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    The document discusses several examples of how forecasts are used in business organizations, including accounting, finance, human resources, marketing, MIS, and operations. It also explains that forecasts help managers plan both the system and use of the system. While forecasting involves predicting demand, it also involves predicting other factors like profits, costs, prices and economic indicators. The document notes that forecasting is not an exact science and requires blending science with experience and judgment.

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    The document discusses several examples of how forecasts are used in business organizations, including accounting, finance, human resources, marketing, MIS, and operations. It also explains that forecasts help managers plan both the system and use of the system. While forecasting involves predicting demand, it also involves predicting other factors like profits, costs, prices and economic indicators. The document notes that forecasting is not an exact science and requires blending science with experience and judgment.

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    The document discusses several examples of how forecasts are used in business organizations, including accounting, finance, human resources, marketing, MIS, and operations. It also explains that forecasts help managers plan both the system and use of the system. While forecasting involves predicting demand, it also involves predicting other factors like profits, costs, prices and economic indicators. The document notes that forecasting is not an exact science and requires blending science with experience and judgment.

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    6 views1 page

    Eee

    Uploaded by

    Atlas Atlantis
    The document discusses several examples of how forecasts are used in business organizations, including accounting, finance, human resources, marketing, MIS, and operations. It also explains that forecasts help managers plan both the system and use of the system. While forecasting involves predicting demand, it also involves predicting other factors like profits, costs, prices and economic indicators. The document notes that forecasting is not an exact science and requires blending science with experience and judgment.

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    in operations and other parts of an organization.

    Here are some examples of uses of forecasts in


    business organizations: Accounting. New product/process cost estimates, profit projections, cash
    management. Finance. Equipment/equipment replacement needs, timing and amount of
    funding/borrowing needs. Human resources. Hiring activities, including recruitment, interviewing, and
    training; layoff planning, including outplacement counseling. Marketing. Pricing and promotion, e-
    business strategies, global competition strategies. MIS. New/revised information systems, Internet
    services. Operations. Schedules, capacity planning, work assignments and workloads, inventory
    planning, make-or-buy decisions, outsourcing, project management. Product/service design. Revision of
    current features, design of new products or services. In most of these uses of forecasts, decisions in one
    area have consequences in other areas. Therefore, it is very important for all affected areas to agree on
    a common forecast. However, this may not be easy to accomplish. Different departments often have
    very different perspectives on a forecast, making a consensus forecast difficult to achieve. For example,
    salespeople, by their very nature, may be overly optimistic with their forecasts, and may want to
    “reserve” capacity for their customers. This can result in excess costs for operations and inventory
    storage. Conversely, if demand exceeds forecasts, operations and the supply chain may not be able to
    meet demand, which would mean lost business and dissatisfied customers. Forecasting is also an
    important component of yield management, which relates to the percentage of capacity being used.
    Accurate forecasts can help managers plan tactics (e.g., offer discounts, don’t offer discounts) to match
    capacity with demand, thereby achieving high yield levels. There are two uses for forecasts. One is to
    help managers plan the system, and the other is to help them plan the use of the system. Planning the
    system generally involves long-range plans about the types of products and services to offer, what
    facilities and equipment to have, where to locate, and so on. Planning the use of the system refers to
    short-range and intermediate-range planning, which involve tasks such as planning inventory and
    workforce levels, planning purchasing and production, budgeting, and scheduling. Business forecasting
    pertains to more than predicting demand. Forecasts are also used to predict profits, revenues, costs,
    productivity changes, prices and availability of energy and raw materials, interest rates, movements of
    key economic indicators (e.g., gross domestic product, inflation, government borrowing), and prices of
    stocks and bonds. For the sake of simplicity, this chapter will focus on the forecasting of demand. Keep
    in mind, however, that the concepts and techniques apply equally well to the other variables. In spite of
    its use of computers and sophisticated mathematical models, forecasting is not an exact science.
    Instead, successful forecasting often requires a skillful blending of science and intuition. Experience,
    judgment, and technical expertise all play a role in developing useful forecasts. Along with these, a
    certain amount of luck and a dash of humility can be helpful, because the worst forecasters occasionally
    produce a very good forecast, and even the best forecasters sometimes miss completely. Current
    forecasting techniques range from the mundane to the exotic. Some work better than others, but no
    single technique works all the time.

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