Types of Forecasting

• Qualitative Forecasting Methods

• Quantitative Forecasting Methods
Qualitative Forecasting Methods
• These methods are used when historical data are scarce or
not available at all.
• They generally use expert opinion to predict future events
subjectively
• Advantage - useful when historical data either are not
available or are scarce. For example, sales of new product,
environment and technology over the long term.
• Disadvantage - Subjective
Quantitative Forecasting Methods
• These methods are used when historical data are available.
• They generally construct a forecasting model from available
data or theory to do forecasts.
• Advantage - Objective. Once the underlying model or
technique has been chosen, the corresponding forecasts are
determined automatically. They are fully reproducible by
any forecaster.
• Disadvantage - Need data
 Forecasting Techniques Common Techniques used Description

Quantitative Technique
Time series Method Only independent variable is the
time used to analyse 1) trends, 2)
seasonal or 3) cyclical factors that
influence the demand data.

Casual Method Employ some factors other than

time, when predicting forecast
values.
Qualitative Technique
Customer Surveys By using a customer survey, a
firm can base its demand forecast
on the customers’ purchasing
plans.
Delphi Method Involves a group of experts who
eventually develop a consensus.
They usually make long range
forecasts for future technologies
of sales of a new product.