Chapter 15 Forecasting Flashcards
what is Forecasting Components?
A variety of forecasting methods are available for use depending on the time frame of the forecast and the existence of patterns in the forecast.
what are the forecasting components?
Time frames Pattern in the forecast Trend Random variations Cycle Seasonal Pattern Demand
Times Frames
- Short-range (one to two months)
- Medium-range (two months to one or two years)
- Long-range (more than one or two years)
Pattern in the forecast
- Trend
- Random variations
- Cycle
- Seasonal pattern
Trend
A long-term movement of the item being forecast
Random Variations
movements that are not predictable and follow no pattern
Cycle
A movement, up or down, that repeats itself over a lengthy timespan
Seasonal Pattern
An oscillating movement that occurs periodically in the short run, often weather/timing related
Demand
may exhibit multiple patterns simultaneously, like cycle and trend; trend and seasonal, etc
Qualitative Methods
Methods using judgment, expertise and opinion to make forecasts.
Times Series
Statistical techniques that use historical data to predict future behavior of the item being forecast.
Regression Methods
attempt to develop a mathematical relationship between the item being forecast and factors that cause it to behave the way it does.
“ Jury of executive opinion ,”
a qualitative technique, is the most common type of forecast for long-term strategic planning
*Performed by individuals or groups within an organization, sometimes assisted by consultants and other experts, whose judgments and opinions are considered as valid for the forecasting item.
“ Jury of executive opinion ,”
Top managers are the key group involved in the development of forecasts for strategic plans.
“ Jury of executive opinion ,”
Usually includes specialty functions such as marketing, engineering, etc., in which individuals have experience and knowledge of the forecasted item.
