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Departments throughout the organization depend on forecasts to formulate and execute their plans. Finance needs forecasts to project cash flows and capital requirements. Human resources need forecasts to anticipate hiring needs. Production needs forecasts to plan production levels, workforce, material requirements, inventories, etc. Demand specifications not the only variable of interest to forecasters. Manufacturers also forecast worker absenteeism, machine availability, material costs, transportation and production lead times, etc.
Besides demand, service providers are also interested in forecasts of population, of other demographic variables, of weather, etc. Types of Forecasts by Time Horizon ; Short-range forecast Quantitative methods – Usually 2 years ; New product planning Design of system Qualitative Methods Qualitative Forecasting Methods Executive Judgment Sales Force Composite Market Research/ Us Nee Smoothing Models Delphi Method Qualitative Methods The qualitative methods are:
Executive Judgment: Opinion of a group of high level experts or managers is pooled Sales Force Composite: Each regional salesperson provides his/her sales estimates. Those forecasts are then reviewed to make sure they are realistic. All regional forecasts are then pooled at the district and national levels to obtain an overall forecast. Market Research/Survey: Solicits input from customers pertaining to their future purchasing plans.
It involves the use Of questionnaires, consumer panels and tests of new products and services. Delphi Method: As opposed to regular panels where the individuals involved are in direct immunization, this method eliminates the effects of group potential dominance of the most vocal members.