past and
child of the present. Under the trend projection method demand is estimated on
the basis of analysis of past data.
