PERT-derived Forecast

Program Evaluation and Review Technique work

is presented in a chart or diagram that makes
visible all schedule tasks in a project in
sequence. Using PERT, project managers
analyze how much time it will take to complete
each task and any dependent task, and then
forecast how long the whole project will last.
PERT is used to estimate project duration or
cost with this following three estimates:

* Pessimistic
* The most likely
* Optimistic
These estimates combine to form an expected values, or forecast, as follows:
Advantages of Qualitative Forecast

 Better Sales Projections

One advantage of qualitative forecasting is its

ability to predict changes in sales patterns and
customers behavior based on the experience
and judgement.
More flexibility in forecasting

 A qualitative forecast gives management

the flexibility necessary to use non-
numerical data sources, such as the
intuition and judgment o experienced
managers, sales professionals and
industry experts.
Reducing Ambiguous Data
 Qualitative forecasting is useful
when there is ambiguous or
inadequate data.
Disadvantages of Qualitative Forecasting

 Unexpected Occurences
Managers reduce the uncertainty o business
planning by using qualitative forecasting
techniques.
Forecast Bias
 Uses qualitative forecasting techniques to
attempt to approximate customer demand
using “ soft information” such as personal
opinions. In doing so, the company analyzes
previous demand patterns while making
allowances for current market conditions.
Unfortunately, it’s difficult to eliminate the
forecaster’s personal bias from the data that
underlies the forecast.
Inaccurate Forecast

Uncertainties complicate the planning
process for a small business owner or
manager. Qualitative forecast enable a
manager to decrease some of this
uncertainty to develop plans that are
fairly accurate but still inexact.