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 It is used in the practice of customer demand planning in every day business forecasting for manufacturing companies. .  Method or technique for estimating many future aspects of a business or other operation.

Qualitative or Judgmental methods 2.Extrapolative or Time series methods 3.Causal or Explanatory methods .There are three types of forecasting 1.

Rely on experts or managers opinion in making prediction for the future. Useful for medium to long range forecasting tasks. Provide a basis for some important decisions. .

. consumer panels & tests of new products & services.Develop forecast through group consensus.process of analyzing possible future events by considering alternative possible outcomes. Market Surveys – Involves the use of questionnaires.Three important Qualitative methods are :- Delphi Technique . Scenario Writing .

. cyclical component.Use past history of demand. The objective of this method is to identify the pattern in historic data & extrapolate this for future. and irregular component. Comprised of four separate components: trend component. seasonal component.

Exponential Smoothing – exponentially decreases the weighting of old demands. .TYPES OF EXTRAPOLATIVE METHODS Moving Average Method .allows for varying weighting of old demands.average of demands occurring in several of the most recent periods. Weighted Moving Average .

. A statistical forecasting model based on historical demand data as well as on variables believed to influence demand.

.a functional relationship is established between variables from the historical data and then used to forecast dependent variable values. Econometric method – an extension of regression analysis and include a system of simultaneous regression equations. There are two types of Causal forecasting methods Regression analysis .