FORECASTING

It is a prediction, estimate or determination of what will occur in the future based on a certain set of
factors.

The value being forecast may be sales, interest rates, funds, gross national product (GNP), technological
status, and others.

The factors on which a forecast is based may be any of the following: past data, opinion or judgment,
company data, or perceived pattern related to time.

Answers the questions:

1. What is the purpose of the forecast?

2. What are the dynamics and components of the system for which the forecast will be made?
3. How important is the past in estimating the future?

Forecasting on Different Departments

 Accounting – new product/process cost estimates, profit projections, cash management

 Finance – equipment/equipment replacement needs, timing and amount of funding/borrowing
needs
 Human resources – hiring activities, including recruitment, interviewing, and training; layoff
planning, including outplacement counseling.
 Marketing – pricing and promotion, e-business strategies, global competition strategies
 MIS – new/revised information systems, internet services