ORQUIA, ANNDHREA S.

BSA-22

ACTIVITY - FORECASTING

1. Identify the key differences between qualitative and quantitative

forecasting methods. Which is better in your opinion and why?
-Quantitative method of forecasting uses numerical facts and historical
data to predict upcoming events. such as previous sales and revenue
figures, production and financial reports and website traffic statistics.
also uses projections based on statistical modeling, trend analyses or
other information from expert sources such as government agencies,
trade associations and academic institutions.
While in the Qualitative method of forecasting where the key trends or
developments are hard to capture or where such data is not available.
Basically based on personal referee and experience in the various
information on the topic of forecasting analysis. business analysts used
information such as intuition or informed opinion for forecasting the
future results.
The better method forecasting to use for me is the Quantitative method
in this method you have a data and information. you will have a bases
and experience of it that will lead you in creating a decision. It is done in
the past, so if you will recognize the things that will make it bad, find a
solution on it and focus on the things that cause worst. In this case will
you improve the weakest part of the plan. and will get only focus on the
part that will need to improve.

2. What are the differences among models that forecast the level,
trend, and seasonality?
-Trend component is a long-term increase or decrease in the data which
might not be linear. Sometimes the trend might change direction as time
increases. While when a series exhibits regular fluctuations based on the
season (e.g. every month/quarter/year). appropriate way to estimate the
pattern is Seasonality. Seasonality is always of a fixed and known period,
and the pattern of it is always up and down.

3. Explain why it is important to monitor forecast errors.

-Forecasting should be viewed as a continuous improvement process.
Your forecasting team should be constantly striving to improve the
forecasting process and forecast accuracy. Doing so requires knowing
what is working and what is not. Monitoring forecast accuracy allows
you to spot problems early. If you notice the error, you will easily change
and resolve the problem as soon as possible without any affecting the
others.

4. Explain some of the factors to be considered in selecting a

forecasting model.
-One of the factor to be considered is Degree of accuracy required. The
type of model selected is related to the degree of accuracy required.
Some situations require only rough forecast estimates, whereas others
require precise accuracy. Often, the greater the degree of accuracy
required, the higher is the cost of the forecasting process. This is
because increasing accuracy means increasing the costs of collecting
and processing data, as well as the cost of the computer software
required. A simpler and less costly forecasting model may be better
overall than one that is very sophisticated but expensive.