Activity No.

2: (Forecasting)

1. What is forecasting?

Forecasting can be defined as predicting the future based on the past. In a

business, forecasting is predicting the future sales volume, profits, customer
needs, and so on. When a business is forecasting, it is trying to predict the
future based on the past. A forecasting strategy is designed to estimate the
size of a market or the sales of a product or service in the future, and it is not
designed to achieve a certain goal in a certain area of the business.
Forecasting is a useful tool, but it is just a tool. A business needs to have a
strategy that is designed to achieve a certain goal in a certain area of the
business, and then it needs to design a forecast to assist with achieving that
goal. If a business is not sure where to start when designing an operations
strategy, then it should start by designing a forecast.

2. What are the elements of a good forecast?

The elements of a good forecast are: timely, accurate, reliable, expressed in
meaningful units and in writing, simple to understand and use, and cost-
effective. The most obvious element of a good forecast is that it should be
timely. If a forecast is 2 hours old, it’s outdated. Make sure forecasts are
being updated in real time. This is the only way to ensure that your customers
are getting the most up-to-date information. The other key ingredient of a
good forecast is accuracy. No one likes being wrong, but if your forecast is
constantly way off the mark, your customers will quickly lose their trust in the
forecast. Make sure your forecasts are as accurate as possible. The element
of a good forecast in business should be reliable. This prediction is then
communicated to customers, suppliers, and other stakeholders. These
forecasts are important because they help to inform decision-making and
provide clarity on what to expect in the future. Forecasts are an essential part
of business planning, but they don't always live up to their potential. A good
 forecast should provide a clear view of the future, help you steer clear of
potential problems, and avoid unpleasant surprises. An element of a good
forecast, therefore, is that it is expressed in meaningful units and is
written down. This allows you to check how accurate your forecast is and
adjust your expectations if necessary. An element of a good forecast in
business should be cost-effective. This means that you should be able to
provide the same level of service to your customers at a lower cost than your
competitors.

3. Why is forecasting important in making decisions?

Forecasting is an important part of decision-making. It helps us

understand the future, which in turn helps us make better decisions. It also
allows us to take action to improve the outcome. It allows us to make more
accurate decisions in the future. It gives us insight into what will happen, so
we can make better choices. Making decisions about how to run your
business is challenging. You have to weigh up a variety of factors before
deciding on a course of action. One of the factors you need to take into
account is the future. Businesses are constantly making decisions about the
future, such as which new markets to enter, what products to develop, and
how much to spend on marketing. When we make decisions, one of the
things we need to do is assess the likely outcomes of our decisions.
Therefore, an important part of making good decisions is being able to make
good forecasts. If we make the right forecasts, we can make the right
decisions and avoid the wrong decisions.

4. What are the two types of forecasting approaches? Give brief description of
each approach.

Forecasting is the process of predicting what the future will look like. It’s a
way of trying to bring order to the world and make sense of what’s going on
around us. Quantitative forecasting uses data and statistical models to
predict the future. Qualitative forecasting uses our intuition and experience
to make predictions. Qualitative forecasting is an approach to forecasting that
focuses on interpreting and analysing what is going on in the economy
instead of relying on numerical data, such as past sales or current sales
figures. Qualitative forecasting is often used to complement the more
traditional quantitative forecasting method, which focuses on collecting and
analysing numerical data, such as sales figures, in order to predict how the
economy will behave in the future.