BUSINESS

FORECASTING
NIKITA GAUR
KSHITIJ TOMAR
Points to be covered
What is Business Forecasting?
Objectives
Characteristics
Steps in Forecasting
Methods
 introduction
It refers to analysis of past and present economic
conditions with the object of drawing inferences about
probable future business conditions.
Analyzing the past economic conditions

Analyzing the present economic conditions

 objectives
Business planning

Reduce the areas of uncertainty

 characteristics
Based on past and present conditions
Based on mathematical and statistical methods
Period
Estimation
scope
 Steps in forecasting
Understanding why changes in the past have occurred
Determining which phases of business activity must
be measured
Selecting and compiling data to be used as devices
Analyzing the data
Methods : Business Forecasting
Business Barometer
Time Series Analysis
Extrapolation
Regression Analysis
Modern Econometric Methods
Exponential Smoothing Method
Business Barometer
Business Barometer

Types of Business Barometer

i. For general business activities

ii. For specific business or industry
iii. For individual business firm
Advantages
i. Scientific and reliable
ii. Proper forecasting of future trends
iii. Help to forecast the speed of fluctuations

Disadvantages
i. Difficult to construct
ii. Incorrect data from source - inaccurate results
Time Series Analysis
What is it?

Merits
i. Easy Method
ii. Comparative study of variations can be made
iii. Reliable results
Demerits
i. Expensive, difficult and time consuming
ii. Data of several years needed
Extrapolation
Extrapolation

Curves
Arithmetic trend
Semi log trend
Modified exponential curve
Logistic curve
Merits
i. Useful to forecast future demand and production
ii. Simple Method
iii. Pure and reliable results

Demerits
i. Can be used under its own assumptions only
ii. Selection of trend curve difficult
Regression Analysis
• Consists of a dependent and an independent variable

• Technique used to find the equation representing the

relationship between the variables
Modern Econometric Methods
What is Econometrics?

Merits
i. Use of computer hence accurate and reliable results
ii. Explains various aspects of economy interrelation

Demerits
i. Difficult and complicated
ii. Needs adequate series of data
Exponential Smoothing Method
Kind of weighted average

Used for short-term forecasting

Methods : Which One To Use?
Based upon context

Based upon relevance and availability of data

Accuracy

Cost Benefit

Availability of time
Questions????