Forecasting Methods

 Qualitative method

 Quantitative method
 Qualitative Forecasting Methods
 Executive Opinion Method

 Delphi Method

 Past Performance Method

 Sales Force Composite Method

 Market Survey Method

 Forecasting Methods
Executive Opinion Method:

 Most widely used method of combining and averaging

views of several executives regarding a specific
decision or forecast.

 Leads to a quicker (and often more reliable) result

without use of elaborate data manipulation and
statistical techniques.
 Forecasting Methods…
Delphi Method:

 It is an interactive forecasting method which relies on

a panel of experts, where the experts answer

questionnaires in two or more rounds.

 Process includes a coordinator getting forecasts

separately from experts,

 Forecasting Methods…
 summarizing the forecasts and giving the summary

report to experts who are asked to make another

prediction;

 the process is repeated till some consensus is

reached and the mean or median scores of the final

rounds determine the results.

 Forecasting Methods…
Past Performance Method:

 This technique the forecasts are made on the basis of

past data.

 This method can be used if the performance in the

past has been consistent and

 the manager expects that the future will bear a

resemblance to the recent past.
 Forecasting Methods…
Sales Force Composite Method:

 Also known as “Grassroots Approach”.

 Individual salespersons forecast the sales for their

territories.

 Individual forecasts are combined & modified by the

sales manager to form the company sales forecast.

 Best used when a highly trained, specialized and

dedicated sales force is used.
 Forecasting Methods…
Market Survey method:

 Process includes asking customers about their

intentions to buy the company’s product and services
through questionnaire method.

 Questionnaire may contain other relevant questions

also.
 Quantitative Forecasting Methods
 Time Series Method
 Trend Projection Method
 Moving average method
 Exponential Smoothing
 Regression Analysis
 Econometric Models
 Economic Indicators
 Technological Method
 Forecasting Methods…
Time Series Method:

 In this method the future activities are the extension

of the past.

 Prove useful when lot of historical data are available

and when stable trends are apparent.

 Forecast are based on the assumption that business

conditions reasonably expected to remain unchanged
in the future.
 Forecasting Methods…
Trend Projection Method:

 The method projects past data into the future and

can be done with the help of a table or a graph.

 The method fits a trend line to a mathematical

equation and then projects it into the future by
means of this equation.
 Forecasting Methods…
Moving average method:

 According to this method, the average of a limited

number of significant results is calculated and updated

as new results become available by adding the latest

result and dropping off the oldest.

 Forecasting Methods…
Exponential Smoothing:

 The technique is almost similar to the moving

average, except that it gives more weight to recent
results and less to earlier ones.

 This is usually more accurate than moving average.

 Forecasting Methods…
Regression Analysis:

 It is used to find the effect of changes of relative

movements of two or more inter related variables.

 Eg: we can predict sales based on the economic

condition, disposable income, price, time, etc.
 Forecasting Methods…
Econometric Models:

 It makes use of several multiple regression equations

to predict major economic shifts and

 the potential impact of those shifts on the

organization.
 Forecasting Methods…
Economic Indicators:

 Taking the current economic indicators for

forecasting the future state of the economy.

 Eg: the current rates of inflation, cost of living index,

level of unemployment, etc.
 Forecasting Methods…

Technological Method:

 It focuses on predicting what future technologies are

likely to emerge and

 the way that can affect the organization.

 References
 Koontz, H., & Weihrich, H. Essentials of Management, McGraw Hill Publishers.

 Williams. Management, (International edition) South-western Cengage Learning.

 Stoner, Freeman, Gilbert Jr. (2014). Management (6th edition), New Delhi: Prentice
Hall India.

 Daft, R. L. (2009). Principles of Management (1st edition), Cengage Learning.

 Gupta, R.S., Sharma, B.D., & Bhalla. N.S. (2011). Principles & Practices of Management
(11th edition). New Delhi: Kalyani Publishers.

 John R. Schermerhorn. Management,Wiley-India

 L M Prasad, (2007). Principles and Practices of Management, Himalaya Publishing

House

 Rao, P.S. (2009). Principles of Management, Himalaya Publishing House.

 Moshal, B.S. Principles of Management,Ane Books.

Thank You…

Dr. Ajai Krishnan G