QUALITATIVE FORECASTING

What is Qualitative Forecasting?

 an estimation methodology that uses expert

judgment, rather than numerical analysis.
 this type of forecasting relies upon the knowledge of
highly experienced employees and consultants to
provide insights into future outcomes.
 requires hard data and number crunching.
 Objective of Forecasting

 reduce risk in decision making.

 In business, forecasts form the basis for planning
capacity, production and inventory, manpower, sales
and market share, finances and budgeting, research
and development, and top management's strategy.
 Advantage of Qualitative Forecasting

 Its ability to predict changes in sales patterns

and customer behavior based on the experience
and judgment of senior executives and outside
experts.
 Forecasting is needed by the following:

1. Marketing Managers
- they use sales forecasts to determine optimal sales
force allocations, set sales goals, and plan promotions and
advertising. Market share, prices, and trends in new
product development are also required.
2. Production Planners
- they need forecasts in order to:
a) schedule production activities
b) order materials
c) establish inventory levels and plan shipments
d) labor scheduling
e) equipment purchases
f) maintenance requirements
g) plant capacity planning
3. Personnel Department
- it requires a number of forcasts in planning for human
resources.
- workers must be hired, trained and provided with
benefits that are competitive with those available in the
firm's labor market.
- trends that affect such variables as labor turnover,
retirement age. absenteeism, and tardiness need to be
forecast for planning and decision-making.
4. Managers of nonprofit institutions and public
administrators
- they used forecasting for budgeting purposes.
5. Hospital Administrators
- they forecast the healthcare needs of the community. In
order to do this efficiently a projection has to be made of:
a) growth in absolute size of population
b) changes in the number of people in various age groupings
c) varying medical needs these different age groups will
have
6. Universities
- these forecast student enrollments, cost of operations,
and, in many cases, the funds ro be provided by tuition
and by government appropriations.
7. The Bank
- they forecast demands of various loans and deposits
money and credit conditions to determine the cost of
money it lends.
 Methods under Qualitative Forecasting
1) Executive Opinions
- this method can be done easily and quickly without the
necessity of elaborate statistics.
- its disadvantage is that it depends on individual
opinions that may not be unanonimous and can vary from
individual which could lead to wrong forecasting.
2 ) Delphi Technique
- in this method panels of experts are selected and are
individually questioned about the upcoming events
- for a long-range forecasting, this method is beneficial
and very effective.
-its disadvantage is that from the returns there is lack of
and low reliability.
3 ) Consumer Surveys
- in this method, the survey is conducted directly on the
customers on their purchases. The surveys can be done
through telephone contacts, personal interviewsor
questionnaires to obtain data from the customers.
- it requires extensive statistical analysis to test
regarding the consumer behavior.
4. Salesforce Polling
-this method the forecast is done based on the opinions
of salespeople who have steady interaction with the
clients.
-the main advantage of this method is that it is very
simple to use and understand. The information can be
segregated easily into different categories.
 Prepared By:
Group 6
Members:
Claret, Jim Marie L.
Cohina, Dean Claire
Baid, Jemicah
Camilotes, Daisy Mae
Cabales. Mark Jefferson
Ayos, Rica