Forecasting

Question 1

Forecasting

Answer 1

Forecasting is a technique that uses historical data as inputs to make informed estimates that are predictive in determining the direction of future trends. Businesses utilize forecasting to determine how to allocate their budgets or plan for anticipated expenses for an upcoming period of time.

Question 2

Trend component

Answer 2

This is useful in predicting future movements. Over a long period of time, the trend shows whether the data tends to increase or decrease. The term “trend” refers to an average, long-term, smooth tendency. Not all increases or decreases have to occur simultaneously.

Question 3

Seasonal component

Answer 3

The seasonal component of a time series is the variation in some variable due to some predetermined patterns in its behavior.

Question 4

Cyclical component

Answer 4

The cyclical component in a time series is the part of the movement in the variable which can be explained by other cyclical movements in the economy.
this term gives information about seasonal patterns.

Question 5

irregular component

Answer 5

The irregular component is the part of the movement in the variable which cannot be explained by cyclical movements in the economy.
In other words, this term gives information about non-seasonal patterns.
This term refers to changes that are not cyclical.

Question 6

What is the optimal order quantity?

Answer 6

When the holding cost curve crosses the setup or order