Week 11

Question 1

Quantitative forecasting advantages

Answer 1

• Objective, consistent
• Processes large amounts of data
• Can identify relationship between two or more variables

Question 2

Quantitative forecasting disadvantages

Answer 2

• Only good with the data that it is based on
• When changes occur in the data, forecasts will not be accurate

Question 3

What is Qualitative forecasting?

Answer 3

A type of subjective forecasting, best used for medium-long term forecasting

Question 4

Qualitative forecasting advantages

Answer 4

• Alternative to quantitative forecasting when there is LITTLE or NO data
• Alternative when forecaster skill/ resources are low
• You can make reactive changes and optimise traditional model predictions
• Useful when there may be changes in the future environment

Question 5

What is Subjective Assessment?

Answer 5

Subjectively assess and weigh relevant subjective information to produce forecasts
- Used in place or in conjunction with quantitative forecasting
- Common in business forecasting

Question 6

For what duration of forecasting is Subjective Assessment used for?

Answer 6

Short-Medium Term

Question 7

What types of methods apply to Subjective Assessment?

Answer 7

1. Sales Force Composite
2. Jury of Executive Opinion
3. Subjective Probability Assessment

Question 8

What is Sales Force Composite?

Answer 8

Views of individual sales people as per the future sales outlook

1. Grass Root Approach:
   Collective sales assessment - done by sales people (Pipeline)
2. Sales Management Techniques
   Sales Executives use the above info and create forecasts
3. Wholesaler or Distributer Approach
   - Input to forecasting , they provide insights on inventory/ product line quantity and size

Question 9

What is Jury of Executive Opinion?

Answer 9

Executive come up to group consensus
- Then reviewed by CEO or averaged (representative forecasting)

Disadvantages: politics/ hierarchy/ coercion and power

Remedy: Delphi

Question 10

What is Subjective Probability Assessment?

Answer 10

Rely on scenario of the economy and distribute weights to the economic cycle
- Identify a range of values for the uncertain event
- Commonly used to incorporate subjective assessment into forecasting

Disadvantages: Forecasters may struggle

Remedy: Guidance and Training