FORECASTING AND DECISION MAKING

MBA SEM-1
GROUP -4

GUIDED BY : PREPARED BY :
DR.JAY BADIYANI 1) DRASHTI BHATT
2) MINAKSHI RAJAI
3) GOSWAMI DARSHAN
4) MITAL HIINGU

SUBMITTED TO :
DEPARTMENT OF BUSINESS ADMINISTRATION
FACULTY OF MANAGEMENT
BHAVNAGAR
 FORECASTING
MEANING :

Forecasting is determining what is going

to happen in the future by analyzing what
happened in the past and what is going on now.
It is a planning tool that helps business people
in their attempts to cope with the uncertainty
of what will might and might not occur.
Forecasting relies on past and current
data and analysis of trends
 DEFINATION
 “its is the systematic attempt to assume future so that the
organization can be able to know the problems and
opportunities and turn them into plan of action.”
 Neter and Wasserman state “Business Forecasting refers to
the statistical analysis of the past and current movement in
the given times series so as to obtain clues about the future
pattern of those movements.”
FEATURES

 1) Involvement of Future Events:

Forecasting relates to future events.
Forecasting is the essence of planning
because planning also aims at
deciding what is to be done
in the future.

2) Depends upon Past and Present Event:

Actually, forecasting is made by analyzing
the past and present relevant data. It takes all
the factors into account, which affect the
functioning of the enterprise.
 3) Happening of Future Events:
Forecasting defines the probability
of happening of future events.
Therefore, happening of future
events can be precise only to
a certain extent.

4) Makes use of Forecasting Techniques:

As can be gathered from what has gone
before that forecasting is a systematic
attempt to probe the future with a view
to drawing certain useful inferness.
Such a probing obviously demands a proper
and full analysis of known facts with
the help of various qualitative and quantitative
forecasting techniques.
 STEPS :
1. Identify the Problem :
 2. Collect Information
3. Perform a Preliminary Analysis
 
4. Choose the Forecasting Model
5. Data analysis
 
6. Verify Model Performance
 IMPORTANCE :  
 Thus the importance or advantages of forecasting are stated below:
 1. It enables a company to commit its resources with greatest assurance to profit over the long term.
 2. It facilitates development of new products, by helping to identify future demand patterns.
 3. Forecasting by promoting participation of the entire organisation in this process provides
opportunities for teamwork and brings about unity and co-ordination.

 Limitations :
 1. Basis of Forecasting
 2. Reliability of Past Data
 3. Time and Cost Factor
TYPES OF FORECASTING

 Organisation use three major types of forecasts in planning future operations.

1. ECONOMIC FORECASTS:
It addresses the business cycle by predicting inflation rates, money suppliers ,
housing starts, and other planning Indicators.

2. TECHNOLOGICAL FORECASTS:
These are concerned with rates of technological progress, which can result in the
birth of exciting new products, requiring new plants and equipment's.

3. DEMAND FORECASTS:
These are projections of demand for a company’s products or services . These are
forecasts, also called sales forecasts , drive a company’s production, capacity, and
scheduling systems and serve as inputs to financial, marketing, and personnel planning.
 DECISION-MAKING
 MEANING

 The English word “decision” originated from the lattin word ‘deciso’ which means “to cut from.”
 ‘To decide’ means “to come to a conclusion or “to pass a resolution”
 Decision making means to select a course of action from two or more alternative.
It is done to achieve a specific objective or to solve a specific probelm
DEFINATION

 According to George R.Terry. “decision making is the selection based on

Certain criteria from two or more alternatives.”

 Trewatha & Newport defines decision making process as follows:, “Decision-making

involves the selection of a course of action from among two or more possible
alternatives in order to arrive at a solution for a given problem”.
Feature:

 1) decision making implies choice

 2) continue acting process
 3) mental / intellectual activities
 4) based on reliable information feedback
 5) goal oriented process
 6) means & not end
 7) related to specific problem
 8)time consuming activities
 9)needs effective communication
 10) responsible jobs
Advantages :

 Primary function
 Entire management process
 Continues managerial function
 It is essential to face new problem & challenges
 It is delicates and responsible job
Types of decision making

 1) programmed and non-programmed decision

Programmed decision are normally of repetitive nature and taken within the broad
policy structure. This decisions have short run impact and are taken by lower level
managers.
Non-programmed decisions are of non-repetitive nature. Their need arises because of
some specific circumstances. Such decisions are taken by top management

 2) major and minor decisions

Major dicision are which decisions are taken for whole organization
Minor dicision means which decisions are taken for minor dicision making
 3) routine and strategic decisions
Routine decisions or tactical decision are taken in the context of day to day operations of the
organization. Mostly they are of repetitive nature and go not require much analysis and evolution and
can be made quickly.
Strategic or basic decisions relate to policy matters and usually involve large Investment or
expenditure of funds. These decision are mostly non-repetitive in nature. A slight mistake in these
decisions is bound to injure the entire organization.

 4) policy and operative decisions :

Policy decisions are taken by top management and they mostly relate to basic policies. such
decision have long term impact.
Operation decision relate to the day to day operations of the enterprise. They are generally taken
by middle and lower level management who are more closely related with the supervision of actual
operations.
 5) organizational and personal decisions :
The executive makes organizational decision. When he acts formally as a company as a
company officer. Such decisions reflect the basic policy of the company.
Personal decisions relate to the executive as an individual and not as a member of an organization.

 6) individual and group decisions :

Individual decisions are taken by a single individual in the context of routine or programmed
decision where the analysis of variable is simple and for which broad policies are already provided.
Group decisions are already taken by a group or a standing committee constituted for this
specific purpose. Such decisions are very important for the organization because they involve the
participation of a large number of persons.
Process of decision making :
Relation between planning and decision
making
References and links :
 http://kalyan-city.blogspot.com/2011/08/what-is-forcasting-meanings-features.html (Access on
14-10-2019)
 https://dashboardstream.com/the-6-steps-in-business-forecasting/ (Access on 14-10-2019)
 https://
www.businessmanagementideas.com/forecasting/forecasting-elements-techniques-and-advanta
ges/3418
(Access on 14-10-2019)
 http://www.managementstudyguide.com/what-is-decision-making.html (Access on 14-10-
2019)
 http://www.gensismc.co.uk/blog/drucker-effective-decision/ (Access on 14-10-2019)
 http://kalyan-city.blogspot.com/2010/06/decision-making-process-in-management.html
(Access on 14-10-2019)
 http://www.citeman.com/4584-time-and-human-relationships-in-decision-making.html#jxzz3jj
4jnmfm
(Access on 14-10-2019)
 book of management : james A.F stoner 2009
 Forecasting methods and application – authors : spyros makridakis , steven c wheelwright rob
THANK YOU