Module 3 Flashcards
A projection of future sales, revenues, earning, costs and other possible variables that are helpful in the firm’s operations
Forecasting
Primary objective is to reduce risk or uncertainty that the firm will face in making decisions
Forecasting
Starting point of business planning
forecasting
who uses forecasting as a tool for decision making?
Top management
Production manager
Purchasing manager
Marketing manager
Finance manager
Human resource maganer
Makes use of forecasting as a tool for long-range planning, particularly in providing a basis for performanc targets, etc
top management
utilizes forecasts to determine the amount of raw material what will be needed in production
production manager
Uses the forecast to ascertain the volum or bulk of material that should be purchase
Purchasing manager
Use forecast to estimate how much sales should be maid in a particular period
Marketing manager
use forecast to anticipate the funding needed by the firm
Finance manager
Use forecast to supply the human resource needed in achiveing the firm objective
Human resource manager
Two approaches to forcasting
quantitative
Qualitative
incorporate factors such as the decision maker’s intuition, emotion, personal experience, and value system; useful in formulating short term forecast
Qualitative (or judgement) forecast
Qualitative forecasting methods
Expert opinions
Delphi method
Sales force polling
Consumer market surveys
PERT-derived forecasts (program evaluation and review techniques)
The views of the manager or a group with high level of expertise
Expert opinions
similar to expert opinion. But that members of a group of experts are asked individually through a questionnaire
Delphi method
every sales person estimates the sales in her region; the responsibility of drawing up the forecast lies with the people
sales force polling